3 Ways to Build Wealth at an Early Age

We’ve all heard stories and read articles about young people who founded successful corporations before their 30th birthday. Some even made their fortunes before they graduated college. Successful entrepreneurs all share some common characteristics: a singular focus, preternatural financial savvy, and the drive and ability to aggressively pursue project funding. Without a doubt, these young people are all adept at identifying problems and creating solutions, but they’re also ambitious and are not afraid to take a few risks.

While not everyone should expect to earn their first seven figures before they have their diploma in-hand, it is possible to build and grow your wealth from a very early age. The business and financial leaders of tomorrow constantly seek ways to improve upon products and systems already in place, and improve their financial acumen.

But no two paths to long-term wealth look exactly alike. Richard Branson, founder of Virgin Group, got his start when he opened a record shop in London, while Mark Zuckerberg, founder and CEO of Facebook, took up computer programming as a hobby in middle school. Neither of these men may have initially imagined that their pursuits would lead to billions of dollars in wealth, but both found ways to fill a niche in their field and invest their money wisely. While it’s impossible to say exactly what your path to long-term wealth might look like, there’s no doubt it’s going to involve some combination of entrepreneurship, innovation, and investing.


young men, entrepreneurs working outside on laptop

Starting your own business not only provides you with a great sense of accomplishment, it also allows you to take control of your financial future. You control how much money you make and how quickly your business grows depending largely on the merit of your idea and the amount of time and energy you invest.

If you want to be an entrepreneur, first determine what you’re most passionate about. The most successful entrepreneurs aren’t the ones who simply want to make money in order to “keep their own hours” and “be their own boss” – they’re the ones who turn an existing passion (and, often, existing expertise) into a career.

After you’ve identified your passion, you must develop a solid business plan to present to investors. This should include market research and analysis, and identifying your prospective competition, vulnerabilities, and opportunities to forge new ground.

By including the following information in your business plan, it should also spell out very specifically how you intend to take your business from funded concept to successful venture:

  • Mission Statement: A mission statement communicates the ultimate purpose of your business idea, and details how you intend to operate and how you plan to grow.
  • Proposed Development of Resources: Include the resources you currently have at your disposal (such as skill set, home office, and marketing channels), as well as the resources you must acquire and further develop. Be sure to relate the cost in both time and money of these necessary acquisitions.
  • Profit and Loss Forecast: The profit and loss forecast should be an honest, realistic monthly assessment of your expected income and expenses over the first 12 to 24 months of your venture. The sooner you feel you can reach profitability, the better – but don’t sugarcoat your projections.
  • Proposed Product/Service Development: You need a concrete plan for how you’re going to develop your product or service, how much it will cost to get there, and who will aid in the effort of taking the product from the idea phase to the final stage.
  • Marketing Strategy: Reaching potential customers is paramount, and thanks to the Internet, social media marketing is an excellent tool. Facebook, Twitter, Instagram, and additional platforms all offer the opportunity to reach thousands of clients, and you can reach customers by engaging them on your competitors’ pages and via a blog and email newsletter.

Unless you’re independently wealthy, you’re going to need start-up capital to get your business off the ground, and that means you’re going to need investors who believe in your business – and in you. If you’ve ever watched the show Shark Tank, where entrepreneurs pitch their ideas to would-be investors, you’ve probably seen that the money always flows to the people who are most passionate about their business, not to those who simply have a good idea. A good idea can take you a long way – but it can’t always take you all the way to the top.

Becoming an entrepreneur is hard work, and at some point you may find yourself working 80-hour weeks in order to get your company off the ground. Of course, this path isn’t for everyone. Before endeavoring into it, it’s important to take a step back and examine your habits, focus, ability, and drive to determine whether you have the stamina. If you’re unsure, move forward, but do so without investing undue amounts of money or time that could derail a full-time job or career.

For some extra motivation, think about it from the perspective of where you’d like to be in 20 years. If one day you want to be independent and working for yourself, then that’s exactly how you have to start out.


young inventor has a bright idea

Innovators are the inventors and re-inventors of the world. Just a few decades ago, no one could have imagined the power of computers, and just a few decades before that, the concept of the telephone would have seemed like science fiction. To many people, the form and function of the products we all use are flawless, and the processes in our work and technology are above reproach – but if you believe there’s something that could be streamlined or changed to better integrate into modern life, you may be an innovator at heart.

