We’ve all heard thousands of “rags to riches” stories over the years. After all, hard-working people can make a fortune depending on the choices they make out of life. While being born into money will certainly help with wealth for years to come, poor backgrounds are no longer restrictive to financial growth.
But – how do you get rich from a poor background? What steps can you take to start moving your finances in the right direction, regardless of your initial circumstances?
In this guide, I’ll look at a few helpful tips you can keep in mind if you’re determined to make a better life for you and your family.
Get great at the things you love
Ultimately, the only sure-fire way to become rich from poor background is to work for it. That means taking time to work out not only what you’re good at – but always what really interests you.
High-paid skills such as those you’ll rely on in surgical care, for example, don’t come naturally to most people. However, the people who make the most money from the highest–paid jobs do so because they love what they do.
Think carefully about subjects and areas that fascinate you. Is there something you’d like to study or get skilled in? What are the financial prospects for going to college, or learning on the job?
If you’re passionate about the skills you train in, you’ll be more likely to stick to your career path and gradually work your way up to an impressive salary. If you get into an industry such as banking and absolutely hate it, you likely won’t stick at it for long enough to make a lot of money.
Get A High-Paying Job
This might seem like obvious advice and it is. Within your given skill-set, it’s important to find a job that can help maximize your income. If you like science or economics, chances are you high that you can get a job with a great salary. Doctors, engineers, coders, etc. can earn well in to the mid 6-figures as they progress in their careers. That’s a hell of a head start!
If you like working with your hands, working in the trades can be a great option. As a plumber, electrician, carpenter you can often make great money. More importantly you can earn that money as a business income, which means you can avoid a lot of the taxes that most salaried professionals face. Moreover, as you scale and grow, you can easily hire a couple of people to work for you and really expand your income.
The ideas are only limited by your imagination, so it’s important to think about how to maximize on your situation. Here’s a roadmap to guide you:
1. Invest in Relevant Education and Training:
High-paying positions often demand specialized knowledge or skills. Consider pursuing degrees or certifications in fields known for lucrative job prospects such as technology, medicine, law, or finance.
Keep in mind that traditional education isn’t the only route. Many tech companies, for example, value skills over degrees. Coding bootcamps, specialized training programs, and online courses can also be pathways to high-paying roles.
2. Master Soft Skills:
Technical know-how is crucial, but soft skills like communication, leadership, critical thinking, and adaptability can set you apart in competitive fields.
Attend workshops, read books, or consider coaching to hone these skills.
3. Gain Experience and Build a Portfolio:
Entry-level roles in your desired field can provide invaluable experience. Even if the initial pay isn’t stellar, the hands-on knowledge can pave the way for higher-paying opportunities later.
If you’re in a creative or technical field, consider building a portfolio to showcase your work. This tangible evidence of your abilities can be a significant advantage during job interviews.
4. Network Relentlessly:
Many high-paying jobs aren’t advertised publicly but are filled through internal references or networking.
Attend industry conferences, join relevant professional organizations, and leverage platforms like LinkedIn to connect with industry leaders and peers.
5. Tailor Your Resume and Cover Letter:
High-paying jobs often attract numerous applicants. Make your resume stand out by customizing it for each position, highlighting relevant skills and accomplishments.
A well-crafted cover letter that demonstrates your passion and suitability for the role can also make a difference.
6. Negotiate Your Salary:
Don’t be afraid to negotiate your worth. Research average salaries for the position in your location and come prepared with this data when discussing compensation.
Remember to consider other benefits like health insurance, retirement contributions, bonuses, and professional development opportunities. Sometimes, these can add significant value beyond the base salary.
7. Continuous Learning:
High-paying fields are often dynamic, with evolving skill demands. Stay updated with the latest trends, technologies, and best practices in your industry.
Regularly attending training sessions, workshops, and courses will not only keep your skills sharp but also demonstrate your commitment to excellence to current or potential employers.
Keep learning new skills
As well as looking for skills and industries that really interest you, always keep a growth-ready mindset. That is, while you may not see money appear in your account right away, the more valuable you become to other people, the more money you will command.
