How to Become a Millionaire from Nothing (4 Ways to Build Wealth)

Do you want to learn how to become a millionaire but you’re starting with nothing?

Building wealth and reaching millionaire status is a common goal among many people, especially in the United States.

It is also very attainable if you look at it as a long game.

Becoming a millionaire fast (within a few years) is much more difficult.

But, becoming a millionaire can be easily achieved if you have time and patience.

Before you can become a millionaire, it’s important to know what it actually means to be one.

What Does It Mean to Be a Millionaire?

If you want to become a millionaire, you have to know exactly what that means.

You cannot create a goal without knowing what it means to accomplish the goal, right?

An easy answer to what does it mean to be a millionaire is someone who has a million dollars.

But, it’s more than that.

A millionaire is someone who has a net worth of $1 million.

What is a net worth?

Assets are everything you own (like a house, money or investments) and liabilities are everything you owe (like debt) money on.

So, if you have a $1 million house but a $1 million mortgage, your net worth is $0.

To become a millionaire you have to build a net worth of $1 million or in other terms, you have to have $1 million of assets more than debt.

How to become a Millionaire from Nothing

Now that you know truly what it means to become a millionaire, you can figure out the best way to become a millionaire from nothing.

While you can become a millionaire from nothing by winning the lottery or creating a one-hit wonder, we’re going to discuss the most common ways.

Most millionaires have reached thier status by investing their money, building a business, or doing both.

Become a Millionaire by Investing

This is one of the more common ways that many people become millionaires.

Save and invest your money until you build enough wealth to be a millionaire.

However, when it comes to investing, it takes money to make money.

It all starts with making money that you can grow through investing.

Make Money

If you want to invest money, you have to make money first.

Use the money you’ve made at your job to build your wealth and become a millionaire.

Spend Less than You Earn

If you want to invest money that you earned, you can’t spend all of it.

That means you have to spend less money than you earn if you want to become a millionaire by investing.

If you need some help figuring out how much you’re spending and creating a budget, check out a few of the following resources:

Invest Your Savings

Once you’re able to spend less than you earn, you can start investing that money in various investments.

You might invest in the stock market, buying shares of various companies that you expect grow over time and pay you dividends.

Or, you might invest in debt, loaning your money to companies or governments and receiving interest payments on the debt.

There are also all kinds of emerging alternative investment options available to low net worth people due to the internet.

Investing in a start-up or hedge fund used to be only accessible by very wealthy people.

Now, there are opportunities for everyone to invest in various types of investments that involve significantly more risk but can also provide a significantly higher return.

But, why does investing lead to wealth?

When you invest, you are purchasing an expected return for a certain amount of risk.

That return is the growth of your money.

For example, you buy an ETF of stocks with an expected average return of 10% each year.

So, next year, that ETF is worth 10% more. And, the year after that it’s worth 10% more.

$1,000 becomes $1,100 which becomes $1,210.

Now, it doesn’t work out exactly like this in reality.

One year, your investment might be down 25% and the next year it is up by 45%.

That’s the risk involved with the investment.

But, over time by continuously making money, spending less than you earn and investing the remainder, you can build wealth and become a millionaire from nothing.

For more on investing, check out our posts:

Become a Millionaire by Building a Business

If you have an entrepreneurial spirit, you may want to build a business and benefit from the growth of that business.

Businesses have value based mostly on how much future revenue and profits they produce.

So, if you own a piece or all of a business you not only own the profits (money in your pocket) but you own the right to the future profits.

This is similar to investing but instead of buying a piece of a business, you are the one helping to build it from the ground up.

Sometimes this may require putting your own money into the business.

You’ll probably have to make money and save it if you are starting a business that has high start-up costs.

But, you can also take advantage of debt too.

At the end of the day, there can be more risk involved with building a business, but there can also be greater reward because you own a piece of the company through your own hard-work.

Start Your Own Business

In the US, there are all kinds of millionaires who achieved their status by starting a business.

Starting a business is a big risk because there are so many ways to fail. Many outside of your control.

But, building a business can be very rewarding as you’re not only paying yourself but you’re also growing an asset that has value.

When you work at a company, you are making money but you don’t own the value (future profits) of the company.

This is different when you own the business.

As your business grows so does your wealth.

Join a Company that Pays You Equity

If you don’t want to start your own business, you still may be able to benefit from a company’s growth.

You just have to find a company that pays its employees in equity.

Many technology company use this practice to attract employees and keep cash outflows down.

When a company is growing, cash is king.

Many new companies will even speak in terms of the amount of months they have left of cash.

So, instead of paying employees completely in cash, they may also pay them in equity.

This can be quite lucrative if your company explodes in value and becomes a billion dollar plus company.

As the company grows so does your wealth.

Start a Rental Property Business

If you want to keep your current job but you’re looking to start a business on the side, you may want to consider a rental property business.

This common way of becoming a millionaire takes advantage of debt and rental demand to help you build wealth.

It can be a great “side hustle” because it may end up involving little if any work on your end.

The process requires you to buy a home and then rent it out to someone else.

This is a great way to build wealth because it is one of the few ways that people can take advantage of debt.

You can buy a house with a loan and then cover the mortgage and other expenses with the rent.

It does require research and time to make sure all of the math works out. It is still a business.

But, once you’ve purchased the house and made sure that you’ll be able to receive enough rental income to offset the costs, you can streamline the rest of the process.

There are even rental management companies that you can hire to handle the renting process.

With a rental property, you have a renter paying off the debt and building equity for you.

You are also likely to see the value of the property go up in value over time.

Create a Plan to become a Millionaire

Now that you know the different steps to becoming a millionaire, the final step is to create a plan.

There are a few different combinations of options that you can use to become a millionaire from nothing.

Figure out what the best option is for you.

Write down exactly what you plan to do to become wealthy and create a goal for when you’ll achieve millionaire status.

Why Do You Want to Become a Millionaire?

One more important thing to consider.

Why do you want to be a millionaire?

We know that it has a nice ring to it and definitely is a confidence boost.

But, why do you need the money?

While being a millionaire is often associated with being wealthy, it doesn’t necessarily mean that it’s enough to cover your financial goals.

Do you want to be financially independent and live off of $60,000 each year?

Based on the 4% rule of thumb you need $1.5 million in investments alone.

So, being a millionaire does sound cool but it might not be enough.

Instead of having the financial goal of becoming a millionaire, create specific financial goals related to how you plan to spend your money.

How much money do you need each year to be financially independent?

What will be the cost of your children’s education expenses and how much do you need to save?

Where do you want to travel and see and how much will it cost?

Simply becoming a millionaire may just mean that you’re closer to your financial goals but not there yet.

How to Become a Millionaire from Nothing

What Does It Mean to Be a Millionaire?