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How do people make friends?

Trial and error. The more people you cross paths with the more opportunities you have to find people who enjoy your personality and the vibe you give off. When crossing paths with someone, simply being pleasant and open to conversation goes a long way towards being someone who can be a friend to other people.

Being open to and available for activities is good. Doing your own regular activity(/activities) which can optionally accommodate other people gives you an easy low stakes thing that you can invite prospective friends to. Time spent intentionally with people who find you pleasant and who you are friendly with is likely to lead to friendship growing.

Cultivating a friendship with someone who seems friendly and tolerates your company mostly comes down to being available and reliable.

It's necessary to be a good listener, which is a skill you can read about and develop. Having a genuine interest in your friends and what's going on in their lives (without becoming obsessive) helps with conversation and if you remember that thing someone complained to you about (or shared their interest in) and ask about it on a subsequent occasion it signals to the other person that you're curious about them or have a healthy concern for their well being.

Conversing with acquaintances-who-may-become-friends also helps you suss out whether you have any shared areas of interest. If you are a fairly good conversationalist and you share interests with someone who enjoys your vibe, you've got a decent chance at developing a friendship.

A friendship develops into something lasting when the two of you know each other fairly well and have some shared experiences. Just being trustworthy, useful and available often leads to shared experiences.

How do I become someone that people actively seek out interaction with?

Try not to think of it like this. You probably won't attract friends just waiting for them to approach you. It's a bad dating strategy and a worse friendship strategy.

Instead consider "How do I make sure I am tolerable?" - good hygiene, appropriate manners, don't overshare or dominate conversations, be mindful of the other person's autonomy to avoid becoming "weird"ly over invested in other people, figure out how to remember people's names.

Also consider "How do I be more interesting?" - do more with your time than passive media consumption, explore some hobbies, explore your local area, learn about stuff.

How do I do this without having any money

Volunteer your time.

Develop a regular routine that incorporates screen-free low or zero cost activities that don't rely on other people but which can accommodate them: hiking, visiting free museums, doing graffiti.

You can also find people organising meet ups online, but I don't have much experience with that.

If you just make sure you're clean, don't smell and you start volunteering your time with some social or environmental group efforts then you're going to meet people, do things, experience shit and probably get invited to hang out afterwards. I strongly urge you to consider volunteering. Even if nothing else eventuates from it, you'll have contributed to the world in a positive way and it's unlikely you'll regret spending time in service like that.