I grew up poor.
My old NYC neighborhood had gangs, drugs, and violence. It wasn't the worst part of the city, but it was plenty bad. I still remember the sound of gunshots at night (which I thought were firecrackers at first).
Fortunately, like many of the kids at school, I got to eat free lunch and breakfast each day, so my basic needs were met. I also learned to avoid the really dangerous elements in my neighborhood and only fell victim to petty crimes growing up, like theft and and minor scuffles.
Looking back, I realize that starting off poor is a big obstacle and I think most kids in my neighborhood did not achieve any level of real success. I think I was among the few that did. Today, I am a real estate investor and entrepreneur with a multi-million dollar net worth. I am not saying this to brag, but to let you know that I personally traveled that journey from poverty to wealth.
So what's the secret?
That's what this article is going to discuss. I will cover 9 lessons I learned that can help you pull yourself out of poverty and become rich. I will provide along the way some helpful tips and resources that you can use right now to improve your financial situation. We've got a lot to cover, so let's get into it.
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1. You Need a Burning Desire to Get Rich
I think one of the main reasons why I was able to pull myself out from poverty was because I hated being poor and desperately wanted to become rich. I did not have any real athletic or musical talent, but I was pretty good at school, so I focused on that. The plan was simple: get a decent job and start saving up some money.
Now just doing this is not going to lead you to wealth, especially if you are stuck in a job that doesn't pay well and you are barely able to cover your expenses. But you have to start somewhere and you have to believe that you can do it.
More importantly, you have to want to do it – the greater the desire, the more willing you are going to be to sacrifice your time and energy to get what you want. And when things get tough (and they will), that burning desire and focus is going to get you through.
So the very first (and most important) thing you need is an unquenchable desire to succeed. Becoming rich is not something that just happens – it is intentional. Without the will to succeed, you will get nowhere.
2. You Need to Break Free from Negative Perceptions About Money
You are never going to get rich if you think you are “bad” with money.
This type of mentality is very common if you grew up poor. It can develop from a combination of things. For example, you may have learned poor money habits from family and neighbors (e.g., going into debt, spending money as soon as you get it, relying on the government, etc.) which led to you making bad financial decisions.
This can shake anyone's confidence (as can the message that you shouldn't get too big for your britches, which is also common among people who grow up poor).
I used to think that I was bad with money (and it was reinforced by my earlier experiences with money). I tried to save and failed. I tried to invest and failed. I tried to control my debt and failed. But I realized that good money habits and skills can be learned. I was not inherently bad with money – I just needed to know how to become good with it.
And to do that you need to learn solid personal finance principles. On that note…
3. You Need To Learn the Basics of Personal Finance
If you want to achieve lasting financial success, you need a strong foundation.
That means you need to learn basic financial truths. They include things like spending less than you earn each month, getting your debt under control, maximizing your income opportunities, and learning how to acquire assets that can create real wealth for you.
Easier said than done, of course.
But if you are serious about pulling yourself out from poverty, this stuff is essential. Don't know how to get started? Check out my article on the five pillars of personal finance. In that article, I cover the five key elements of a strong financial foundation and how to achieve them.
4. You Need to Buy the Rights Assets
If getting rich is the goal, you need assets to get you there.
But before we can talk about assets, we need to talk about how to measure wealth. In the world of finances, wealth is measured by a term called “net worth,” which is just a calculation all of the things you own minus all of the things you owe. So to become rich, you need to own stuff that far outstrips your debts. We call stuff you own “assets” and debts you owe “liabilities.”
If you want to become rich, you need to become a collector. And the thing you are going to collect is assets. But not just any assets – you need to collect assets that will grow in value over time and generate income for you. At the same time, you need to work on reducing your liabilities.
Again, this is easier said than done. As I confessed before, when I first started investing in assets, I was terrible.
But I started reading books about how to get rich, like Rich Dad, Poor Dad and The Richest Man in Babylon. This focus on learning how to get rich changed my perspective and from that point on, I stopped thinking like an employee and adopted a more entrepreneurial mindset.
I learned how to invest in high ROI alternative assets like real estate and started several businesses (which are assets that can generate incredible returns). Not all my business ventures were successful, but I learned from my failures and got better. It was that commitment to education (not just formal schooling, but self-education) that catapulted me from a normal worker bee to someone who has assets and businesses that generate wealth for him.
If you want to learn how to start investing in real estate, check out my step by step article on the topic here.
If you are interested in starting a business (you can even do this on the side, like I did), check out my ultimate beginner's guide to starting a business.
5. You Need to Find Your Strengths and Make the Most of Them
As I mentioned, I didn't really have any talent athletically or musically, so I knew I needed to discover another path to wealth. I was a bit of a nerd, so I decided to own it and make that my vehicle to getting rich.
Now, you may have different strengths. There are a lot of ways to succeed – the key is to use what's available to you and (this is the important part) don't worry so much about your weaknesses.
In school (and even work), everyone is focused on shoring up their weak points. But that's not what leads to roaring success – it's being exceptionally good at something and continuing to hone it until you are world class (or at least better than your immediate competition).
Maybe you aren't very good at paperwork, but you are an amazing salesperson. Don't try to get better at paperwork – it's a waste of time. Keep building on your natural talents and good things will happen. That's how I ultimately started advancing and succeeding at work.
I am a lawyer who hates (and sucks at) legal research, but I am a pretty good negotiator and problem solver.
