How to Accumulate Wealth from Nothing

How to Accumulate Wealth From Nothing

Cover Photo by Vladimir Solomyani on Unsplash

The Secret to Wealth Accumulation

The rules you need to follow to accumulate wealth are often common sense. In personal finance however common sense is not so common anymore.

Personal debt in western counties is now at its highest level ever recorded and the scary thing is it is continuing to grow. More than any time in history it has become the norm to live beyond our means and borrow to fund a life we cannot afford.

A live for today attitude where we sell our future for easy thrills today has become the prevalent mind-set. The traditional values of our grandparents such as saving for a rainy day, “if I can’t afford it I won’t buy it” are dying and are now sneered at by the majority of people.

With so many people doing so much dumb stuff it’s easy to follow the crowd to try and keep up and fit in. The fact that you are reading this article suggests that you are looking for more and want to accumulate wealth and achieve financial success.

This article will lay out the rules to follow to achieve financial success and accumulate wealth. These rules are not a secret but may as well be. Most people are unprepared to follow any rules and are looking for instant gratification.

By following the simple rules within this guide you can set yourself on a path to an amazing future built on wealth rather than debt. I hope that you find this guide beneficial. You may also get some benefit from my articles How to Achieve Anything and How to Secure your Dream Job.

Good luck with achieving your financial goals and please feel free to share or comment on this article with what you are working towards and how you are doing!


Stop Borrowing Money!

This is a basic one but is fundamental to achieving financial success. It is impossible to build wealth when we are continuing to rack up debt. Debt is extremely destructive to wealth building due to the power of compounding.

Think of it this way if you borrow $10,000 and pay $1,000 in interest alone each year you are taking $1,000 of wealth out of your home and handing it to the bank. That same $1,000 could have been invested and itself earned a return for you if you did not have the debt. Over many years the destructive impact of event small debt can be huge due to negative compounding.

Add in on top that the $10,000 itself still needs to be repaid and it becomes clear debt makes it almost impossible to get ahead financially.

When you borrow money you are putting yourself on the back foot and severely restricting your ability to accumulate wealth. Wealth is essentially the cumulative difference between your income and outgoings to if your income is $5,000 a month and your outgoing are only $2,500 you will accumulate $2,500 of wealth each month. As you start to save and invest the effect is exponential as you start to earn money on money in the form of interest, dividends and investment growth.

Consumer Debt is at Record Levels
Consumer Debt is at Record Levels

Photo by Ehud Neuhaus on Unsplash

When you borrow money to buy something you can’t afford you are stealing from yourself. The future you will have to pay that money back and make do with less to repay your debt. This short-sighted mind-set leaves people forever playing catch-up and never accumulating wealth.

Live within your means, this means spend less than you earn, live on a budget and habitually save and invest rather than habitually spending and borrowing. This might not feel great at the time but will pay huge dividends in your financial future.

After working with hundreds of wealthy individuals in financial planning I have seen that most of these individuals have accumulated their wealth by avoiding debt and living within their means. This might seem boring but it’s true, the first rule of accumulating wealth is to stay out of debt!

A huge influence in my own approach to accumulating wealth has been Dave Ramsey. Dave Ramsey is a financial guru based in the US but has an international audience with a popular YouTube channel and a number of bestselling books – View on Amazon.

Dave teaches to avoid debt at all costs and that repayment of debt is the critical step in accumulating wealth. If you are serious about wanting to learn more and change your perspective I would strongly recommend giving Dave Ramsey’s book a read, the total money makeover – View on Amazon. This book has been a huge influence on my thoughts and approach to wealth accumulation.

Dave Ramsey is inspirational for people all over the world who are working on accumulating wealth. As we work through this guide we will hear more about Dave’s approach where this is relevant.


Repay Debt

Okay so you have stopped accumulating more debt now we need to clear the debt we already have. I have spoken to so many people who don’t see the importance of clearing debt to wealth accumulation. So many people see debt as a friend.

Debt is not your friend, debt creates huge instability in your life. A lay off at work or an unexpected bill is stressful but when you are heavily indebted this can cause your entire life to spin out of control and unravel.

