My Formula for Building Wealth

chalkboard displaying formula


This article originally appeared in the Denver Post, October 16, 2022.

Warren Buffett turned 92 on August 30th. Given his investment prowess and lifelong dedication to finance, it’s incredible that most of his wealth (96%) was acquired after he turned 50. He attributes his success to a simple and salient truth: it takes time to grow wealthy, and most people don’t have the patience for it.

Buffett’s business and investment strategy are simple: invest in quality companies managed by quality people, give them the resources to run the business well, receive the dividends from the profits, and reinvest in other quality companies. Value investing is key. The formula is on every shampoo bottle: rinse and repeat.

There is no shortage of formulas for how to build wealth. Some are overly complex, requiring advanced algorithms and people smart enough to make sense of the data computers spit out. Others are overly simplified, like telling millennials to stop going to coffee shops. The majority are quantitative, or some sort of spreadsheet with assumptions, modeling what someone thinks will happen in the future. The probability of those models matching the future with accuracy for actual amounts is, well… remote. The best formulas are not quantitative, numbers, or math. They are qualitative and behavioral. Like Buffet’s formula, simplicity is a necessity. I’m a believer in this formula:

Desired Outcome = Goal + Plan + Money + Time + Discipline (Coaching)


To paraphrase the dialogue from Alice in Wonderland, any road will get you there if you don’t know where you’re going. Before attempting to plan any sort of wealth-building approach, it’s necessary to ask yourself about your goals. Why do you want to build wealth? What is important to you? How much wealth is enough wealth? These are all questions that will dictate the rest of the formula. Someone who desires to leave a lasting legacy with a large family will likely have a very different set of goals than a family who wishes not to have children and instead leave their mark on the charities and causes important to them. Like figuring out an algebraic equation, beginning with the solution allows us to solve for the variables.


Having a documented, well-defined income and a time-based plan is critical. These are the steps we need to take to work toward the goal. What has to happen for you to reach your desired outcome? And in what order will it need to happen? Are there assumptions we must make, caveats for which we must plan, or cushions we must build? Like a blueprint, the plan is designed to show you where things fit, how they work together, and the materials necessary for construction.


Money seems rather apparent here, but it’s essential to understand the purpose it serves. Money is the engine that will propel your plan into action. Quite simply: compounding requires initial capital on which to work its magic. It’s impossible to roll a snowball without some snow. This is why we’re proponents of starting as soon as possible and saving until it hurts. Compounding can work regardless of the starting amount, but the starting amount can have a massive effect on potential growth.

Also critical to financial planning is the proper use of debt. We are big believers in being debt-free, especially for those approaching or in retirement. Freedom is the result when you only write on the backs of checks.


Time is the great equalizer to starting capital. The 50-year-old stashing away $50,000 per year in their retirement fund is likely to be outsaved by the 10-year-old diligently saving and investing their weekly $10 allowance. Returning to our snow example above, the 10-year-old has the time to roll their small snowball around the yard until it becomes big enough to build a six-foot-tall snowman. The 50-year-old is hoping it will snow six feet. Waiting until you are 10 or even 15 years away from retirement is often too late. Unlike many financial commercials, you can’t walk into an advisor’s office and “buy” a retirement. The more time an investor allows compound interest to work for them, the easier it is to pursue a meaningful balance by retirement. You must have money to begin to accumulate, build and create a snowball of cash flow. Otherwise, retirement is a dream, not a goal.


The area that can have the most significance is discipline, coaching, and investor behavior. Combine money with goals, add in noisy media, stir up some uncertainty, and you end up with the emotion of fear. Fear begets fear, which often causes people to do the wrong thing at the wrong time. Markets temporarily fall, and investors extrapolate the decline, assuming markets will drop to zero. They react with a “better sell now than later” mentality and end up buying high and selling low. A financial advisor can act as a check on uninhibited emotions, preventing this fear-driven approach. We go to great lengths to educate our clients and help them understand when and why their emotions may be getting the better of them. This training has enabled them to be calm during turbulent times and to recognize when great investments are underpriced.

There are no proven formulas for building wealth. That’s why having a financial plan that fits you is so important. What may work for you is likely different than what worked for someone else. The planning process works to help you understand what’s essential, clarify your goals, and set up a step-by-step approach to get you where you want to go. Investors must trust their plan (blueprint) and the advisor to which they’ve entrusted it. Financial relationships like this are multi-decade, deep, and transparent. Investors must be intentional with their plan: the creation, design, implementation, and progress monitoring. Things change over time, and the advisor and the client must adapt. Don’t make money your idol. It is a pretty shallow idol and never satisfying. Instead, see it as a tool, and put that tool to work with a plan.

Steve Booren

Steve Booren is the Owner and Founder of Prosperion Financial Advisors, located in Greenwood Village, Colo. He is the author of Blind Spots: The Mental Mistakes Investors Make and Intelligent Investing: Your Guide to a Growing Retirement Income and a regular columnist in The Denver Post. He was recently named a Barron's Top Financial Advisor and recognized as a Forbes Top Wealth Advisor in Colorado.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy can ensure success or protect against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.