How To Build Wealth From Scratch, According To TikTokker Humphrey Yang
Written by
Ashleigh Ray, AI Editor
Edited by
Ashleigh Ray
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Building wealth might seem like a daunting task, especially if you’re starting from zero. But according to a recent video from popular TikTokker Humphrey Yang, it’s entirely possible with the right steps and mindset.
Here’s how you can grow your wealth, even if you’re starting with nothing.
Step 1: Earning Money
First things first–you need to make money. “You’re actually going to have to go out there and figure out ways to make money,” says Yang. It’s all about transferring value; whether you’re mowing lawns or teaching tennis, it’s about providing a service that people are willing to pay for. Yang emphasizes that you don’t need a high salary to start building wealth; what’s crucial is that you’re earning and saving effectively.
Find the Right Job
Yang suggests targeting jobs where your input doesn’t necessarily equal your output, such as sales positions. “These are jobs where you make a percentage of the deal that you close,” he explains. Real estate, private equity, or owning a business that cash flows well are prime examples of these types of jobs.
Step 2: Be Frugal and Set Savings Goals
The journey to wealth starts with saving. Yang points out, “The first [savings goal] is obviously $10K, but then the second one is definitely that $100,000 Milestone.” Frugality, especially early on, is crucial. Even small savings count, like using an app to get discounts. “Every little decision and every dollar that you save is going to matter way more,” he adds.
Step 3: Invest Wisely
Investing is essential for growing your savings. “By investing as early as possible, you give your portfolio time to compound and grow,” says Yang. He warns against letting inflation eat away your savings and stresses the importance of making your money work for you. For example, investing in stocks or funds that can yield returns significantly higher than typical bank savings accounts.
Understand the Power of Compound Interest
Yang illustrates the impact of compound interest, explaining that a dollar invested today can grow substantially over decades. This exponential growth is why it’s critical to start investing early and wisely.
Step 4: Multiple Income Streams
Diversifying your income is a key strategy used by many millionaires. Yang cites that over 65% of millionaires had three or more income streams. These can range from earned income (like your primary job) to investment income (such as dividends from stocks), rental income, and even side hustles.
Start Small
You don’t need to jump straight into multiple income streams. Begin with your primary job and explore opportunities for passive income, such as dividend stocks or high-yield savings accounts. Once stable, consider adding more diverse income sources.
Step 5: Building Wealth on a Modest Salary
You can still build significant wealth with a modest salary. Yang gives a practical example: “At the $40,000 income level, you’re taking home $2,696 per month. If you’re able to save 10% of that into a Roth IRA and pick up a side hustle, you can significantly increase the amount you’re able to invest each month.”
Stay Consistent
The key to success in this strategy is consistency and discipline in saving and investing, regardless of your salary.
Conclusion
Starting from scratch is challenging but far from impossible. By earning strategically, saving diligently, investing wisely, and diversifying income sources, you can build substantial wealth over time. Remember, each small step can lead to significant financial progress. Keep focused, stay informed, and push towards your financial goals. As Humphrey Yang says, “Every single dollar matters so much more when you’re starting with zero.”
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