Debt heavily restricts your ability to respond to changes to your income and outgoings as the money has to be paid back whatever happens. So even if you are earning less or nothing at all you have to find the money to make the payment.

Before you start to think about saving and investing you should consider repaying debt. Whether you should include the mortgage if you have one in this approach is debatable. As a minimum however it makes sense to clear all debt besides your mortgage before you start to save and invest.

In my article How to Achieve Anything I talk about the importance of building on solid ground when you are trying to achieve your goals in life. This is essentially about having a solid foundation before you push on. Debt weakens your foundations in life and makes it riskier and harder to save and invest. Clearing debt could give you a much more secure platform to accumulate wealth from.

In Dave Ramsey’s book the total money makeover – View on Amazon, he teaches repayment of debt is essential before we can start to accumulate significant wealth. This is because wealth accumulates from surplus income and debt eats income for fun. Clearing debt can free up significant income for wealth accumulation that would have otherwise have gone to the bank in interest!


Plan for the Unplanned

If you wait long enough something will go wrong. The car will need a new gearbox or the hot water boiler will need replacing, maybe even both. It’s not a matter of if, it’s a matter of when. The irony is that even though we know these things happen daily we are always surprised when they happen to us!

We can plan for the unexpected by holding an emergency fund for unexpected bills. An emergency fund is money held in in an instantly accessible cash account that is not at risk and which can be accessed instantly should it be needed for an unexpected outgoing.

By planning for the unplanned life becomes so much less stressful. Believe me I know the feeling as well as anyone when the third thing breaks in a week and you are lost and scared. Living day to day in this way is scary and can really impact your health and wellbeing.

When you hold cash for emergencies it feels like they don’t happen anymore because they don’t. This is fact, things still go wrong but it ceases to be an emergency when they do. When you have money in the bank and your car breaks it stops being an emergency and starts being an inconvenience.

Plan for the Unplanned!
Plan for the Unplanned!

Photo by Jiroe on Unsplash

In terms of how much cash to hold this is each to their own, but it needs to be enough to cover significant unplanned expenditure. Dave Ramsey suggests in his book the total money makeover – View on Amazon holding the equivalent of between three to six months monthly expenditure in an instantly accessible cash account for emergencies and this seems like a very sensible minimum amount to me.

If you are starting from scratch with no savings this might seem impossible, don’t panic. Any emergency fund is better than none. I would rather meet an unplanned $10,000 medical bill with $2,000 than $0, for that matter I would rather meet it with $100 rather than $0.

If you follow the first rule in this guide and clear your debt you will be surprised how quickly you can accumulate wealth and in particular an emergency funds. Think about how much money you could save each month if you didn’t have any debt besides your mortgage. Some people simply don’t earn enough to save for emergencies however most people do they only can’t afford to because they give all their money to the banks in debt repayments each month.

To accumulate wealth you need to repay debt, stay out of debt and save money for emergencies every time you get paid. It is habitual behaviour that makes or breaks personal finance, huge fortunes can be built on doing the little things right over and over again.


Be Clear On your Why

If you have read my article How to Achieve Anything you will be familiar with this point. When you are setting out to achieve anything hard it’s important to know why you are doing it and have a vision for the future that drives and motivates you.

When you are throwing money at your debt to make it go away or starting to save money from scratch it is very hard, especially because the biggest change is you and your behaviour. Change can be very difficult and to stick with it you need have a vision for your future that motivates you to sacrifice and push through.

In difficult moments your why can sustain your commitment. Your why might be a vision for your future that inspires you such as having the financial resources to give your children a great education or to repay your mortgage and achieve financial freedom, maybe both. Your why could be anything but if you are not excited when you think of it you need to think again! Your why should inspire you and energise you to change your life.

The motivational speaker and entrepreneur Les Brown captured the reality of this kind of change perfectly when he said –

“People change their life when they get sick and tired of being sick and tired.”Les Brown

Passion is so important to succeed
Passion is so important to succeed

Photo by Ian Schneider on Unsplash

If you are not energised to change your life you are in for a tough ride, you need a powerful why. Les once said he achieved his dream because be kept running towards it, even when it seemed impossible and this is what we must do to win with money.

