Just because you have the money doesn't mean you should spend it frivolously. Rich people like Warren Buffett get rich not just by good business sense; they are also common-sense spenders living simply, not extravagantly.
According to Wikipedia, Warren Buffett “has a net worth of over $100.6 billion as of April 2021, making him the world's seventh-wealthiest person.” How does someone become that wealthy? Buffett made his wealth value investing and has kept it growing by living under his means. As Buffett once said, “the difference between successful people and really successful people is that really successful people say no to almost everything."
Here are 5 Warren Buffett tips to help you save more and spend less.
- Don't buy more house than you need. Did you know that Buffett has lived in the same house for over 60 years? Purchasing a home less than you can afford and keeping it will help you in the long run. You'll be able to put more money toward savings and retirement instead of paying more money toward mortgage interest.
- Don’t get stuck on keeping up with the Joneses. Flashy cars and expensive hobbies can up your social status, but they do nothing else for you in the long run. Buffett buys fixed-up vehicles at reduced prices. Remember, cars depreciate at a rapid rate, so once you drive it off the lot, you've lost money that you could be saving. Buffett also avoids unnecessary spending; he prefers playing bridge or playing his ukulele over expensive hobbies.
- Use cash, not credit. Using a credit card may be more convenient, but Buffett most often pays with cash. Paying with cash helps prevent buying items you don't need, or that may be beyond your current means. Mounting credit card debt and getting behind on payments will not only reduce your credit score, it reduces your ability to save.
- Eat on the cheap. Splurging on daily Starbucks coffee and café lunches can drain your pocketbook. Buffett enjoys his fast-food breakfast at McDonald's and also uses coupons. An even better idea is to pack your lunch and bring your coffee on the go. You'd be surprised how much you can save!
- Be careful borrowing money. Though Buffett has in the past, he frowns on borrowing money to invest in the stock market. Instead, consider setting up a regular automatic transfer from your bank account to invest. Borrowing money for your home is okay, but it is best to save and then buy with cash for other purchases. Remember, the interest charged on borrowing adds up quickly, and that could be money put to better use, like investing in the stock market.
If you would like help with wealth management or have questions about savings strategies, please feel free to contact us. We have a great team of professionals ready to help you!