A Simple 3‑Step Process Helped Warren Buffett Build Wealth -- How It Works
Warren Buffett has grown a fortune of well over $100 billion dollars in his lifetime, and is consistently ranked one of the wealthiest people in the world. He has largely amassed his fortune through successful investment strategies.
Legend has it (as well as a few well-documented sources) Buffett's "two lists" model has been a major key to his success. It allows him to prioritize and say no to tempting or important tasks that get in the way of his main goal.
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Warren Buffett's Path to Success
The story goes that Buffett began building his wealth by investing in the stock market at the age of 11, first filing his taxes at age 13. As a teenager, he was bringing in about $175 per month delivering The Washington Post (this was more than many adults made at the time). He also sold calendars, used golf balls and stamps. At 16, he built the equivalent of $53,000, according to Business Insider.
As a young adult, Buffett formed his own company and began investing in companies he viewed as undervalued. He reinvested all profits in more investments and his wealth grew.
Most of Buffett's wealth was built after his 50th birthday, when he transformed Berkshire Hathaway from a textile company into a conglomerate using his value investing philosophy. In fact, the vast majority of Buffett's net worth is tied to his publicly traded holding and investment company.
Building Wealth Through Two Lists
One story published by James Clear best illustrates Buffett's approach to productivity and time management.
Mike Flint -- Buffett's personal pilot for a decade and former pilot for four U.S. presidents -- had a discussion with Buffett about career priorities. Buffett presented a three-step exercise to help streamline his focus.
The first step was to write down his top 25 career goals. In the second step, Buffett told Flint to identify his top five goals from the list. In the final step, Flint had two lists: the top five goals (List A) and the remaining 20 (List B). Flint assumed List A was his primary focus, but he was wrong.
Buffett reportedly replied, "No. You've got it wrong, Mike. Everything you didn't circle just became your 'Avoid-At-All-Cost' list. No matter what, these things get no attention from you until you've succeeded with your top 5."
Buffett stated that List B should be completely avoided until the top five in List A were achieved. According to Buffett, this "two list" strategy is essential for true success: Focusing on a few critical goals rather than spreading yourself too thin.
When you achieve one goal from your top five, add a new goal from List B. ModelThinkers noted the list is always a work in progress, and something on the "avoid" list might become a priority as you achieve your top five from List A.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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