I would highly recommend Les Brown’s teachings which I have found to be both inspirational and transformational in my own life. If you are interested in learning more about Les you can now buy a collection of his work in Audio format. These are my favourite and perfect for listening to when traveling. You can View on Amazon here.


Save and Invest

To build wealth you have to save and invest and live on less than you make, this is true no matter what you earn. Think of it this way whether you earn $30,000 a year or $3,000,000 a year if you spend it all you will never have financial security and will also never accumulate wealth.

Every month save what you can from your income. Once you have money in the bank for emergencies then focus on clearing all debt. Most people without debt can accumulate saving and wealth very quickly.

Think long and short-term with your savings. It’s worth considering what you want to achieve and picking accounts and investments that meet your desired timeframe and attitude to risk.

Most people will have a need for short-term savings to fund things such as replacement cars and home upgrades and long-term investments to fund things such as retirement.


Increase your Income

Think how much easier it would be to repay debt, save and invest if you had more income to work with. You might want to consider how you could increase your income such as by starting a side business, getting a part-time job or focusing on a promotion at work.

Whatever you do you should always be looking to grow your income. The higher your income the more potential you will have to accumulate wealth.

Remember there is no point earning more if you spent it all without thinking so as you increase your income try not to massively scale up your expenditure. Give yourself small rewards for achieving more and save what you can.

Life is all about balance so it’s not about putting every penny into savings or debt repayment but having a plan that will allow you to win and following this through. It’s okay to reward yourself every now and again and actually this is really important to stay motivated – just exercise common sense.


Risk v Reward

Risk and reward are positively correlated, meaning usually the more risk you take on an investment the higher the possible return or loss you should expect. It’s important when we invest to pick investments that have an appropriate level of risk which matches our attitude to risk and individual needs.

If you are new to investing you should consider taking the professional advice of a financial planner. Whilst this advice may cost money it could easily pay for itself if it stops you making a bad investment decision.

Understand The Risks
Understand The Risks

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With Money Consistency Is Key

If you have read my article How to Achieve Anything you will be familiar with this concept. Success is rarely an isolated event, we typically can’t train once and become the best athlete or invest once and become richest person. Usually success in life is achieved through changing our habitual behaviour so that we do those things over and over again that push us towards our goals and success.

In Wealth accumulation there are almost limitless examples of consistency being king. The power of compounding means that consistent repayments of debt or payments into savings/investment are compounded by the interest on interest effect. Compounding is your best friend when you are working to accumulate wealth.


Have a Written Budget

It’s much easier to follow the plan if you have a plan. With money a budget can hugely increase your chances of success. It’s only when you fully understand your income and expenditure that you can start to see opportunities to save, invest and repay debt.

I would recommend having a written budget and reviewing this on a regular basis.



There is no bottom that you can push to accumulate instant wealth. You can push a button in yourself however that will enable you to go on and have huge success with money and to accumulate wealth. The change starts with you.

Wealth accumulation is at its core about patience and consistency. When you realise if you give up a little today you can have a life beyond your wildest dreams in the future something changes within you. Dave Ramsey has said it best –

“Live like no one else today, so tomorrow you can live and give like no one else.”Dave Ramsey

This is incredibly true, if you get out of debt and consistency save and invest you will one day soon find yourself in an incredible financial position. You can change your own and your family’s lives, it just takes patience, discipline and consistency.

If you are serious about wanting to learn more and change your perspective I would strongly recommend giving Dave Ramsey’s book a read, the total money makeover – View on Amazon. This book has been a huge influence on my thoughts and approach to wealth accumulation.

I hope you found the information in this article useful. You may also get some benefit from viewing my articles on How to Achieve Anything and my How to Secure your Dream Job.

Good luck with achieving your financial goals and please feel free to share or comment on this article with what you are working towards and how you are doing! Wishing you and your family happiness, good health and good fortune.

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