How To Build Wealth With $0 - The Easy Way

What's up, Graham? It's guys here.

Now, here's the thing: if you're already wealthy, it's easy to find new ways to make money. But if you have nothing to fall back on, it's not exactly looking so good. It was recently found that just 30% of the poorest American families have a savings account. Millions of working Americans still can't afford food and rent. 54% say they're living paycheck to paycheck. Inflation is said to be crushing the middle class, and on average, $500,000 is the amount it would take to make them feel financially secure.

Fortunately, though, there is a solution for anyone who wants to build up their wealth starting from nothing, and it does not involve the same cookie-cutter advice listed in every single article like, "Save 15% of your income, invest in a 401k, live below your means, don't go to Coachella, and make sure to get your free stock down below in the description because it's worth all the way up to $1,000." Even though I admit it's still good advice and it's probably way better than what the majority of people are doing.

But in terms of effectively and realistically building your wealth starting from nothing, regardless of your education and background, these are my own recommendations that I have learned firsthand. Because there are some step-by-step rules that anyone can follow that work incredibly well and don't cost you a single penny—besides, of course, one like on the video. It helps out my channel tremendously and it also gives me a good indication if this is something you want to hear more of. So if it is, let me know by hitting the like button and I can do more like this in the future.

So, thank you guys so much! And now, with that said, let's begin.

All right, so my first piece of advice before we go into these step-by-step specifics is just this: be careful who you listen to. There's a lot of people out there who are totally broke but who love to give financial advice at any chance they could get. These are the kinds of people who tell you that only poor people get loans, that credit cards are bad, that you have to go to college to be successful, and that you shouldn't start a business because it's too risky.

Don't get me wrong; usually, the people who tell you these things have really good intentions and they believe it themselves. But the fact is, if you really want to build your wealth, you have to go against the grain and do what most people are not doing. And that includes listening to people who are where you want to be. Those are the people who have done what you want to do, and chances are that is the advice you should be listening to.

Second, if we're being honest and realistic here, if you want to build your wealth starting without any money, you're going to have to actually go and make some money. Someone had to say it, and most likely if your goal is to build up your wealth as fast as possible, you're not going to be doing that through a traditional job—unless that job pays you some exorbitant amount of money or you're really good at poker.

So instead, my recommendation is this: pick a career or a business that's not dependent on how many hours you work. If you ignore the rest of the video but you just focus on one point, let it be this because it's important. Anytime you work a career that pays you hourly, most of the time you will plateau rather quickly. There's just so many hours you could work in a day before eventually you max yourself out, and when you reach that point, you've hit a ceiling.

But by working any job that pays based on results, your income has the potential to skyrocket because now hours no longer make a difference. Personally, I think sales is one of the most underrated careers out there. It's usually a stepping stone to making more money. It'll teach you everything you need to know about time management and customer service, and it could provide the funding for almost anything you want to do later on.

Now, if you're not the type who wants to go into sales and you want something a little bit more stable and consistent but you still want to make more money, just consider this: employees that stay in their companies longer than two years get paid an average of 50% less. So in the interim, consider switching careers, leveraging your skills, and using that as a way to make more money—especially now when so many businesses are experiencing a shortage of talent and are willing to pay anything they can to find the right person.

But overall, I would say that most people you hear about who built up a crazy amount of wealth rather quickly starting from nothing did so by starting a business. They saw an unfulfilled niche, and they created a solution to a problem, or they saw an existing business doing well but they found a way to do it even better. Learning how to do this is not expensive either, and pretty much everything you need to know is already on YouTube for free. Learning how to be self-sufficient enough to find your own answers is going to be an important part of building your wealth long term.

But now that we have some of that self-help jargon out of the way, here's some of the best step-by-step steps that you could use to build your wealth starting from nothing.

And that would be: third, get in the habit of investing everything immediately. Like, just get this: the average 25 to 34-year-old millennial spends over $2,000 a year at coffee shops, and 41% admit to spending more money on coffee than they do on their own retirement, and that's got to stop right now.

That's because the more time you allow for your money to grow, the more money you will have. You know, someone should turn that into a t-shirt.

Now, here's the thing: to me, it doesn't exactly matter how much money you're investing right now, but instead how well you maintain and sustain those habits once you actually do start making a lot of money. For example, keep in mind that $1 invested at the age of 20 years old at a 7% return is going to be worth $21 by the age of 65. But if you wait and invest that very same $1 at the age of 30 instead, you'll only have $10.68 at the age of 65. And if you wait even longer at 40 years old, you'll only have $5.48.

That means your money is worth twice as much invested today as it is 10 years from now. When I first learned about that concept when I was 18 years old, it changed everything. All of a sudden, that rewired my brain to see every expense as taking away from what it could be in the future. So I made the choice to consistently invest everything, even though in the short term I cut out all of my discretionary spending.

