Contents
- 1. Never lose money
- 2. Get Healthy Financial Habits
- 3. Do not keep all the money in the account, keep some in cash
- 4. Get valuable things at a low price
- 5. Invest in yourself
- 6. Think in terms of decades, not months
- 7. Don’t borrow
- 8. If you manage your own money, read about finance
- 9. Money isn’t everything
- 10. Don’t jump, step over!
Warren Buffett created a fortune from scratch and became one of the richest people in the world. Nevertheless, he is very cautious, in his decisions he often contradicts the basics of the science of finance and believes that you cannot risk what you need for what you want. Ten unexpected tips on how to properly treat money, so as not to lose, but to increase.
1. Never lose money
“Rule number one: never lose money. Rule number two: never forget rule number one.» A strange recommendation — after all, there is hardly anyone who would consider losing money a good idea. However, everything is not so simple. This is very wise and practical advice to avoid risks as much as possible. “To stay successful and live happily, never risk what you need for what you want.”
Warren Buffett himself adhered to this rule and never made risky investments. He said, «The difference between successful people and truly successful people is that truly successful people say no to just about everything.»
2. Get Healthy Financial Habits
Speaking to students, Buffett once said, “A lot of our behavior is determined by habit, and for good reason they say that its chains are too easy to notice at first, and too heavy to break when you finally notice them.” . There are some habits we’d all like to break, but the most important one we need to acquire is the habit of saving money the right way.
Don’t save what’s left after you’ve spent — spend after you’ve saved
To make this painless for you, it is best to automatically deduct a small amount from each of your paychecks and use programs that show the proportion of your monthly expenses for different product categories.
3. Do not keep all the money in the account, keep some in cash
Another unexpected suggestion. Considering that Buffett’s net worth is estimated at $2022 billion as of 116, his company Berkshire Hathaway always has about $20 billion in cash ready to be dispensed at a moment’s notice.
This seems unreasonable and goes against the general principle of financiers to invest money and not keep it under the mattress. And he really loses a lot from the fact that this money is not invested in any project and does not bring profit, but this is what saved his company during the 2008 crisis.
And he is still in the top ten of the list of super-successful investors.
As Buffett says, “Cash is to a business like oxygen is to the body: you never think about it when you have it, and you only think about it when you don’t.” Dollars are somehow trusted more than checks. It is especially important to follow this rule for those whose income is unstable.
4. Get valuable things at a low price
The price is what you pay. Value is what you acquire. As a financier, Buffett thought globally, so it’s not about buying on sales. Although, according to him, «the sale of socks and the sale on the securities market are subject to the same laws.» If you buy property when everyone around you buys it, the market will be overheated and the price will be too high for you.
5. Invest in yourself
Invest in yourself as much as you can afford, from taking care of your health to getting a useful education and finding a job you love. Everything you do to develop your talents and acquire new skills will then come back tenfold. And no one can take away your skills from you. Anything that makes you smarter makes you richer.
6. Think in terms of decades, not months
Most people make the same mistake of trying to make the most of the moment. “Don’t chase a quick buck, focus on growing your strength and confidence gradually, over a lifetime,” Warren Buffett advised. Successful investing takes time, discipline and patience.
No matter what talent you have and what gigantic effort you put in, some things just take time.
«You can’t have a baby in one month by making nine women pregnant,» Buffett said. Think in terms of decades—gradually accumulating the amounts needed for your children’s education or your pension.
7. Don’t borrow
You don’t need to take loans in this world at all. Buffett is very categorical about this.
He said: «If you are smart enough and quick-witted, you will make your interest work for you, and you will not work for your interest.»
8. If you manage your own money, read about finance
Go to bed smarter at night than you got out of it in the morning. “A major part of my job as an investor is to minimize risk and cut costs.
And what is the risk for an ordinary person, not a financier? It appears when you don’t know what you’re doing.»
The more you learn about money and the laws of its life, the greater your financial literacy, the better you manage your money and know how to get the most out of it, no matter how much you have.
9. Money isn’t everything
“Some material things have made my life happier, but if there are a lot of them, then it will be the other way around. I won’t give up on a private jet, but half a dozen houses is already a problem. Often a large number of possessions begin to own the owner himself. The greatest value besides health is my friends, ”admits Buffett.
10. Don’t jump, step over!
«You don’t have to do extraordinary things to get extraordinary results.»
“The most important quality for an investor is temperament, not intelligence. You need a temperament so that you do not get much pleasure either from the fact that you are with the crowd, or from the fact that you are against the crowd.
“I’m not looking to jump over 7 foot high barrels. I look around to find a one-foot can and step over it.»
And finally: “Opportunities happen irregularly. When it rains golden, take out the bucket, not the thimble.»