Uncover Warren Buffett's Top 15 Frugal Living Hacks
Warren Buffett, the renowned investor and successful businessman famous for his thrifty ways, has achieved immense wealth through self-made efforts, making him one of the world's richest individuals.
In this article, we will delve into his lifestyle and unveil the 15 intelligent and economical habits that have been pivotal to his success.
Get prepared to observe and implement these habits to shape your financial future positively.
Habit #1
The first and foremost habit is to exercise caution when considering loans.
Warren Buffett himself has taken out only one single loan, which was specifically for a vacation home.
He made this decision based on the belief that the investment would yield higher returns compared to keeping his money in a savings account.
The key takeaway here is to thoroughly weigh the pros and cons before opting for a loan and ensure that it aligns with your long-term financial goals and benefits you in a wise manner.
Habit #2
The second habit is to prioritize quality over brand names.
While many people associate brand names with high quality, Warren Buffett's approach is different.
He values owning items of excellent quality, such as suits, but not necessarily from expensive or well-known brands.
He understands that true quality is not determined by the brand or its price, but rather by how well it serves its intended purpose and stands the test of time.
Habit #3
The third habit is emphasizing the importance of avoiding unnecessary spending.
Warren Buffett's Frugal habits are well-known, as he creatively repurposed a dresser into a bassinet for his first child and borrowed a crib for his second.
His famous quote:
If you buy things you don't need, you will soon sell things you need
highlights the wisdom of refraining from purchasing unnecessary items.
Instead, he advocates borrowing or finding alternative uses for existing possessions.
Habit #4
Habit number 4 is to caution against investing with borrowed money.
Warren Buffett made the mistake of borrowing 25% of his net worth for investments, but he learned from it and now strongly advises against such practices.
In his 2017 letter to Berkshire Hathaway investors, Warren Buffett presented a table displaying the returns of the company's stock price from 1973 to 2009.
Within this timeframe, there were four instances where Berkshire's stock price experienced significant declines, ranging from 37% to 59%.
According to Buffett, this table serves as his most compelling argument against using borrowed money to invest in stocks.
He emphasizes that the unpredictability of stock market fluctuations can be substantial, and even small borrowings can lead to unsettling moments when facing market downturns.
An unsettled mind, he warns, is not conducive to making sound investment decisions.
Instead, he recommends investing any surplus money you have on hand.
Fortunately for us, there are numerous investment apps available that make it convenient to do so.
Habit #5
Habit number 5: Exercise prudence with home upgrades.
Warren Buffett's steadfast commitment to live in the same house he acquired for $31,500 in 1958 (that’s the equivalent to $329,500 in today's money) exemplifies his practical living philosophy.
For him, a home should serve its primary purpose, and unless it meets his fundamental needs, he sees no justification for making unnecessary upgrades.
The essential notion here is to carefully assess whether any changes to your home are truly vital, fostering a frugal mindset, financial savings, and the practice of living within one's means.
Additionally, in a 2010 letter to shareholders, Buffett has praised the benefits of homeownership, considering it the third-best investment he’s ever made.
Habit #6
Habit number 6: Choose budget-friendly takeout alternatives.
Despite his considerable wealth, Warren Buffett is famous for favoring cost-effective meals, like a $3.17 meal at McDonald's.
This choice highlights the idea that enjoying good food doesn't require spending exorbitant amounts.
The advice here is to minimize expensive dining choices and instead seek out delicious yet affordable meals.
By doing so, you can keep your overall expenses in check and boost your savings.
Habit #7
Number 7: Select a budget-friendly vehicle.
Warren Buffett doesn't prioritize spending much time on driving, so he prefers a reliable older model or a used car.
This choice exemplifies the importance of living within your means and shows that you don't necessarily need a luxurious brand-new car to meet your transportation needs.
You just want to get from point A to point B without any hassle.
Prioritizing practicality over extravagance can lead to better financial stability and long-term savings.
Habit #8
Habit number 8: Pursue a career you are passionate about.
In contrast to popular opinion, Warren Buffett credits his investing success to his genuine love for the work he does.
He firmly believes that enjoying what you do leads to better performance.
Therefore, if you find yourself dissatisfied with your current job, Buffett suggests exploring the possibility of creating a side hustle that aligns with your passions.
Finding fulfillment in your career can positively impact your overall performance and contribute to long-term success.
Habit #9
Frugal habit number 9 is to embrace cash transactions over credit and debit cards.
While credit and debit cards offer convenience, Warren Buffett prefers using cash to avoid the risk of overspending.
By sticking to cash, you gain better control of your expenses as you can only spend what you physically possess in your pocket.
This approach promotes mindful spending and helps you keep a clear track of your financial transactions.
Seriously, give this a try and you will be amazed at the effectiveness when you see your money leaving you everytime you buy something.
Habit #10
Habit number 10: Seek discounts and sales opportunities.
Whether it’s investing in stocks or shopping for clothing, Warren Buffett advises waiting for the right time to make a purchase.
He believes that high-quality items should be acquired when they are available at a discounted price.
This is very much in line with his famous value investing philosophy.
Also, this advice works best for anyone looking to reduce expenses and make the most out of their spending.
Habit #11
Habit number 11: Avoid unnecessary upgrades.
Warren Buffett's frugal approach to life is evident in his limited use of upgrades.
He only switched to an iPhone in 2020, and he believes in maximizing the lifespan of his possessions, using them for 20 to 25 years before replacing them.
This prudent approach helps him avoid unnecessary expenses and saves money in the long run.
It’s interesting to note that his iPhone was gifted by none other than Apple’s CEO himself, Tim Cook.
In 2018, Cook mentioned to Bloomberg TV that he would be willing to personally travel to Omaha to provide tech support for Buffett if the billionaire ever required assistance.
Habit #12
Number 12: Utilize coupons – Even individuals as wealthy as Warren Buffett recognize the benefits of clipping coupons.
This anecdote tells us that during a meal with Bill Gates at a McDonald's in Hong Kong, Warren offered to pay and took out coupons to use.
I’ve actually attached a picture of the 2 found in Bill Gates's 2017 Annual Letter, if you are interested in reading the full article yourself, feel free to click here.
Regardless of one's financial status, coupons can still be highly valuable and aid in saving money.
Habit #13
Number 13: Avoid smoking and drinking – Habits such as smoking and drinking can be both costly and harmful to your health.
By refraining from these habits, not only can you save money on their purchase, but you may also prevent potentially costly medical expenses in the future.
Warren Buffett serves as a prominent example of this, as he has never smoked or consumed alcohol and still managed to become one of the wealthiest individuals globally.
Habit #14
Number 14 is to steer clear of gambling risks – Warren Buffett had a clever way of teaching his kids about the perils of gambling.
He provided them with an allowance in nickels and a slot machine, assuming that they would be tempted to use it.
What they didn't realize was that every time they played, he was getting back all the money he had given them.
The lesson here is to be cautious with your finances and invest in ventures that have the potential to generate returns rather than gambling away your money.
Habit #15
And the final frugal habit, number 15 is to opt for a modest wedding.
While weddings can be expensive affairs, Warren Buffett chose a different route.
He and his second wife had a simple ceremony at his daughter's house, forgoing a lavish wedding.
Instead of spending extravagantly, they focused on their long-term financial goals and invested the savings wisely.
This serves as a reminder to prioritize financial objectives over unnecessary expenses on events like weddings.
I hope you enjoyed learning about the timeless habits that are practiced by Warren Buffett to this day.
If you did, be sure to share these habits with your family and friends!
- Ivan