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 5 frugal living habits he goes by and how we can learn from them.
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.
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.
