When you think of the famous billionaire, Warren Buffett, you probably don’t assume that you have much in common. Surely he lives very differently from the rest of us, right? And surely his financial habits have nothing to do with your own life!
Actually, there’s a lot we can learn from those who are more successful. No, it doesn’t mean we’ll all become billionaires, but examining their viewpoints can probably help us all become more successful with money.
Check out these lessons, straight from Warren Buffett…
He lives in a house he purchased more than 60 years ago. Purchased for $31,500 back then, the home is worth over a million dollars today. Buffett didn’t view “trading up” as a way to compete with other wealthy people. He preferred a buy-and-hold approach with his home, has enjoyed many years of mortgage-free living, and built considerable equity as a result.
His car is used, too. Since new cars quickly depreciate, they aren’t a wise investment. Buffett prefers used Cadillacs and drives them for many years before trading them in.
Generic works just as well as name brands. Buffett just purchased his first iPhone last year, and says he doesn’t even use the more high-tech functions of the phone. Before that, he used twenty-dollar flip phones for many years.
He eats like the rest of us. Maybe his personal physician isn’t thrilled, but Buffett says he spends about three dollars on breakfast at McDonald’s each morning. The point is that he eats to live, and doesn’t live to eat. Frugal meals are okay by him!
He eschews credit cards. Buffett almost always uses cash, preferring not to rack up debts on impulse purchases. If you have it in your wallet, you can spend it… If you don’t have it, maybe you shouldn’t spend it.
Needs trump wants. Buffett says, “if you buy things you don’t need, you will soon sell things you need.” Spending money on unnecessary purchases can lead to regret, and maybe financial hardship, later. Instead, Buffett used a dresser drawer for his first child’s crib, and borrowed a crib for the second child.
Saving is paramount to a sound financial plan. Buffett once said, “do not save what is left after spending, but spend what is left after saving.” If we apply that lesson to your long-term financial plan, we can see that you should stash money for retirement first, then spend what is left over.
And on that note, give us a call to discuss your retirement savings plan. We can help you analyze your current situation, anticipate future needs, and then make a plan for long-term financial solvency.