I owned my suckiness in legal research and didn't spend a ton of time and effort to go from a bad researcher to a barely mediocre one. Rather, I made myself valuable to my employer because I became really good at the other stuff. You have to break away from the “model student” mentality of getting all “A”s. In the real world, if you are an A++ in one area that matters, but are a C everywhere else, you can still achieve incredible success.
6. You Need to Do What Others Aren't Willing to Do
Today I will do what others won’t, so tomorrow I can accomplish what others can’t.Jerry Rice
Most people who start off poor just want to live a comfortable and ordinary life. There's nothing wrong with that. But that's not the same as becoming rich.
If you want exceptional results, then you have to be willing to do what others are not. That means constantly learning more about how to make money and honing your skills. It means sacrificing your free time to work on your financial future. It means being frugal in the early days so you can have the capital to invest and grow your wealth.
Most people aren't willing to do this.
They would rather watch cat videos on YouTube. But if you are the sort of person that is single-mindedly focused on achieving your goals and willing to sacrifice things now to achieve greatness in the future, you have a terrific shot at obtaining exceptional wealth someday.
7. You Need to Learn New Skills
A mind that is stretched by a new experience can never go back to its old dimensions.Oliver Wendell Holmes
In order to succeed in any meaningful enterprise, whether that is a new business, side hustle, or investment strategy, you will need to expand your knowledge and skills. Now book knowledge is one thing, but you also need to develop real world experience. Most are either too afraid or too lazy to step out of their comfort zone and do this.
So my advice is this – just do it. For me, I did not know anything about blogging or starting an online business, but I did some research and learned that this can be a great way to earn passive income without a lot of risk (no real money needed to get started).
So I just started writing some articles and loading them onto this blog. They sucked at first, but as I got better, they got better. And now, this blog generates consistent passive income for me each month. What's even better is that I now have this skill and no one can take it away from me. With this same skill, I started other blogs and they make money for me too!
The bottom line is that everything is hard in the beginning – but if you keep at it, everything becomes easy. It's true for most things in life, including making money.
If you want to learn how to start a blog, check out my article on How to Start a Blog From Scratch. It takes you step by step through the process, including how to set up your website, write compelling articles, and most importantly, how to generate traffic to your blog (which translates to money in your pocket).
8. You Need to Be Willing to Take Risks
Whenever you see a successful business, someone once made a courageous decision.Peter F. Drucker
Nothing worthwhile comes without risk. The risk-reward tradeoff states that as potential returns increase so does the risk. It's why savings accounts are safe, but pay a pathetic interest rate, while stocks are risky, but can generate attractive returns.
If you want to make real money, you need to be willing to take on some risk. If you are brave enough to take on risk, but smart enough to recognize when a risk is foolish or excessive, then you have a valuable trait that will allow you to become rich.
So how do you make big money without taking on excessive risk?
You need to master the skills needed to be successful in investing or starting a business. This way, you can invest in “high risk” enterprises, but do so in a calculated and responsible way. Here's an example from my life. I am a real estate investor. I own nine rental properties and manage them myself. This is in addition to my full-time job and my online businesses.
When I look at a property, I know there is some risk in buying that property. The neighborhood can suffer decline, my tenants may not pay the rent, they may trash the place, the heater may break down, etc. I could lose a lot of money.
And if I were a newbie investor, the chances of those things happening would be high because I would probably buy in the wrong neighborhood, be clueless when it comes to screening tenants, etc.
But I have been doing this for over 10 years. I know what neighborhoods to invest in. I know how to screen tenants and keep them happy. I make sure to inspect all of my properties thoroughly before I buy them and I have a team of skilled techs to handle any repairs that do come up. My risk of losing money when I buy a new property now is almost zero.
Once you have attained the knowledge and skill necessary, making money is easy. You have figured out what works – you just need to rinse and repeat. That's exactly what I did to build up my real estate portfolio, which now generates meaningful cash flow for me every month and has increased my wealth through appreciation and mortgage reduction.
But you have to start somewhere. If you have the courage to take risks and the intelligence to master the knowledge and skills required to make money (and of course learn from mistakes), that's a great sign that you have what it take to be a financial success.
9. You Need to Surround Yourself With People Who Are Successful
You are the average of the five people you spend the most time withJim Rohn
Most people hang out with others who make them feel comfortable and who treat them kindly and with respect. There's nothing wrong with that. I am certainly not saying you should abandon current friendships.
But if you are truly committed to making real money in the future, you need to start building a network of people you can learn from. Those friends who are nice but are stuck in a poverty mindset are not going to help you become rich. That should be obvious just by looking at how they spend their time and what they talk about.
Establish new friendships with people you admire and find mentors who can help you along your financial journey. You will be surprised at what people are willing to share when it comes to information on how they achieved wealth.
Being a legitimate friend or mentee to successful people can yield incredible dividends. But don't be fake or just try to use people – they will smell that a mile away.
So if you are the type of person who is not afraid to establish new relationships and build a strong financial network, you will find it much easier to obtain real wealth in the future. As the saying goes, your network equals your net worth.
So there you have it – 9 lessons I learned on my journey from poverty to wealth. I hope this article has been helpful and you have found some useful information to help you on your financial journey.
If you want to learn more about how to start a business, but don't have any ideas, check out my article on how to start a business when you have no ideas.
If you are intrigued by the idea of passive income (i.e., making money in your sleep), but don't have a lot of money to invest, check out my article on low cost passive income. It covers 9 great ideas that all cost under $500 to start.