The following is a guest post from Neal Frankle. He is a Certified Financial Planner® in Los Angeles and also the owner of Wealth Pilgrim – a wonderful personal finance blog. His most recent post is his Prosper Review – a peer-to-peer lender.
One of the really nice things about living in the 21st century besides having penicillin and working traffic lights is that anyone can become wealthy if you live in a democracy. Truth be told, very few people who are rich today were born that way. They created their own wealth.
That’s an interesting phenomenon if you ask me. And you have to ask yourself how rich people got their start? If they didn’t have any money, how did they get off the launching pad? Perhaps an even more interesting question is how you can amass wealth if you don’t have much money to start. In my experience there are 7 proven ways to do just that:
1. Take a low paying job.
One of the best ways to fund your future success is by sacrificing current income in return for great potential income down the road. Let me give you an example. Let’s say your dream is to have a fleet of plumbing trucks unclogging drains and sewers all over town one day. The only problem is you don’t anything about plumbing right now.
Why not find a sympathetic plumber who is in business for himself and offer to tag along with him as an apprentice? Do it for a very low wage or even for free. Promise you’ll work hard and deliver. Tell the plumber your dreams and get him invested in your future. You may have to talk to a dozen plumbers before you find the right fit but once you do you’ll be on your way to that plumbing fleet you’ve been dreaming of.
Obviously, this tactic isn’t restricted to plumbing jobs. You can apply this idea to almost any profession there is. Once you start openly discussing your dreams, it won’t take long to find people who want to help you succeed. You’ll have to work hard and probably earn very little or nothing to start. But in the long-run it will be a great trade off.
2. Take a part time job.
This is variation on the idea I presented above. Get clear on what you want to do and then do everything you have to do to get your foot in the door. Don’t let low pay or few hours stop you. This is how many of the best small business ideas start. Let me show you why.
Let’s say you could earn $50,000 a year as a legal secretary – a job you hate. Your dream is to be an interior designer. You talk up your dream to anyone who will listen and you finally find someone who agrees to take you under her wings. The only problem is that you’ll have to work for a lower wage and you’ll have fewer hours. You may only earn $20,000 that first year. But you estimate that can slowly work up and ultimately start earning $80,000 a year starting in year 5. You can see that you’ll invest in yourself by accepting a lower wage for 4 years but it really pays off. And the payoff you receive lasts your entire working life. Not a bad investment if you ask me.
3. Start a business with time or other people’s money.
Believe it or not, most businesses buy themselves. That’s right. When you buy a small business, you don’t write a check for the purchase price. Instead, you pay for the company over a 3, 5 or 10 year period. Sure you’ll have to come up with a down payment but you can arrange that too. Take on a partner if you don’t have the cash yourself.
Have the partner provide the down payment and you take on responsibility for the debt. Of course the business will pay down that debt so you will end up with a business for free. Of course, you’ll have to work hard. You are going to provide the sweat equity but if you buy the right small business, you could be on your way to significant financial freedom and wealth.
4. Eliminate financing costs.
There is no more wonderful feeling than using found money to create wealth. And the best way to create that found money is to eliminate or vastly reduce your financing costs. Of course this takes work – like any worthwhile endeavor. One of the best methods I know to quickly eliminate financing costs is by using the debt snowball method Joe has discussed before. Once you eliminate that debt, keep that snowball growing but take the money and invest it.
Now the good news is that you don’t have to wait to learn about investing until you are debt free. You can start investing now no matter how little money you might have now. I highly recommend using a site like Betterment because they walk beginners through the steps of investing and actually implement your investment plan for a very low cost.
5. Become a Bookkeeper
Even if you never want to become a professional pencil pusher, learn how to become a bookkeeper. I say this for one main reason. If you really want to understand the power of budgeting, do your own books like a bookkeeper.
Again, even if you don’t hang your own shingle, you will benefit greatly if you take the time to learn the ins and outs of bookkeeping. Take an adult education class and become an expert with QuickBooks. That’s all it will take. The money save by simply being on top of your budget will astound you.
6. Buy Real Estate With Your Time and Someone Else’s Money
You can allow other people to make you wealthy but you’re going to have to invest time. There is probably no better opportunity to capitalize on than with real estate. Learn the market. Make connections and then seize the opportunities. Talk to your family and friends and offer them a piece of the action. You do all the work. They put in all the money. And you split profits down the middle. Not everyone will go for this at first. You may have to offer better terms to your first investors. But once you establish a track record people will be lining up to invest with you.
If you notice, these ideas all require work and not money. But if you are willing to put in some sweat equity you can see that there are quite a few opportunities to build wealth starting from scratch.
What other opportunities do you see right now? What are you doing to capitalize on them?