Then, in addition to that, you should also open up a Roth IRA as soon as possible and contribute to it. This is a retirement account that you can invest money into, and then all of the profit you make is completely tax-free after the age of 59 and a half—which means if you invested that $1 at 20 years old and now it's worth $21 at the age of 65, you're not going to pay any tax by the time you cash out, leaving you with a lot more money left over for Lamborghinis and yachts.

Now, for anyone who wants to build their wealth from nothing, this is especially good for two reasons. First, you're probably not making a lot of money right now, so you're already in a really low tax bracket, and that means you'll have more money left over with to go and invest. And second, the sooner you start, the longer your money is going to have a chance to grow, which gives you more money in the long term. It's as simple as that.

Now, in terms of how much you should be saving, the realistic answer is as much as you possibly can. Even though some financial advisers say you've got to save 10% of your income—someone has to say it—but that's just not enough. Just consider this: if you invest 10% of your income starting at the age of 20 years old, it'll take you about 51 years of doing that to accumulate enough money for your investments to replace your income. If you bump that up to 30%, it'll take you 28 years, and if you manage to save 50% of your income, you could literally retire in 17 years while your investments earn enough to sustain your lifestyle indefinitely.

That's why getting in the habit of saving as much money as possible as soon as possible is going to help you build your wealth as fast as possible, even if you're not making a lot of money up front. Just start because it's going to be a lot easier to maintain once you do actually start making more money.

Then, once you've done all of that, here's the secret sauce: number four, create multiple sources of income. Now, this one is so important that the IRS actually published their research on high-income tax returns to study the distribution of economic well-being. Or, in other words, they wanted to know why some people made more money than others, and what they found is that generally, the more income streams you have, the more income you tend to make.

So, when you see that 65% of millionaires have three or more sources of income, I would take that into consideration and do your best to diversify as much as you can.

Now, if you're curious about which income streams are the most common for millionaires mentioned in the study, the main income source was derived from a job or earned income from a paycheck. This is where almost everybody starts off, and it's the equivalent of you working a normal 9-to-5 job, being paid a salary, or working on commission as the main source of income for most people. This is the cash cow that makes everything else possible and funds the remaining income sources.

Like, number two, dividend income. This is probably the easiest second income source that pretty much everyone watching could start literally right now, and it's as simple as this: go to any free stock trading brokerage, like Public, down below in the description, because they will give you a free stock worth all the way up to $1,000 when you use the code GRAHAM. Then go and buy any dividend stock out there, and bam, you're done!

Depending on what you buy, dividends could range anywhere from 6% if you're investing in Apple to 7.6% if you're buying AT&T. Generally, the higher the dividend, the more risk you take, but you could even throw it in something like a broad index fund like VFIAX, which pays you 1.3% a year.

The third, closely related to that, is capital gains. This is what happens when you sell an investment for profit, and the amount of money you make is what's called your capital gain. And even better, if you hold that investment for longer than a year, it's going to be taxed at long-term capital gains rates, which is a lot lower than the taxes you pay from actively working. And if you make under $40,000 a year, the long-term capital gains tax rate you will pay is 0%.

Now, fourth, another income source could be interest income. This is what happens when you keep your money in a high-yield savings account or pretty much any bank account that pays you interest. At the end of the year, they will issue you a 1099 interest form that you report to the IRS as another source of income.

Now, fifth, once you start earning enough money, you could also branch out to this one, and that would be rental income. Now, personally, this is my favorite from the entire list, and it's where I placed most of my focus throughout the last ten years—in terms of buying properties, fixing them up, and then renting them out for cash flow. For most people who want to invest their money and build wealth, real estate has so many tax advantages that make it very unique and profitable for anyone who wants to spend their time learning how to do this.

For example, if the property goes up in value over time, that could be long-term capital gains if you sell it. If you rent your property out for a profit, that would be rental income, and then you could reinvest your profits back into the stock market to make even more money. I've also seen so many articles out there that claim that 90% of millionaires are invested in real estate, and even though I can't find any studies to back this up, I would not be surprised if quite a few millionaires hold some of their wealth in real estate as a way to hedge inflation or as a place to live.

And then finally, number six, we have the income that you make from working a second job or a side hustle. I seriously think this is probably one of the most underutilized income sources that people are not taking advantage of, and that stops today! Working on any sort of side business that has the potential to grow completely independent from your main source of income is not only a good way to make more money but also diversify in case something happens to your main job and you have nothing left to fall back on.

I just want you to think about this and ask yourself the question: what do you do between the hours of 6:00 p.m. and midnight every single night? That is six hours a day or almost an entire full workday every single day that most people don't utilize at all. This is the perfect chance to leverage your time, make more money, and use the resource that all of us have the exact same amount of—and that would be time.

Finally, since $500,000 is the amount that would make most Americans feel financially secure, let's break down exactly what you'll need to reach that goal and how long it'll realistically take if you start from nothing.

First, for purposes of this calculation, I will assume that you at least have the average annual salary of $31,000 a year, and I understand that some people watching this will have to build up to that. Which, if that's the case, you're best off figuring out exactly what you want to do and make a plan to build up to a consistent paycheck. And if you're making at least that or more than that, well perfect! We can go on to the second step, and that would be to minimize all of your costs at all costs.

