Warren Buffett, one of the most successful investors in the world, has a reputation for his simple financial wisdom. His advice is certainly worth listening to, especially if it helps you avoid making money mistakes.
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According to Buffett, here are 10 things poor people waste money on and what he does instead.
“The most important investment you can make is in yourself,” Buffett has said, according to Inc. “That’s how knowledge builds up. Like compound interest.”
One of Buffett’s most famous tips, known as the Buffett formula, is to go to bed smarter each day.
According to Inc., Buffett recommends reading. He spends about 80% of his day reading, and he suggests that anyone hoping to achieve success should read 500 pages per day.
If you’re investing in something other than yourself right now, it might be time to rethink your strategy.
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Buffett is also very against credit card debt. He prefers to rely on cash instead of using a credit card. “I’ve got an American Express card, which I got in 1964,” Buffett told Yahoo Finance. But I pay cash 98% of the time.”
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” Buffett wrote in his 1989 letter to Berkshire Hathaway shareholders.
Buffett won’t invest in something just because it’s cheap. Although he’s talking about investing in businesses, this can be applied to everyday life. When you prioritize quantity over quality, the short-term gains may not mean much (and it could cost you more) in the long run.
Buffett doesn’t care about having the latest technology or designer labels. According to AP Moneywise, he used a $20 flip phone for several years before upgrading to an iPhone in 2020.
His advice? “Do not save what is left after spending, but spend what is left after saving,” according to Moneywise.
Cars are depreciating assets. According to Kelley Blue Book, most new vehicles have a 20% drop in value in the first year.
So instead of buying a new car, Buffett prefers to buy used vehicles at reduced prices.
“The truth is, I only drive about 3,500 miles a year, so I will buy a new car very infrequently,” he said, according to Forbes.
Even Warren Buffett looks for good deals. Years ago, Buffett once treated Bill Gates to a meal at a fast food restaurant and used coupons to help pay for the meal.