10 Tips To Save Money Like Warren Buffett

Guest Post by Michael Vincent

Most people, if asked about their financial goals, would instantly say they want to be rich, or to have the financial freedom of being able to buy or pay for anything their heart desires. Saving money is rarely ever on the top of anyone’s list.

10 Tips to Save Money Like Warren Buffett

Investor Warren Buffett himself strongly believes in the value of saving, despite having billions of dollars to his name. You might want to pick up a pointer or two from one of the world’s richest men…

1. Be careful with your investments

Buffett has been quoted as saying that the first rule of investing is to “not lose money”. The billionaire has placed so much emphasis on this rule of investing, that his second rule is “not to forget rule number 1″. Do not get into debt unless you are absolutely sure that you can profit later on, he advises.

2. Do what you love

Another tip from Buffett is to do something you love. Only then can you find satisfaction from work or your job. If it’s not so easy to just pack up and quit your current job, why not make a hobby out of what you love doing? And maybe try making just a little money out of it? Pursuing your passion can bring lots of fulfillment—and that is something no amount of money can buy.

3. Don’t purchase expensive toys

Don't purchase expensive toys

Some people who successfully earn their first million dollars immediately purchase a luxury vehicle or an expensive toy. As a practitioner of frugal living, Buffett avoids luxuries such as yachts and luxury cars. For him, these expensive “toys” only cause headaches. Buffett advises investing extra cash in investments that can yield good interest rates instead.

4. Do not waste time

To the Berkshire Hathaway CEO and founder, time is as valuable as money. When doing business negotiations, Buffett advises researching and making a decision in advance. He advises against any unnecessary talk, which he likens to “thumb sucking.” If you are making a business proposition, be straightforward and name your price straightaway. Buffet says he won’t talk with anyone unless they give him a price. He also makes decisions right on the spot.

5. Put a limit on the amount you borrow

Buffett has been known to dish out tips on the use of credit cards. He advises everyone to borrow just what they can pay, and to not shy away from negotiating with credit card institutions. Work toward paying off your debts, then proceed to saving money, which you may use later on for investing.

6. Wait for a sale

Wait for a sale

Never pay for an item at its original retail price when you can get it discounted. Buffett always waits for the asking price to go as low as possible before he purchases a company. Similarly, you should not think twice about using discount vouchers and coupons for buying products or services.

7. Invest in yourself

Buffett also highlights the importance of investing in one’s self. Improving your talents and skills makes you more valuable and puts you in a better position to earn more.

8. Clarify the terms of any agreement

Before you sign an agreement for a job or seal any business deal, make sure you have thought thoroughly about all the terms of the agreement. Think of worst case scenarios. Try to calculate if the promised compensation covers extra expenses that may be brought about by bad conditions and unexpected mishaps.

9. Do not depend on one income

Start looking for other possible sources of income by getting side jobs on the weekends or by making smart investments that can yield good returns. Buffet always talks about how he diversifies his investment portfolio to increase his chances of winning.

10. Control impulsive buying

The “Sage of Omaha” attributes his financial success to making good decisions. When making important financial decisions—whether you are buying something, weighing a job offer, or choosing a credit card company—ask yourself why you are making that decision. If you are unable to come up with a convincing answer, then the decision is not worth it.

Regardless of anyone’s financial social standing—whether you are born to parents with platinum credit cards or struggling to pay off your parents’ debt—saving should be more than just an afterthought. Saving improves your quality of life, not to mention, your perception about money.

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Toma Ionut 8 years ago Member's comment

All I learnd form Economics Faculty and practical life situations is that I have to save more.

Nicholas Damptsie 8 years ago Member's comment

Thank you very much Papa, for such a wonderful piece of advice. It will surely be a light unto our financial path. God richly bless you, give you long life and shower you with good health.

Nicholas Damptsie 8 years ago Member's comment

This is a great and spot on free advice to we the young, up and coming ones.

P.janardhana Reddy 8 years ago Member's comment

Neo rich people follow Buffet in breach.

N Catherine Coackley 8 years ago Member's comment

Add another.....be mean and put lots of people out of work with your financial dealings just like Mr. Buffet has done with his recent Heinz/Kraft deal. And show absolutely no remorse as you do these deals do the shareholders all praise you!

Noelene Jorgensen 8 years ago Member's comment

Simple effective and a good reminders!

Dol Quiano 9 years ago Member's comment

It's ok to buy expensive toys if it can make you happy because he says you must do want you love most and then you can make money out of it.

Mpho Millicent Chwenyane 9 years ago Member's comment

Having an expensive car will not make you money unless if you sell it.

Chris Haley 9 years ago Member's comment

While you'd expect good advice from this modest expert, neither is it rocket science e.g don't incur debt you can't pay off or don't splash out on unnecessary new toys! I wonder if he's told this to the UK Treasury pension liberation authorities? Of more value is, don't sign off on a deal until you've considered the worst scenario and wait for the best offer.

Mr Buffet's previously stellar record has looked somewhat tarnished after some dud buys like Tesco, Kraft and Oil majors, so no longer is he the Sage of Ohama. But he's still worth listening to.

Rajeev Desai 9 years ago Member's comment

At least if he tells ALL his employees and franchisees to give good (means 100% satisfaction) customer service and IF they follow it faithfully for life, than that would be the most awesome thing he has done....

Sanjay Sanjay 9 years ago Member's comment

When you are successful, anything you say is taken as good advice, even eating French fries 10 times a day