Like it said, the average American spends $118,000 a year on non-essential items, and this is something that nearly everybody could begin cutting back on immediately. This means living with parents if you have that choice available to you, or living with roommates, or moving further away if you don't mind a longer commute—or anything you can right now to reduce your housing costs.

First, from there, make sure to cook food at home, avoid eating out, drive a good reliable used car that's decent on gas, and otherwise only buy things that you absolutely need. By doing this, you're going to have more money left over, which then brings us on to number three.

I'll assume that with a $31,000 income, living frugally and cutting back on discretionary spending, you should be able to save about $200 a month, or $2,400 a year. If that's the case, open up a Roth IRA and invest all of that into a broad market index fund that tracks the entire market like VTSAX. Now you get tax-free profits, long-term growth, a bit of a dividend, and you'll see some consistent savings.

And if you're able to save even more than that, then smash that like button for the YouTube algorithm!

Now, fourth, I think this is the fun part: find a side hustle or part-time work that you could do after normal hours. Maybe this could be working as a restaurant server, starting a side business, or doing anything for a few hours a night just to earn a little extra money. Even assuming an extra $35 a night, four nights a week, that's an extra $560 a month that you could use towards investing in a Roth IRA.

Then, once you have enough saved up, we can move on to number five, and that would be to switch jobs. Like I mentioned earlier, workers who switch jobs every 2 to 3 years wind up making significantly more money than those who stay within the same company, and even switching jobs once sees an average pay raise of 15%.

And if you're able to increase a $31,000-a-year career by 15%, that's an extra $390 a month that you could save. When you combine all of that together with a side hustle that even makes $35 a night, four nights a week, that's $950 a month in savings. And if you literally just maintain that, you could reach your $500,000 target in 18 years at an 8% return, and after 30 years, you'll have $1.5 million, which is basically your entire retirement.

And that's all assuming you do nothing else except for that. But number six, realistically, you're not just going to stop there. There's nothing that says you can't switch jobs every 2 to 3 years to end up making significantly more. So, by year three or four, you should be able to leverage that $31,000 career into something that earns $46,500 a year.

And if you choose to further save that difference, that's an extra $10,000 a year that you could invest. Apply that to the existing $950 a month that you were already saving under this example, and now that gives you $1,750 a month that you could use towards building your wealth. Doing that would allow you to reach more than $500,000 in 13 years!

That also doesn't include your side hustle income increasing at all, of which would more than likely take the time frame below ten years—just by being able to save an extra $580 a month.

But one of the most difficult parts to maintain throughout all of this is what's known as lifestyle inflation. This is what happens when you're making $40,000 a year, you're saving some money, there's no complaints, but then you start making $60,000 a year, so you reward yourself with maybe a slightly nicer apartment or a slightly newer car or you start eating out a little bit more often. Not a huge difference here. Nothing crazy.

But then you start making $90,000 a year, and all of a sudden, your current place isn't as nice as it once was. So you upgrade your apartment to a higher floor and you get an even nicer car. But then a year later, you're making $150,000 a year, and your apartment seems a bit messy, so you go and upgrade to a house. Your car isn't as nice parked next to all the other BMWs and Mercedes, so you get something nicer. Now you can actually start to travel.

But the funny thing that happens with so many people is that they wind up saving the exact same dollar amount earning $150,000 a year as they were when they were making $40,000 a year—despite now making four times more. That is what we call lifestyle inflation.

In fact, a recent study even found that 44% of millennials earning above $100,000 were living paycheck to paycheck. And without going through all of their expenses line by line, I can pretty much guarantee that's mainly because of lifestyle inflation.

The only way to overcome this is that if you make more money, keep your expenses the exact same. Don't change a single thing and invest the difference immediately. Or you could do what I do, which is just work so much that you don't even have time to spend your money. There you go, big brain!

But all in all, by doing this, it's entirely possible to grow your wealth from $0 to $500,000 in ten years, even without a crazy high income.

Now, I understand that even by reducing your expenses, living below your means, switching companies, investing the difference, and doing everything else listed here, it's easier said than done. But it is entirely possible if you're dedicated to increasing your income, sacrificing short-term discretionary spending for the sake of investing more, pushing yourself outside your comfort zone, and making it a goal you have to achieve.

This is something absolutely doable over the next ten years. With a decade's worth of sacrifice, you have the potential to set yourself up for the rest of your life. And it all begins right here as soon as you smash the like button for the YouTube algorithm!

So with that said, you guys, thank you so much for watching. I really appreciate it! As always, make sure to subscribe and hit the notification bell. Also, feel free to add me on Instagram. My posts are pretty much daily, so if you want to be a part of it there, feel free to add me there as my second channel, The Graham Stephan Show. I post there every single day I'm not posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that.

Thank you so much for watching, and until next time!