Wealth is a mighty elixir for many, and the youth of today want it today more than ever. Over are the days of aspiring to get that secure and steady job. The youth of today are surrounded by 15-minute celebrities, start-ups, and self-proclaimed leadership gurus who make millions. But what is wealth? It is defined as an abundance of money or valuable possessions. Of course, the “abundance” part is the trickiest.
To earn an abundance of money, and to purchase or own valuable possessions, requires smarts, preparation, and a bit of luck. For some, the fortune all comes at once, a windfall that propels the lucky someone into a life of luxury. For most, wealth is something developed over time.
Today, our perception of wealth is that it can come at any time. We’ve seen it happen with the likes of Facebook and its creator, Mark Zuckerberg, but unless one were to win the lottery, found a successful start-up, or become a CEO of a multi-national company as large as Coca-Cola, its highly unlikely that a person would develop extreme wealth in such a short period of time. Any of those cases are unlikely to become a reality for most people, thanks to an unfortunate truth of economics: wealth leads to wealth, and doesn’t always spring up as a result of hard work or a good idea.
So when youth aspire to be the next Mark Zuckerberg, they should remember that without the funding of wealthy investors, Facebook wouldn’t exist today. In fact, start-ups face even more challenges today than what Zuckerberg and others before him faced just a few years ago. Today, even seasoned entrepreneurs with funding are joining the start-up game – making it a really crowded space. The odds of building a successful start-up are still very slim – more than 75% of start-ups fail in the first year. The other 25% face an uphill battle to simply stay alive for a second year. Only a small number move on to sell their business for a worthy return.
Unfortunately for many ambitious young workers today, money still gravitates toward money. So where will today’s youth go to build wealth? Here’s the good news – there is more than one way to build wealth. Risking your future on a business is not the only way.
There’s no secret sauce to building extreme wealth early, so today’s youth shouldn’t worry themselves trying to make millions outright. For a comfortable and fulfilling life, all they need is a starting point. Here are five steps useful in building wealth.
1. Start Earning Early
One of the big challenges of coming out of school is that students will make less money in first few years than they will make in the rest of their professional career. In addition to the low wage, they’ve likely accumulated debt. With those two aspects combined, young people face a daunting obstacle to building wealth, as it forces individuals to gamble on their future. First, they need to find a job. Then they need to make sure the job adds value to their career, as there’s no sense in investing time in a job that’s not developing the skills they’ll need years down the road. Finally, they need to ensure that they make enough money to reduce the debt they’ve accrued. It’s all easier said than done.
A recent North American study found that approximately 30% of degree holders earned less than the median income. With such low odds of making “good” money early on, young people need to consider the opportunity cost. By going to school and accumulating debt, what the youth are actually doing is gambling on their future. And although schools are telling today’s youth to invest in their future, what they aren’t telling them is that the investment is a gamble.
When we reflect on the lives of those who have built wealth, what’s apparent is that they got started early, which gave them time to gain experience, earn money, and be prepared for when opportunity presented itself. If today’s youth seeks wealth, then like most good things in life, finding balance will serve them well.
2. Save Cash
Getting started early is only meaningful if cash is saved and meaningless debt is avoided. By saving cash, students and young workers can prepare themselves to take on new opportunities that were not otherwise available. The importance of saving cash in a high spending and credit-crazed society is more important than ever before. For the financially savvy, cash is still king. When students and young workers are able to accumulate cash, they not only establish financial security, but also open new doors and possibilities. Wealthier individuals have solid purchasing power that can enable them to invest, and cash plays an important role. Banks still look for cash, and when a young individual starts their first job with cash in the bank, they immediately become a good prospect for loans and mortgages. Cash opens doors that credits cards can’t. No one has built wealth with a credit card.
3. Surround Yourself With Experience
Having cash early on opens doors and builds a foundation for future investments. Yet, in the absence of solid decision-making, cash can be depleted and time can be wasted. Having someone around to support decision-making is crucial. It’s important for today’s youth to surround themselves with something they do not have – experience. Although any experience is helpful, specific experience is much more effective. By surrounding themselves with others who have accomplished goals similar to theirs, they immediately gain an advantage in decision-making and understanding. With the help of the internet, finding someone who can mentor or offer advice is easier today than it’s ever been. Those looking to make it on their own should stop for a second to consider the value of collaboration. Wealth has never built alone. It typically involves contributions and input from others.
4. Make Smart Business Choices
Cash is king, time is of the essence, and making the right decision should all lead up to something that will grow money. Again, money goes where money is, and when individuals can get their hands on property, a commodity, or small business with the cash they’ve accumulated, they will have passed a significant milestone in their quest to wealth. This is a critical step, as it requires the purchase of something that’s somewhat risky, but still smart. It also will dictate the type of wealth and the abundance of wealth that will shortly follow, so investments need to be chosen wisely.
5. Seek Out New Revenue
This is the riskiest step, and most don’t take the chance on areas they are less familiar with. At some point in life, the well dries up, and in order to continue to make money and have more success, individuals need to take a shot at a second or third source of revenue when the first doesn’t quite get there. Diversifying into different industries will offer a different type of revenue from the money an individual currently enjoys, and will also help to insulate investors from unfavorable fluctuations in the market. Someone with interests in real estate and in internet businesses, for example, will fare better in the case of a dotcom bubble burst than someone whose holdings are all tied up in software companies.
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