Warren's Wise Words
Probably the greatest investor ever, Warren Buffet is the chairman of Berkshire Hathaway. Nuff' said, let's move in straightaway to his advice to success.Investing in yourself
According to Warren, "the most important investment you can make is in yourself," in an interview with Inc. He continued on to say that, "that's how knowledge builds up. Like compound interest". And the way he recommends is to go to bed smarter each day, via reading. He does this by example - he estimates that he spends 80% of his time reading and suggest that reading 500 pages each day as the norm.
500 pages will probably be difficult assuming we have a full-time job plus night-meetings or assignments. For those with family the time left will be spent with family or we wish to go on dates or do a little workout. But probably a few pages of the newspaper or a book may actually be do-able.
At the very least, the advice from Warren is to seek an alternative other than spending time in front of the mobile screen looking at Facebook, Tiktok or Instagram posts.
Credit card debt
Warren prefers cash over credit card and he claims that he pays cash 98% of the time. There is some wisdom in that interest rates for credit card range from 24-26% per annum, plus $100-200 if we miss the due date.
Credit card probably does have its advantages in that some offers perks such as airline miles, points that we can use to offset our purchase in certain stores (my favorite is discounts on petrol/gas stations), or cashback if we can meet the rules.
The most important is that we have to pay the credit card diligently in full each month, if possible and not forget the due date.
Unnecessary spending
Rather than spending money on the latest fad or fashion, his personal habit is to be frugal. His advice is "do not save what is left after spending but spend what is left after saving". Once we have received the payment for our service or products, (or wages for the majority of us), we should park the money aside - some say in separate account. We should set money for investments, for future college expenses, for course (investment in yourself). After that we look at what remains and perhaps then we decide how to spend on our living expenses - the food we eat, the clothes we buy, etc.
New cars
It is fairly common knowledge that cars are a depreciating assets - there are some that increase in value over time but you need to big pockets to afford these limited editions in the first place. Estimate from various resources is that they fall about 20% in value int he first year alone. Rather than a new car, Warren advocate getting a used vehicle.
If one follows the advice, do factor in the mileage, fuel consumption, servicing and support as well as vehicle reliability. In many cases, getting a Japanese model may be a way to go versus getting a European or American one...but that's from cost perspective.
Full-price purchases
Despite his riches, Warren always goes for deals. A story was told of his dinner with Bill Gates - they went to McDonald's and Warren used coupons to pay for his meals. While it is good to splurge on purchases (sometimes), there really is no shame in keeping track of discounts and using apps or credit cards that allow cashback. That way, one does not need to pay full price.
Regular night-outs
A quite drastic but fairly obvious advice - if we reduce the number of night-outs, we will save. Yes, that means skipping the Iced Mocha Macchiato at Starbucks or dinner at the new sushi restaurant. I guess it is OK to splurge once in a while but perhaps only on special occasions to celebrate achievements and milestones in life. Life is too short to be eating ham sandwiches every day.
Wasted opportunities
This is a call by Warren to be out looking for opportunities or side-hustles. One of his favorite saying is that "if you don't find a way to make money while you sleep, you will work until you die". Sadly, this is predicament by many people...we find that we are unable to retire early. In his early years, Warren tried delivering newspapers, selling used golf balls, buffign cars, etc.
These days, we have heard many success stories of folks getting by via the Internet. I did touch a little on this subject in my post on side hustles
Gambling
Warren called gambling "socially revolting". While it does bring some excitement into one's life plus bringing in money (lot of it) in terms of tax revenue, the flipside is that it has cause the downfall of many. I explored gambling in my book where I examined how gambling ticks every checkbox in the motivation equation...if you wish to learn how to motivate people, study how the casinos work!
In short, don't even start gambling: as sung by the Eagles in Hotel California "you can't kill the beast...you can never leave"
Living beyond their means
Last but certainly not the least, Warren advices that when you are out shopping and see something you like, ask yourself if this is something you need or something you want. He warned the audience during a meeting at Emory University not to confuse the cost of living with the standard of living.
One of the questions that I was asked if how I can afford to live in Singapore, said to be one of the most expensive cities in the world. The answer to the question: it is manageable if we live like the 80% of the population by staying in government housing, eating at cheaper hawker centers, shopping at local stores, etc.
Well, we don't appear on Instagram/Facebook feeds or Tiktok because it is not an expensive restaurant or Louis Vuitton. But we get to live in one of the cleanest and safest country in the world.