Warren Buffett is one of the most famous investors ever. Over his very successful career, he has given several interviews talking about his favorite money tips.
As of the time of writing, Warren Buffett has a net worth of $76 billion, making him the fifth richest person in the world. He is the owner and CEO of Berkshire Hathaway which owns over 60 other companies most notably Kraft Heinz Company.
15. “Short” Your Friends
It is often said that you are the sum of the five people you spend the most time with. One of Buffett’s biggest money tips is that you should consider “shorting” your friends, just as you’d do an investment.
He says that every so often, you should re-evaluate your friendship group. You should imagine that you were going to invest in the five friends you spend the most time with. However, you have to “short” one of them, just as you’d do a stock.
Think about who you’d short in particular. Then think about why you’d short them. And if you still can’t find a reason why they’re your friend- cut them loose.
14. Don’t be Afraid to Pay More
Warren Buffett is famous for always trying to get the best deal for everything, as taught to him by Benjamin Graham. However, Benjamin Graham also taught Warren Buffett that value is more than just price.
Graham taught Buffett that just because something is cheap, doesn’t mean it is good value. Graham taught Buffett that he shouldn’t look at the individual stock price of the different stocks.
Graham taught Buffett that it is ok to pay more for an individual stock if the company itself is on offer. And this is something that Buffett has taken beyond just investing, but to his spending habits also.
Bufett buys a modest car- a car that will do the job and be on the road for several years. Buffett bought a house in his twenties, a house he has lived in ever since.
13. Start Young
Warren Buffett is an advocate of starting young. And this can be anything- investing, entrepreneurship or whatever! Warren Buffett bought his first stock when he was 11, and has continued to buy them until being almost 90!
When you look at other successful people, especially other investors or business magnates. People such as Alexander Pask, Rachel Zietz and Mo Bridges are all self-made teenage business magnates.
By starting young, Buffett has enabled himself to get over a decade’s worth of compound interest and investing experience that his peers don’t have. As such, he preaches that if you or your children want to be successful, they have to start young.
12. Don’t be Afraid to be Frugal
Warren Buffett is perhaps the most famous frugal billionaire. He lives in a house he bought in his twenties, he drives a Cadillac and he eats a cheese burger from McDonalds.
Buffett is perhaps the poster boy for living a frugal life. Despite his billions, he still lives far below his means. Berkshire pays him $100,000 annually, yet he lives like he earns half that, perhaps even a quarter of it.
He does this so that he can reinvest the money into low-cost index funds. He also does this so that he can have a big enough rainy day fund so that when the next recession comes, he can invest a huge amount of it in stocks he believes are good.
11. Be Modest
Just as how Warren Buffett has spoken about being frugal, he has also spoken about being modest. Whilst you may think they are synonyms for one another, but in this case, they are not.
You don’t need a yacht, you don’t need a private jet, you don’t need a large house. Yes, Warren Buffett does own a private jet, however, that is only because he gets harassed at the airport otherwise (plus he owns NetJets).
Not only is being flashy expensive, but it’s also stupid.
If you are overly flashy and repeatedly tell people just how rich you are, and how you have six private jets and three yachts and seven vacation homes. You are going to get robbed.
10. Pay Yourself First
It may be tempting to keep reinvesting your money over and over again. However, you need to stop eventually. Personally, I completely get this, I too once believed that reinvesting my money all the time was the way to go.
But now I know that is not the case anymore. Little did I know, that this is one of Buffett’s most famous money tips! Buffett too once had this notion- the more he reinvested, the more he would make, and the more he would reinvest.
Buffett worked out that if he paid himself a portion of what he made in dividends, he would get the best of both worlds. He would get some money to himself- to pay bills/have days out and he would reinvest some of it too.
9. Think Long Term
Perhaps one of Warren Buffet’s most famous money tips is to always play the long game. Warren Buffett is perhaps the best example of someone who has been playing the long game.
We have already established that Warren Buffett bought his first stock when he was 11. Since then, he has been constantly investing and reinvesting the profits he has gotten. And almost seven decades later, this has served him well.
One of his biggest and most well known money tips is that whatever you do with your money, always have a plan with it.
If you’re buying a house, are you going to try house hacking? If you’re investing in your 401(k), are you also going to invest privately too?
8. Use Debt Wisely
One of Warren Buffett’s biggest money tips is that you should be wise with the amount of debt you have. Unlike many other billionaires who have a staunch anti-debt stance, Buffett is open to the idea of debt.
