Invest in yourself before investing in anything else

“The average millionaire goes bankrupt 3.5 times before making it to the top.”

That’s a powerful statement, because it’s clear evidence that almost no one makes it on the first try. It’s absolutely normal to try, fail, try again, and fail again.

What matters at the end of the day is extracting the lessons from each failure so you can avoid the same mistakes next time. Sometimes people make it on the second attempt, and sometimes it takes ten failures.

Sometimes you get lucky and your idea hits exactly where it should, like Facebook, Snapchat or Airbnb. If you ask the founders of any of these apps, none of them will tell you they expected that kind of success.

The thing about success is that once you start succeeding, you attract a lot of attention. People suddenly want to work with you and be your friend, which creates a snowball effect that eventually leads to more success. That’s why successful people usually get lower mortgage rates and better deals, even though they don’t really need them.

But the opposite is also true: when you have nothing, it seems impossible to start building wealth. Imagine having literally zero in your bank account. What would you do? If you’re reading this article, you probably have some money. But still, let’s work out how to start building wealth when you have none. What exactly can you do with an empty bank account? Do you really stand a chance of getting out of that dark financial position?

Focus on the next 6 to 12 months

If you’ve just been through bankruptcy, or you’re just starting your financial journey, forget about the long-term investments we usually talk about. Yes, of course investing even $5 a day will make a huge difference in the long run — but that’s not your priority yet.

Focusing on how you’ll make millions 30 years from now while you’re barely surviving is a waste of time. You should always keep a long-term vision in mind, but what matters at the end of the day is the foreseeable future: what you can accomplish in the next 6 to 12 months.

Long-term investments only make sense when you have extra money and a stable stream of income. Only then can you focus on building a long-term portfolio — and in that case, even a few hundred dollars a month over the long term will make a real difference.

Build one high-income skill

People usually say you need money to make money. That’s absolutely true. It’s far easier to make money when you already have money, whether you invest it in a working business, real estate or stocks.

But that doesn’t mean you can’t make money by trading your time. If you don’t have many skills, it’s difficult to earn a decent income, and that’s where the challenge starts. At this stage, focus only on developing a high-income skill. Just one skill — one that’s in demand and has some barriers to entry.

If you’ve just graduated from accounting school, for example, don’t go straight into audit, because every other accountant is an auditor. Try something less popular and a bit more difficult, like taxation. People hate tax because of its complexity, but that’s exactly what will set you apart from the rest.

In fact, private tax consultants are some of the highest-paid professionals, because wealthy people are always looking for legitimate ways to reduce their tax bill. If you can save them a lot of money, they won’t hesitate to come to you, even if you charge a thousand dollars an hour.

The same applies to any other profession — design, marketing, health and fitness, whatever it is. The problem I usually see is that people develop a skill, reach an average level where they’re as good as their peers, and then stop growing. They’re making money, but only as much as their peers. That’s why you should never hesitate to invest in yourself to sharpen your skills.

Learn from people who’ve done it

At some point, you can’t keep teaching yourself. You need someone who can share their experience in that field.

When I got into the stock market, the world of investing was entirely new to me. I thought I could teach myself, but then I found that a single course from an experienced professional was far more valuable than endless hours trying to figure it out on my own. As they say, if someone has already invented the wheel, go and learn from them instead of trying to reinvent it.

Sometimes all it takes is one conversation with the right person to figure everything out. That’s what makes networking events so important. Go to conferences, meet new people and talk to them. If you’re humble and polite, people enjoy sharing their knowledge — it gives them a sense of fulfilment.

Discipline beats motivation

But at the end of the day, what matters most is discipline. Nothing beats discipline. Yes, it’s hard, and boring to a certain extent, but time after time it has proven to be a strategy that works.

The mistake a lot of people make when they decide to get disciplined after a motivational moment is trying to do everything at once. It’s great to be that motivated, but I’ve seen it fail every single time: you get exhausted, and a few days down the road you’re back where you started.

So if your goal is to master a skill, make your goal just 30 minutes of learning a day. That’s it. What matters is that you don’t skip a single day. Once that’s part of your lifestyle, make it an hour, and so on.

Keep the strategy simple and clear: make money, save money, invest money. How you invest will change over time as you grow, financially and personally. At the beginning of your journey, it will most likely mean investing in yourself. As your income grows, you’ll have the opportunity to buy assets that turn into their own streams of income.

Build your credit early

While you’re on your journey to financial freedom, don’t forget to keep improving your credit score.

People usually don’t care about their credit score until the day they need to borrow money — and then they can’t, because they’ve ignored it all along. It’s difficult to build everything on your own. Sometimes it takes a whole lifetime to build enough capital to start something of your own. That’s why leverage is your best friend.

But no one will lend you money if there’s nothing that proves you’re financially responsible. It doesn’t matter how good you are with money; if you can’t prove it, no one will believe you. So if you can get a credit card, get one. Use it to pay for your necessities and simply pay it back in full at the end of the week or month. That’s how you show the banks it’s safe to lend to you, so when mortgage rates are low you can buy a house on favourable terms.

And when you find a business model that works, the banks will help finance your operations too.

Remember: when you’re broke, no one wants to work with you. If you don’t focus on building the foundations first, nothing else will work.

Thanks for reading!