Secrets of the Wealthy: Warren Buffett, Part 2
You can watch my YouTube series about Warren Buffett here!
Warren Buffett is one of the top 10 richest people in the world today. What wealth habits can we take away from his success story, and how can we implement those right now to start growing our wealth and improving our chances of success in both business and in life? Luckily for us, Buffett has written and spoken widely (despite his extreme fear of public speaking as a young man) about his phenomenal success! You can also read his biography here.
1. Steer clear of lifestyle inflation. It’s easy as we make more money to buy a bigger house, fancier cars, vacation homes, etc. While these can all be great, don’t level up your lifestyle with debt and consider putting extra income towards saving and investing goals. Warren Buffett is still living in the same house he purchased in Omaha, Nebraska in 1958 for $31,500. He eats a $4 breakfast at McDonalds most mornings. His extremely frugal lifestyle isn’t for everyone, but especially in the beginning of his career it most likely helped him grow his wealth.
2. Save first. Buffett once said “Do not save what is left after spending, but spend what is left after saving.” This might involve automating your savings goals so you have a set amount that goes towards savings out of each paycheck, for example. You can’t go wrong with saving first.
3. Know when to quit, whether it’s an investment that’s not performing well or pretty much anything else in life. Buffet said, "Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks." If something is costing you too much in terms of time, energy, or money, know when to call it and move on to something better.
4. Educate yourself about investing, or hire a finance professional to manage your assets for you (preferably, some of both). Buffett had an impressive career as a successful investor and figured out better than most how to invest in (and hold) well-managed, undervalued companies that went on to pay him back with excellent gains. Buffett once said, "All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies." While you may want to hire a qualified investment advisor/wealth manager, it also pays to have at least a basic understanding of how stock market investing works. You can also explore the multitude of other investment opportunities out there such as real estate, collectible art, precious metals, and even wine. There are lots of great resources online about all this so just check YouTube and Google for more.
5. Focus your long-term goals, in both investing and in life. Buffett once said, "If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes." If you set clear, achievable long-term goals for yourself, it’s easier to push through hard times and not get discouraged.
6. Get good at spotting opportunity and jumping on it when it comes your way. Buffett once said, "Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble." This is such a key component of the wealth mindset: staying positive, optimistic, and on the lookout for when the tide is turning in your favor.
7. Avoid get-rich-quick schemes. Buffet said, "Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick "no." If something sounds too good to be true, it probably is.
8. Think before you speak (or act). Buffett said, "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently." This is true both of your business brand if you’re an entrepreneur, and also of your personal brand whether you’re in business or not.
9. Give back. Buffett is famous for his large philanthropic donations, numbering in the billions of dollars. He once said, "If you're in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.”
10. Get really, really good at saying no. Buffett said, "The difference between successful people and really successful people is that really successful people say no to almost everything." This is harder than it sounds and circles back around to being able to tell the difference between a golden opportunity and a huge waste of time. Up there with being able to quit things that aren’t right for you, saying no to those things in the first place is probably the most valuable wealth habit you can learn from Buffett.
Bonus!
11. Invest in yourself first. This can be through ongoing reading, learning and education, as well as good self-care. Buffet once said, "The most important investment you can make is in yourself." He particularly emphasized the important of reading: "Read 500 pages like this every day. That's how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it."