Are You Finding That The Start Of Your Year Has Not Kicked Off To A Great Start In Terms Of Being Smarter With Your Money, Building Your Wealth And Saving Some Extra Cash?
Well, there’s nobody better to turn to for advice than Warren Buffett himself; with a personal fortune estimated at more than $72 billion and being the third richest person in the world, it’s common sense to take what he advises as gospel.
We list 6 of his most important tips to become smarter with your money.
- Avoid risk wherever you can.
“Rule No.1: Never lose money” Buffett has said; which is an obvious choice of words because how many people do you know that think losing money is a great idea?! Although saying that, sometimes we mindlessly forget this and risk something that we need (weekly groceries) to get something that we want (new iPhone).
Over the years, Buffett has refrained from making a lot of risky investments, and has shunned what could have been huge gains. This risk-averse strategy has paid off extremely well for Buffett.
- “Price is what you pay, value is what you get.”
Also known as ‘bargain hunting’, you must hold higher the value that you’re getting to offset the price that you’ll be paying for. We all fall short of this when we go to grab our credit card to purchase that one expensive item that we just absolutely must have and end up accumulating a high percentage of interest in the month ahead.
“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down”, Buffett has written.
- Healthy financial habits are key.
We all have (nasty) habits that we try to break, make new year’s resolutions for, or just genuinely try to combat with the help from others. But there are those habits that we try to form (in a good way), and sometimes those can come from making mistakes and knowing and understanding this better for next time so we don’t make them again.
“The biggest mistake is not learning the habit of saving properly” Buffett says. Perhaps try automatically deducting out of your savings each pay period, or set a reminder in your phone to commit to this on a weekly / fortnightly / monthly basis.
- Pay in cash.
Try to aim to have a decent portion of your savings in cash, whether it be hidden under your bed in a shoebox, out proud on the shelf in a piggybank, or in a cash equivalent that gives you easy access.
“Cash is to a business as oxygen is to a body: never thought about it when it is present, the only thing in mind when it is absent” Buffett mentions. And he’s right. Go back to the time when there was no PayPass available and we had real money in our wallets. It’ll also help you consider just how much you’re really spending on your Saturday nights out.
- Work on you.
Invest in yourself as much as you can and in every way you can. Whether this be in the form of work you do everyday, your career, or your education. Your abilities and skills can’t be taken away from you, so improve in your talents and what you’re good at doing (and love doing it) and see the rewards and returns start trickling in.
Do something you have always wanted to do: take up an art class or get creative, accept that job offer to become part of management in your casual job, or give back to the community by taking up a volunteering position. Whatever you feel will make you smarter, will make you richer.
- Don’t think of goals as just short-term.
Try not to make the mistake of setting short-term goals all the time, actually invest in thinking forward one, two or three decades ahead of life. Don’t just make a ‘quick buck’, but focus on increasing your purchasing power over your entire lifetime.
It may take some time to pull together, but you will thank yourself by the time you retire with your children all moved out, and you’re happily planning that cruise around Europe you have always wanted to do.
If you would like to make a start in planning for your long-term goals and get into the swing of being more ‘savings savvy’, give us a call or send us an email at firstname.lastname@example.org to chat further.