Warren Buffett says this is the “biggest mistake” people make with their money (and psst: it has to do with saving)

Warren Buffett says this is the "biggest mistake" people make with their money (and psst: it has to do with saving)

Warren Buffett

Johannes Eisele/Agence France-Presse/Getty Images

Warren Buffett, the infamous 91-year-old Oracle of Omaha, is worth roughly $100 billion, and he clearly could spend frivolously. But Buffett is known for his spending ways (remember, he eats at McDonald’s frequently) and his emphasis on building financial security. He’s also a big fan of learning how to save properly.

You might be thinking, why save now in times of high inflation? But professionals say that even now, having savings is key (thankfully, savings accounts are paying more now; here you can see some of the best paying savings accounts). The guidance is that you’ll need about 3-12 months of essential expenses in a safe place like a high-yield savings account. Need some inspiration to make it happen? Here are some of Buffett’s most famous quotes about saving money.

“The biggest mistake is not learning the habit of saving properly.”

In a speech to college students, Buffett pointed out that the “big mistake” is “not learning the habit of saving properly.” He also noted that “most behaviors are habitual” and that “they say the chains of habit are too light to feel until they are too heavy to break.”

An easy way to do it? Make it automatic. It’s advice you’ve probably heard a thousand times, but that doesn’t make it any less effective. Set up automatic transfers directly from your paycheck soon after you get paid into your savings and retirement accounts at regular intervals. That way you’ll never touch that money yourself; it just goes straight to savings. Then every year, if you can, try to increase your savings (many people use the start of the year to review their finances and do something like this). You can see some of the best paying savings accounts here.

“Whether it’s socks or stocks, I like to buy quality merchandise when it’s on sale.”

In his 2008 Berkshire Hathaway shareholder letter, Buffett said, “Price is what you pay; value is what you get.” To avoid losing money as a result of paying a price that doesn’t match its value, Buffett suggests you can save by buying discounted items. “Whether it’s socks or stocks, I like to buy quality merchandise when it’s on sale,” Buffett said.

The good news for consumers is that in both stocks and shares, there are deals right now as the markets have been down this year, and there is now excess inventory on many items in places like Walmart because inflation is spurring consumers to spend less. .

“Don’t save what’s left after spending, but spend what’s left after saving.”

Essentially, save first, and once you’ve eliminated as much as possible, you can afford to spend money. For his part, Buffett is also all about spending cash. “I have an American Express card, which I got in 1964,” he told Yahoo Finance. “But I pay cash 98% of the time.”

Any advice, recommendations or rankings expressed in this article are those of MarketWatch Picks and have not been reviewed or endorsed by our trading partners.



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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!