Legendary investor Warren Buffett is one of the wealthiest people in the world and for a time was the wealthiest. It might surprise you, then, to learn that Buffett is a proponent and practitioner of frugal living and always has been.
Frugal living doesn’t mean hoarding every penny and only buying the cheapest items available; it’s about practicing sound budgeting, good spending habits, and other actions that help you get more value out of your money and which lead to financial stability.
When someone like Buffett talks about money, it makes sense to listen, so here are 14 frugal living habits he goes by and how we can learn from them.
Live Within Your Means
While it’s easy for Buffett to live within his means now, he wasn’t always a billionaire. Living within his means kept him out of financial pitfalls and helped him amass capital that he kept growing.
Avoid Unnecessary Debt
Sometimes, like when buying a car or a house, it might be necessary to take on debt, but Buffett always sought to avoid debts that weren’t needed. Ways to do that include avoiding impulse spending, evaluating want vs. need, and sticking to a budget.
Prioritize Value Over Brand Names
A lot of the time, the big brands are more expensive than their competitors, but they don’t always deliver better value. Buffett would advise you to weigh what you get against what you pay for it to determine what the real value is. That applies to both spending and investing.
Invest Wisely for Long-Term Growth
Obviously, Buffett is one of the most successful investors of all time. One way he attained that status was by doing his homework so that he could invest wisely in companies with strong prospects. In turn, that set the stage for strong long-term growth for his own assets. Many a company has experienced a meteoric rise only to suffer a catastrophic fall, and unwise investors get badly burned when those things happen.
Buy Stocks With a Strong Competitive Advantage
Competitive advantage refers to a company’s ability to produce goods better or at less cost than its rivals do. Buffett learned that the ability to discern this comes with wise investing, prioritizing value, and patience.
Focus On Long-Term Financial Goals
For understandable reasons, many people put great focus on short-term financial conditions. While that’s important since bills, purchases, etc. are occurring now, it’s important to think of the long term. Always set long-term goals so that you steadily plan for and work toward them.
Be Patient in Financial Decisions
Investing and financial management tend not to reward impulsivity. You don’t have to achieve all your goals tomorrow. Patience helped Buffett make wise investing and other financial decisions that paid off grandly.
Don’t Chase After Quick Gains
Similar to the above, don’t try to get there all in a hurry. Chasing quick gains impairs the ability to make wise choices and stay focused on long-term goals, and it can cost time and resources. Think of it like buying lottery tickets; you can keep buying them and hoping you’ll hit the jackpot, but most likely, you’ll just have ended up throwing away money you could have put to better use.
Stay Informed About Your Investments
As an investor, Buffett has always kept track of his investments and urged his clients to do so. You need to know how they’re doing, when it’s time to buy or sell, etc.
Seek Opportunities During Market Downturns.
Markets always experience downturns, but then they go up again eventually. Investors like Buffett know this, and they look for opportunities to invest in companies that they know will recover and thrive, and they develop a knack for knowing when things are about to start climbing again, which is when it’s time to invest.
Practice Simplicity in Lifestyle
Leading a simple lifestyle means keeping focused on what’s important and not getting distracted by what isn’t. Distractions make it easy to stray from the path leading to your long-term goals.
Avoid Lavish Spending on Luxuries
Buffett famously drove an economy car for years when he easily could have been driving the priciest, fanciest, most exotic cars money can buy. This was an extension of practicing a simple lifestyle; that economy car was all he needed to get around. Just because you can afford something doesn’t mean you have to buy it; there may be a much better use for that money.
Invest in Your Own Education
Education isn’t the only way to financial success, but it’s one of the most reliable pathways. Buffett earned a B.S. from the University of Nebraska, a Masters from Columbia Business School, and a degree from the New York Institute of Finance.
Give Back and Practice Philanthropy
Buffett has always believed that one should pay it back as a way to recognize the help they had along the way and to create opportunities for those without a lot of them. To back that up, Buffett has given billions to charities. In fact, that was what knocked him from #1 to #2 on the Forbes list of the world’s richest people in 2009.
It goes without saying that advice on frugal living and other financial matters from someone like Warren Buffett is worth listening to. Hopefully, these tips can help you set a course for your financial goals!
The IRS Adjusted Its Tax Income Brackets — Are You Ready?
Have you heard that the IRS adjusted their tax brackets? The reason behind the IRS adjusting its tax income brackets for next year is tax consolidation, which aims to simplify the tax code. You might have already heard about it.
Travelers Beware: 10 Most Dangerous Cities In The World To Avoid
There are endless sources of inspiration for travelers nowadays, and with pandemic travel restrictions having been largely lifted, you can explore nearly every corner of the world. However, there are some places that you are better off avoiding- dangerous cities.
20 Legal Things That Will Probably (Hopefully) Be Illegal In The Next 20 Years
In today’s modern world of legalities and regulations for everything, there are certain things that people are eager to see illegalized in the next two decades, despite the complex legal landscape or things people think will become illegal in America.
15 Things That Are Really A Scam But Have Been Normalized By Society
Have you ever seen something that is so crazy and ridiculous that you are sure it’s a scam but is actually normalized by society? Do you know that society is being scammed, but everyone is just acting like it’s normal?
10 Crazy Myths About Women Men Actually Believe
In our society, many myths and stereotypes exist about women. Unfortunately, some men still believe in these myths, even though they have been debunked time and time again. Here are some of the crazy myths that men believe about women.