Warren Buffett is one of the most successful investors of all time. The son of an American congressman, he bought his first stock at the tender age of 11 – and filed his first tax return when only 13. Since then he’s gone on to own more than 60 companies, and is now the world’s fourth-wealthiest person with an estimated net worth of $85.6 billion.
Don’t save what is left over after spending; spend what is left after saving.
The remarkable thing is, Warren’s practical financial wisdom is as relevant to the middle-earner as it is to a top-flight executive with a six-figure salary. It’s simple, timeless, and can work for anyone.
Here are five of his top money tips.
1. Save first, spend later
You’ll only have enough money to invest when you prioritise saving. And the best way to do that is to take it from your salary before you do anything else. Start by putting together a budget that accounts for every penny you make and spend. Then commit to saving just 1% of your income each month. Your goal can then be to increase your savings amount by another per cent each month until you reach the level you’re happy with.
2. Invest for the long haul
If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. It’s best to take a ‘set-it and forget-it’ approach. Choose a few funds to invest in, then don’t worry about the minor ups and downs that occur day-to-day – or even the major ones that happen every few years. The only time you’ll lose money in the stock market is when you take your money out while the market is down.
3. Never depend on a single income
Nothing in life is guaranteed. So you should always be ready to expect the unexpected. By investing cleverly and giving yourself another potential income stream, that reduces the pressure on you and your salary. And for added peace of mind, always try to have an emergency fund that can cover your living expenses for a while.
4. Work with people who show integrity
If you’re looking for a financial planner to help you with an inheritance, establish a business or exit from one, choose wisely. Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you don’t have the first, the other two will kill you.
5. Just get started
The most important step is the first one. Not starting to invest, paying off a debt or saving is where most people go wrong. What’s holding them back? Too many choices, too much jargon, not enough time, or money. It’s all just excuses to fail. Instead, make time to learn the basics and get started. How you live out your retirement depends on the actions you take right now.
Warren’s advice is so simple – and yet it all makes perfect sense. No wonder he’s been as successful as he has. And he’s one of the good guys too, having pledged to give 99% of his fortune to philanthropic causes.
You only have to do a very few things right in your life, so long as you don’t do too many things wrong.
Need some help to get started?
At Citywide, we’re always happy to talk about how you can manage your wealth and live life to the full. If you’d like some help to get started, please feel free to give us a call on 01372 365950.