You don’t even have to invest money in expensive college or university courses to build up your core skills. Take a look at online tutorials, such as those available through YouTube. Use a little money to try a Udemy course, or teach yourself skills such as coding through basic practice.
The better you get at transferable skills, the more money you stand to make by opening up doors. Of course, in some ways, it’s better to niche – but the more doors you have open, the more opportunities you have at making that fortune.
Save, invest, rinse and repeat
To go from rags to riches, you need to develop a healthy mindset when it comes to money. For all it’s great to enjoy money while you have it, saving the money you make as early as you can will help you hugely in the years to come.
Set yourself clear savings goals, and strive to reach them. Don’t make them impossible, either. Start small, and attainable, and make use of high-interest offers through various bank offers and account options. Be sure to invest in the market or in an investment generating property to compound your capital and increase your net worth.
In the long run, take care to invest excess liquid money into assets. Look carefully at real estate, for example, which is likely to appreciate in the long run. Even if you don’t have much money to begin with, saving a few dollars here and there will build up a stock of money you can later invest in education, stocks, or valuable assets.
Develop Multiple Streams of Income
The adage “don’t put all your eggs in one basket” rings especially true when discussing financial stability and growth. Developing multiple streams of income not only offers more financial security but can also accelerate your journey towards increasing your net worth and put you on a path to financial independence.
Why Multiple Income Streams? Let’s look at a few specific reasons:
- Risk Diversification: Just as diversifying an investment portfolio spreads risk, having multiple income sources can protect you from financial downturns. If one stream dries up, others can keep you afloat.
- Financial Freedom: Relying on a single paycheck can be limiting. Additional income streams can provide the extra funds for investments, luxuries, or experiences without straining your primary income.
- Exponential Growth Potential: As you reinvest earnings from multiple streams, the potential for compound growth increases.
Passive vs. Active Income Streams
It’s important to develop as many streams of passive income as possible. Once set up, these sources require minimal ongoing effort but can provide income continuously. Examples are rental income, royalties, or dividends from investments.
However do note that there are various levels of “passivity”, so just be sure you’ve done your research in to how much time and effort is required to generate said passive income.
Ideas for Developing Multiple Streams
Let’s take a look at some options at hand for generating multiple streams of income.
- Investments: Stock market investments, bonds, or mutual funds can generate dividends or capital gains.
- Real Estate: Owning rental properties can provide a consistent monthly income. Real estate investment trusts (REITs) are another option if you don’t want to manage properties directly.
- Online Ventures: Start a blog, YouTube channel, or podcast. With consistent quality and growth, you can earn through advertising, sponsorships, and affiliate marketing.
- Sell Digital Products: Write an eBook, design a course, or develop software/apps. After the initial effort, these can generate income with every sale without added input.
- Freelancing or Consulting: Use your expertise to offer services on platforms like Upwork, Fiverr, or directly to businesses.
- Dropshipping or E-commerce: Start an online store. With dropshipping, you don’t need to manage inventory directly.
Some additional risky options include:
- Peer-to-Peer Lending: Platforms like Prosper or LendingClub allow you to lend money to individuals while earning interest.
- Royalties: If you’re musically inclined, earning royalties from music or even from patents can be lucrative.
Tips for Success
- Start Small: Instead of diving into multiple ventures at once, start with one. As it becomes stable, explore more opportunities.
- Educate Yourself: Knowledge is key. Read books, attend workshops, or take online courses relevant to your chosen income stream.
- Reinvest: Use earnings from one stream to establish or bolster another. This strategy can help in scaling your income sources more rapidly.
- Stay Committed: While passive income streams might seem “easy”, they often require upfront effort and patience before they become truly passive.
- Monitor and Adjust: Not every venture will be a success. Periodically assess the viability of each income stream and be ready to pivot if necessary.
Nothing comes for free – not even multiple income streams. The challenge is to avoid over diversification. Spreading yourself too thin can lead to burnout and none of your income streams reaching their full potential. Additionally you’re more likely to miss problems creeping up in some of your streams if your attention is spread too thin.
And of course it’s important to remember to give priority to your primary active income. As much as it can feel exciting and liberating to look at new business and investment ideas, it’s crucial to ensure your primary source of income (like a day job) isn’t compromised while pursuing other avenues!
