Warren Buffett: 5 Finance Mistakes That Will Keep You Poor
Warren Buffett, the renowned investor known as "The Oracle of Omaha," is a man whose advice is absolutely worth heeding.
Buffett once outlined the money wasting that keeps people poor. Here are his top five.
1. Accruing Credit Card Debt
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.”
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2. Buying New Cars
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.
3. Paying Full Price
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.
“Remember the laugh we had when we traveled together to Hong Kong and decided to get lunch at McDonald’s? You offered to pay, dug into your pocket, and pulled out … coupons!” Gates wrote in his and now-ex-wife Melinda’s 2017 annual letter.
“Melinda just found this photo of me and ‘the big spender.’ It reminded us how much you value a good deal,” Gates wrote, using the anecdote to segue to a discussion about the value of philanthropy.
4. Gambling
At a 2007 Berkshire Hathaway shareholders meeting, Buffett called gambling “socially revolting,” according to The Motley Fool.
“I’m not a prude about it, but to quite an extent, gambling is a tax on ignorance,” he reportedly said, referring to the tax revenue generated by gambling.
“A government shouldn’t make it easy for people to take their Social Security checks and [waste them pulling] a handle.”
If you have extra money, don’t waste it on gambling.
5. Living Beyond Your Means
When you’re shopping and see something you like, ask yourself whether you really need it or just want it.
During a 2009 meeting at Emory University, Buffett said something to the effect that his goal is “not to make people envious.” He also said you can’t buy health or love and warned the audience not to confuse the cost of living with the standard of living, according to meeting notes from a student who attended, which appeared on the student’s Underground Value blog.
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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