17 Insights from Warren Buffett on Money Wasting Habits
We all make bad money decisions, and many times, these decisions can have a significant impact on our finances. And sadly, sometimes, the negative impact can be disastrous.
The good news is there are money experts worth listening to that can help you limit your mistakes. And many times, you will learn valuable nuggets to help you get ahead financially.
One such expert is Warren Buffett. While many people see him only as an expert in the field of investing, he offers great insights on personal finance in general. Here are some of his best nuggets for you to learn from and see immediate results.
1. Use Your Credit Card Less Frequently
Credit card debt can easily weigh upon you and continue to contribute to the debt you find yourself unable to dig your way out of. In fact, the average credit card debt per cardholder currently sits at around $7,236.
Warren Buffett avoids credit card use almost entirely, preferring to use cash. While he still uses his card on small expenses to keep his credit alive, he uses it sparingly to avoid digging himself a hole.
2. Don't Buy Into the “Latest and Greatest”
Too often, we find ourselves attracted to the newest gadgets and products that are out on store shelves. I know I've certainly been guilty of that more than once.
Meanwhile, people like Warren Buffett stuck to a flip phone until he absolutely had to switch over to an iPhone. If you don't want to waste money, use what you have and only upgrade when necessary.
3. Pursue Quality Over Quantity
In terms of both investments and the products we purchase, it's easy to spring for what is cheapest because that's what's most accessible. But that doesn't guarantee that what we're buying is worth it. We could lose money or have to replace something faster because we purchased the cheapest.
Always pursue quality over quantity, no matter what you're spending money on or investing in.
4. Purchase Used Cars Rather Than New Ones
Did you know that, on average, cars tend to lose around 10 to 15 percent of their value per year?
Warren Buffett sees new cars as a waste, which is why he only purchases used cars, as they can offer substantial savings if you know where to look.
Just take care to research your car, test drive it, and make sure everything looks correct if you plan on working with an independent buyer. Nothing is worse than thinking you're getting a deal, only to find out you're stuck with a vehicle that won't last nearly as long or perform as well as you initially expected.
5. Avoid Spending Full-Price on Anything
You might think that a man who is as wealthy as Warren Buffett wouldn't think twice about a price tag while looking to purchase something. But that's not the case.
Buffett is known to be extremely frugal, even to the point where he's using coupons at dinners he's having with others. Avoid spending full price on anything, and you can save a lot of money along the way.
6. Stay in Instead of Going Out
Buffett has always been known to prefer spending time indoors rather than going out to get drinks and such. That doesn't mean that you can never leave the house. Rather, it just highlights that going out or eating out regularly will cost you money you don't need to spend so often.
I think it's all about balance. Don't be afraid to go out and have fun with friends or treat yourself once in a while. However, don't do it so often that your bank account is being negatively affected because of it.
7. Create Opportunities Where Possible
If there's one thing Warren Buffett doesn't like, it's wasted potential. He always looked for ways to make money, even when he was younger.
Ask yourself, are there ways you could be boosting your income? Are there certain side hustles that you could take on to help you improve your financial situation?
Not all time not spent working is a waste of time. However, if you aren't using your available resources and taking advantage of certain situations, you could be losing out on chances to better your life.
8. Gambling is a “Tax on Ignorance” – Avoid It
Gambling is one of those things that I'm not too fond of. You could potentially make some extra money with the money you have. But most of the time, you'll probably lose the money you put in.
Buffett likes to call gambling a “tax on ignorance,” and he isn't exactly wrong. If you want to “gamble,” your money is better suited toward safer options like investment vehicles. The risk is greatly reduced, and the returns are far better.
9. Live Below Your Means
Warren Buffett still lives in the same house he purchased in the 20th century, doesn't drive a fancy car, and likes to eat a cheap breakfast. He does all this despite being worth millions.
When you live below your means, you don't put your wealth at risk. Buying cheaper alternatives and considering whether or not you really want something will reduce the risk of overspending and putting your financial health and future in jeopardy.
10. Enjoy Affordable Hobbies
I have a few hobbies, and I've tried out many more. The problem I run into is that so many hobbies these days cost a ton of money. This can make it difficult to engage in some of the hobbies you love without breaking the bank. This is why it's important to find relatively cheap hobbies.
Buffett, for example, enjoys playing bridge. It costs no money, aside from the pack of cards you need to get started.
11. Be Savvy When You Need to Purchase New Things
You might not think it when you look at him, but Buffett is not afraid to upcycle or shop secondhand.
Buying something new and shiny isn't his first move when he needs new things. Upcycling and buying gently used goods can help you save a lot of money while still getting the quality products you need. Be savvy when you need to purchase new things so you don't overspend.
12. Try Not to Take Out Loans (But Think Ahead If You Do)
Loans aren't entirely necessary for the rich. But for common folk like us, chances are that we're not going to be able to dodge loans and pay only cash for the things we need.
That said, there is a kernel of truth in this wisdom. Taking out as little money as possible by saving up and putting down a higher down payment will help you manage debt more effectively. Plan ahead accordingly before you look to apply for any loans.
13. Don't Invest With Borrowed Money
My investment strategy relies solely on the income I generate and what I'm able to do with it. But some people get the idea of taking out loans so they can jumpstart their investments or invest in trending products that seem promising.
Buffett heavily warns against this. Never invest with borrowed money. If you don't make the returns you expect and are unable to make loan payments, it will come back to bite you!
14. Stick to a Simple Wardrobe
Simple clothes are the cheapest clothes (generally speaking), which is why you see so many wealthy people like Warren Buffett wearing something that isn't brand name rather than flaunting his wealth.
If you're willing to wear clothes that don't cost a ton of money but are still well-made and will last you several years, you'll fare much better.
15. Keep an Eye on Subscriptions
One thing that Warren Buffett describes as a potential money waster is a gym membership. You can often save money by finding low-cost programs or ways to make money at home.
But I think that you can stretch this advice far beyond just gym memberships. All subscription payments could cost you money if you forget to cancel them. Be aware of your purchase and always look for alternatives that will save you money.
16. Don't Overuse Skincare Products
Taking good care of your skin is important. However, people tend to waste a lot of money on expensive skincare products that are ineffective or use only one key ingredient rather than several.
See if you can consolidate your skincare needs into a few choice products. Many products are multi-purpose, which will help you save money on your skincare routine.
17. Stop Failing to Invest in Yourself
Warren Buffett is known for his financial investments, but it's taken education to get him to the point he's at now.
He highly recommends that people invest in themselves. No matter the education, learning and growing will help you improve your capacity to make money and learn the skills needed to advance in your chosen career. The more you invest in yourself, the more capable you are of generating opportunities and improving your financial situation over time.