When Lance Matthews suffered a broken foot, he became frustrated with uncomfortable and cumbersome crutches. He put pen to paper, worked out a prototype for something better, and founded iWalkFree in 1999, the makers of the first ever hands-free crutch. Matthew’s story illustrates that you don’t have to reinvent the wheel to be an innovator, you just need to find a small way to improve upon the existing one.

Innovation is certainly one of the best ways to build long-term wealth, but it’s also something that can’t be rushed or forced. You may find you have a lot of decent ideas throughout your career, but very few that have what it takes to catch on. After identifying an idea that stokes your passions, it is important to ensure its viability in the marketplace:

  • Online research, articles, and industry association mailing lists may be able to offer trends, surveys, and statistics to help you gauge the viability of your idea. So too can notifications from your competitors, which may disclose what they offer, how much they charge, and how they operate.
  • An online landing page serves as a teaser for your forthcoming business. Utilizing Goodle AdWords can ensure your page gets in front of the right clientele, and if your page includes an option for visitors to sign up for updates and information, you can rack up potential customers. By measuring your ratio of clicks to sign-ups you can get a sense of whether your idea has some life in the marketplace.
  • Potential clients who’ve signed up for updates can supply additional insights, such as whether the service or product you plan to offer could be beneficial to them, and how. Such feedback can give you an idea of the demand, as well as possible improvements – but you must be proactive and reach out.

Above all, practicality is the most important aspect to ensure the viability of your concept. Production must be feasible and affordable, and you must account for where the product will be manufactured, the cost and accessibility of materials, and whether you need to hire staff. Familiarity with the industry, its resources, and your competitors can help you determine whether bringing your idea to market makes sense.


young male investor watching money grow

Investing requires the utilization of your best resources – including money, energy, and effort – to create a profit. Wise investors must continually exercise discipline, commitment, and patience, and be open to hearing bad news and (sometimes) harsh advice from trusted advisors. They don’t let their emotions get the better of them, have their ego firmly under control, and make a point of learning from – and not repeating – their mistakes.

Generally speaking, there are two types of capital when it comes to investing: money and time. If you have both, you can make a fortune. But you must start out investing with at least one.

People with little money but plenty of time (as in years to be invested) can put the power of compounding interest to work for them. For example, if you invested $1,000 at 10% interest, you’d only earn $100 if you took your money out of the investment at the end of the year. However, if you let that $1,000 grow over 20 years and re-invested the interest earned, you’d end up with approximately $6,727.

Better yet, if you invested $1,000 every year for 20 years, at 10%, the investment would grow to more than $60,000. The sooner you start investing and the longer you let your investments grow, the more likely you are to gain and control long-term wealth.

Investors with more money but less time, have options beyond compounding interest. These people should research and even be heavily involved in the companies they invest in – as Warren Buffett is and has been, for example – and may look to turn a profit in less than 10 years.

These investors may incorporate a direct approach (buying a fledgling business) or getting an equity share (as an angel investor, perhaps) that they expect to rise significantly in value within a short time frame (five years, for instance). They may also make money via passive investing – for example, buying stocks for the long-term and eking out percentage gains year after year, thereby taking advantage of the time element and compounding interest (even if they have limited years to take advantage of it).

Though multi-billion-dollar wealth and multinational companies may not be in your future, they’re certainly not required to build sustainable long-term wealth. As an investor, you should start out by identifying the kind of assets you currently possess: Do you have plenty of time to work with? Do you have a nice inheritance or other funds that you want to start working for you? An understanding of what you have to start with is essential in order to leverage those resources for long-term wealth.

Success Stories

steve jobs anton ivanov

Steve Jobs, photo by Anton Ivanov

UK-based entrepreneur Jamie Wells started Glasses Direct while he was still in college. He had trouble finding affordable eyeglasses, and used his student loan as start-up capital. His risk paid off – in its first year, Glasses Direct generated more than $2 million in revenue. John Paul DeJoria, who created Paul Mitchell haircare products, got his start selling merchandise door-to-door from the trunk of his car while struggling to make ends meet. Today, his company, John Paul Mitchell Systems, brings in more than $900 million per year in revenue.