Buffett believes that debt can be a great tool to helping you become financially free. However, he does caution restraint. He has made it very clear on several occasions that you shouldn’t borrow money to start a business, nor to invest.
However, he believes that if you are able to have restraint and only use debt in a certain way, you can come out on top. However, you need to do more than just cursory research. You need to do lots of research to find the right loan for you.
7. Be Prepared
However, whilst you are busy investing, building your business empire or what have you, you need to be prepared. By prepared, Buffett is talking about having a rainy day fund.
Buffett has spoken on several occasions that everyone in the United States, and even to some extent the world, needs a rainy day fund. This fund would be a pool of money that you put money into every month in case of an emergency.
He has repeatedly talked about how almost 60% of Americans can’t afford a $1,000 expense. Buffett has talked about how this is the biggest killer of investors- so many investors have to divest themselves because of an unforeseen expense.
6. Never Lose Money
Buffett is a savvy investor. Buffett is perhaps the most famous value investor on the planet, having been taught by Benjamin Graham himself. One of the main tenants of value investing is to never lose money.
And this is something that Buffett takes very seriously. When people are divesting themselves of almost all of their stock portfolio during a recession, loosing millions of dollars, Buffett is doing the opposite.
When his peers are divesting themselves during a recession, Buffett is the one buying all of the shares. And when Buffett does sell, he sells when the stocks are at their pique, thus making more money than his competitors would.
5. Keep Building
One of the most famous money tips that Warren Buffett has told people over the years is, well… himself. He bought his first stock at 11, and at almost 90, he is still investing.
At almost 90, when most of his peers have been retired for almost 25 years, he is still investing. At almost 90, he is still building Berkshire Hathaway into the largest insurance and investments companies on the planet!
Buffett once famously said “I will die with my boots on”. And this is something that Buffett says that others should do too. When your friends are retiring and living off a meager state pension, you keep working, you keep investing.
This will allow you to continue to be worth something, even after your friends are living off their meager state pension. If you do it well, you could be living your best life in retirement, no worrying about how to pay the bills any longer.
4. Never Stop Learning
It may seem odd or a little weird, but one of the best money tips Warren Buffett has ever given is to not stop learning. Warren Buffett is a vivacious reader, devouring several books a week.
Warren Buffett understands that he can and will never know everything. However, he will try to learn as much as he possibly can. This means that he will become an expert in the areas he wants to invest in.
And it isn’t just investing-related topics he reads about. He might read about trains, or history, or sports or whatever interests him at the time.
3. Trust Low-Cost Index Funds
This is perhaps the most shocking of all of Warren Buffett’s money tips. Both Buffett and Berkshire have made money from risky acquisitions and risky investments, most notably Buffett’s takeover of Berkshire Hathaway in 1962.
Despite this, Buffett believes heavily in investing in low-cost index funds regardless of your net worth! In fact, when he dies, Buffett’s will states that his remaining wealth should be invested in low-cost index funds.
Buffett preaches that you should invest this way, rather than investing how he does, as there is almost no way you can lose your money. To lose your money would require every company in the FTSE 100 or S&P 500 or Russell 3000 to collapse. Highly unlikely.
2. Be Generous
Despite Buffett’s immense fortune, Buffett is also one of the most charitable billionaires on the planet. One of Buffett’s greatest money tips is to always try to give back, whether that is monetarily or through your work.
For Buffett, he has created the Giving Pledge alongside Bill Gates. This pledge states that whoever signs it aims to give their most of their wealth to charity.
Whilst I doubt that you’ll want to do something as generous as the Giving Pledge, you should still try to give back. If you can help at least one other person, surely that is worth it!
1. Always Look For the Deals
Warren Buffett is known for maintaining a frugal lifestyle. He doesn’t smoke, he doesn’t have a big house, he doesn’t have a boat. In fact, he is well known for eating cheese burgers from McDonalds, costing him only a couple of dollars.
There is a funny story of when Bill Gates and Warren Buffett went to Singapore. The pair of them went to McDonalds to get some food, instead of paying for the meal fully, Buffett began to pay using coupons.
Buffett is always looking to get a great deal on everything. Especially when it comes to buying investments. In fact, his whole investing philosophy is dependent on getting the best deal possible- buying a stock worth $10 for $5.
Which are your favorite money tips from Warren Buffett? Tell me in the comments!
