I have always been a firm admirer of wealthy and influential people who live humble, simple and frugal lives instead of the majority, who with a little bonanza at hand would splurge their fortune on fame, fortune and ostentatious display of material stash.
In the newtraderu.com blog, author Steve Burns, enumerated the seven money-saving habits of billionaire Warren Buffett, which I would like to share with everyone in the hope that we would reduce the number of show-offs in the world and their hypocritical existence that make the lowly among us feel all the more miserable with their lives.
For the unversed, Warren Buffett is one of the world’s most successful investors, who is renowned for his financial acumen and frugal lifestyle. Despite his immense wealth, Buffett’s money-saving habits offer valuable lessons for anyone looking to improve their financial health. This Oracle (sage) of Omaha (he was born in Omaha, Nebraska)-- a title bestowed on him– has a networth of $135 billion making him the 10th richest person in the world, at 94.
He created Buffett Partnership Ltd. in 1956 and his investment firm eventually acquired a textile manufacturing firm, Berkshire Hathaway, a holding company which he heads as chairman and majority shareholder since 1970. In 1978, fellow investor and long-time business associate the late Charlie Munger, another billionaire now,joined Buffett as vice-chairman.
Here are his seven frugal living tips:
1. Live Modestly: The Power Of A Humble Home– He continues to live in a modest house bought for $31,500 in 1958, a testament to living below one’s means. This highlights a crucial aspect of building wealth: “it’s not about how much you earn but how much you keep.” Doing this, Buffet was able to allocate more of his resources to investments and wealth-building opportunities.
For the average person, this principle means assessing our needs versus our wants. Will a larger home or a prestigious neighborhood bring us happiness and well-being? A modest home can mean: lower mortgage, property taxes and maintenance cost. The savings can be used to pay off debt, build an emergency fund or invest for the future. It can also help curb lifestyle inflation and the tendency to spend more as the income rises. Modest living enables us to avoid feeling pressured to keep up with the Joneses.
2. Debt-Free Living: Steering Clear Of Credit Card Traps– Buffett says he has “seen more people fail because of liquor and leverage (borrowed money). You really don’t need leverage. If you’re smart, you’re going to make a lot of money without borrowing.”
Buffett rarely takes out loans and advises young people to “stay away from credit cards,“ which underscores the importance of living within one’s means and avoiding the financial pitfalls of easy credit. Consider using cash or debit cards for daily expenses to avoid this trap. If you must use a credit card, pay the balance in full each month to avoid interest charges.
3. Frugal Feasting: Eating Well On A Budget– Buffett favors simple meals over extravagant dining, a testament that satisfying food doesn’t have to come with a hefty price tag. Preparing simple, home-cooked meals can result in substantial savings. By planning meals, shopping with a grocery list, and focusing on whole, unprocessed foods, you can significantly reduce your food expenses while improving your diet. When it comes to dining out, treat it as an occasional indulgence rather than a regular habit.
4. Brand-Smart Shopping: Avoid Paying For Labels– To this Buffett says: “Price is what you pay. Value is what you get.” Buffett buys based on value rather than brands (which comes with a brand tax or additional cost not necessarily related to quality) as a powerful money-saving strategy. In many cases, generic or store-brand alternatives offer comparable quality at a fraction of the cost. Develop the habit of reading product reviews and comparing features and not on brand reputation alone. Remember, the goal is to get the best value for your money, not status symbols or fancy packaging.
5. Discount Detective: The Art Of Deal-Hunting– Buffett always says he would rather buy quality merchandise when it is marked down. He loved finding deals and using coupons because small savings can add up to significant amounts over time. Star by researching prices before making a purchase esp. for big-ticket items. Avoid buying something because it is on sale. The true value is finding discounts on items you would have purchased anyway, not accumulating unnecessary possessions.
6. Upgrade Wisely: Resisting The Latest And Greatest. To this Buffett would say: “ Do not save what is left after spending but spend what is left after saving.” Resist the constant pressure of having the latest and best versions of everything. Each upgrade costs money for accessories and services. Instead of automatically upgrading, focus on maintaining and repairing what you have to extend its lifespan.
7. Wants Vs. Needs– “if you buy things you don’t need you will soon sell things you need.” The core of his frugal living philosophy is distinguishing between wants and needs to avoid the pitfalls of impulse buying and lifestyle inflation. Before buying something, ask questions like if you need it, will it add significant value to your life, can you afford it without compromising financial stability.
Remember, contentment doesn’t come from acquiring more things but from appreciating what you already have. Focus on experiences and relationships rather than material possessions.
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