Innovators such as Steve Jobs, founder of Apple, and Pierre Omidyar, founder of eBay, built their fortunes by developing new uses for technology. Jobs became a household name by integrating digital technology into everyday life with the iMac, iPod, and iPhone. Omidyar got his start when he began a small online auction website from his home, initially known as “Auction Web.” As of mid-2016, eBay has a market cap of nearly $28 billion, according to Yahoo! Finance.

Although these men were certainly innovators, did Steve Jobs invent handheld electronics? No. Was Pierre Omidyar the first to open an e-commerce website? No. They simply looked at the marketplace, saw a niche that needed to be filled, and let their innovative minds take it from there.

On the investing end, billionaire Warren Buffett, whose net worth as of 2016 is estimated at nearly $70 billion by Marketwatch, began investing at the age of 11. By the time he was 14, he was able to purchase a 40-acre farm in Nebraska, and had saved $5,000 delivering newspapers (more than $50,000 in 2016). Investor and businessman Carl Icahn began working on Wall Street when he was just 23, and at age 32, formed Icahn & Co. securities firm. His 2016 net worth is estimated to be nearly $17 billion, according to Forbes.

All of the above entrepreneurs had very different paths to success. They were all willing to take risks and put themselves out there. None knew that success was guaranteed, but all had passion and drive – key ingredients in anyone’s entrepreneurial stew.

Final Word

If at first you don’t succeed, try, try again. Famous movie director Steven Spielberg was rejected from film school three times. Huffington Post founder Arianna Huffington’s second book, “After Reason,” was rejected by 36 publishers, according to Success.com. And Thomas Edison is rumored to have tried 10,000 versions of the light bulb before he got it right. They didn’t give up, and neither should you.

But remember that money is only one form of wealth. Your friends, family, and career are all just as real as cold, hard cash, and just as necessary to living a full life. Becoming financially wealthy is a great goal, but it’s not the only goal. In the pursuit of it, make sure you’re not overlooking or risking wealth you already have.

What other qualities are important for building long-term wealth?

  • gina

    I don’t know if everyone can be an entrepeneur or invent something, but certainly EVERYONE can invest. Better to start when you are young, but for those of us who did not, it is not too late!!

  • http://madsaver.com Mac

    Good go-get-em advice for people who need a little push in the right direction. Though inventing exactly what is always the problem…

  • http://www.youngandthrifty.ca youngandthrifty

    Real estate is another good one! The housing prices here in Vancouver is a good example.. about 5 years ago (when I was in my early twenties) the housing prices here were standard, and now they have really skyrocketed (doubled in my neck of the woods…)

    Entrepreneurship is the way to go, wish I was computer savvy enough to be the developer of facebook, or plenty of fish =)

    • http://madsaver.com Mac

      House prices…skyrocketed? Wow, that would have been nice. Not so much south of the border. My house (owned 7 years) is going on the market in a few weeks and will list at a price lower than when I purchased. And that’s after putting in an extra $20K+ in upgrades.

      Real Estate can be a good investment, but not as much as it once was.

      • Mark Riddix

        Real Estate is a good investment as long as the property is desirable and it is held for the long term.

  • http://www.yourfinances101.com/blog David/Yourfinances101

    I think anyone an be an entreprenuer if they want to.

    We ALL have some sort of God-given talent. Its just a matter of harvesting whatever that may be into something that other people are willing to pay money for.

    This is over-simplified, but true.

    • Mark Riddix

      David, I agree with that statement. Everyone has some God give ntalents that they can use start a business.

  • Winston C

    Only successful people are remembered and their stories are passed on as examples of success that can be achieved in their perspective fields. But while they succeed, millions have failed. Right now, I aspire to be a half-decent investor, particularly in real estate. Once I have saved enough money, I want to buy a property in Chinatown of NYC. Apartments that used to be undesirable are now very hot properties thanks to thousands of immigrants coming to NYC every year, some have tripled in value over the course of ten years.

  • Matthew Butensky

    How about trying cloud computing software which can keep you organized and working pretty efficiently. Remember in business, efficiency=more money:)

  • Minh Nguyen

    As many have already stated, of course not everyone is an inventor or an entrepreneur. The surest way for people in their 20s to build wealth nowadays is to avoid being mired in student debt, pay as little as possible on monthly expenses like food and rent, and get into the habit of saving / investing over 50% of one’s income.