Developing multiple streams of income can be empowering, offering both financial security and new opportunities. While the journey requires effort, resilience, and sometimes a bit of trial and error, the end rewards—both financial and personal—are well worth the commitment.
Minimize Unnecessary Debt
It goes without saying that you want to minimize your debt load. Your net worth is what’s left over after subtracting the value of all the debt that you owe from your total assets. Therefore in order to become rich from a poor background – or any background, for that matter – you need to minimize unproductive debt.
What is unproductive debt? It’s anything that is not used to increase the value of your assets. Examples include consumer debt such as credit card debt, loans from buy now pay later schemes, car financing, unsecured borrowing, etc. Check out our loan payment calculator to see how damaging having excess debt can be to your finances.
Productive debt, on the other hand, includes things like mortgages, loans to buy businesses, or loans to finance assets that generate cashflow. There can also be too much of a good thing. While productive debt is good, too much of it can also cause problems if you run in to problems such as an economic recession, natural disaster, etc.
Debt is infamous as it can make you poor very very quickly!
Respect yourself – and everyone else
The key to success (in all its forms) all starts with self-respect – and respect for others, too.
Respect the fact you’re going to experience hard times, and that you might not get that lucky break first time around. Many multi-millionaires went through trials and tribulations to amass their fortunes. Not everyone with high net worth was born that way. Hard work is only going to be worth it if you believe in yourself.
That’s not always so easy to practice, but the more you learn and the more you work with others who need you, the more self-worth you can build up. Practice gratitude, and keep your eyes on your financial goals.
In the meantime, treat everyone you work for, and with, respectfully. Make yourself not only useful, but indispensable. Can you turn up to work on time? Can you do your best within the remits expected of you? Can you take orders and negotiate (if needed) without resorting to personal arguments?
If so, people will soon realize your worth as a person. You’ll become someone people trust, and want to be around. That, long-term, will open up even more lucrative doors and the potential for making a fortune.
Working hard alone isn’t enough to get rich from a poor background. You need to have a can-do attitude and treat other people like human beings (as they rightfully deserve!).
Be ready to get uncomfortable
What really holds people back from making the most out of their skills, breaking free from their circumstances, and becoming rich, is a resistance to change.
The bottom line is, you are never going to make millions if you’re unwilling to get uncomfortable. If you weren’t born into wealth, then you’re going to have to make your own way through the world – and that’s the same for the vast majority of people.
Create wild, dreamlike goals and outline steps you want to take to reach them. If you’re stuck in a near-impossible situation, keep looking for new ways to break free, or to change your fortune. Ask your boss for that raise, learn new skills, and dare to rise above your station.
Many people become downtrodden and – while they may not feel this way – “comfortable” in their respective miseries. It’s easy to just continue trudging through life, waiting for a break to come.
Only you can make that break – it’s not going to jump into your lap. To even be within a shot of winning the Powerball, you need to actually buy a ticket.
Once you break free from a harmful, restrictive mindset, you can start to open up a huge range of possibilities. Even if this sounds laughable and your life is impossibly difficult right now, look at all the potential changes you could make, and be willing to risk them.
Is it possible to get rich from a poor background?
Yes – it’s entirely possible for anyone to turn their lives around from negatives into positives. It is possible to get rich from a poor background. However, to do so, they need to grasp a mindset of “endless potential” and develop the right money mindset.
You have no say over what might happen until – of course – it actually happens. Consider what you have to lose – and ultimately, we all only get one shot at happiness.
Actually making money along the way takes lots of different forms. You could start making shrewd decisions on the stock market, get into real estate investment, write a best-seller, train to be a gold-medal-winning athlete – and in many, many cases, you’re never too old to get started. The right approach to money management can go a long way.
Start mapping out your goals and what you want out of life. How are you going to get that fortune? What do you need to get there – and what’s getting in your way?
by Jon Craig
I am the creator of Project Financially Free and I started this journey to both educate myself and share my insights on personal finance. I’m passionate about financial literacy and I invite you to join me on this transformative path. See more.