When I was in college, I was struggling with my finances.
I didn't know how to manage my money properly and always had the problem that I couldn't
really save money.
That all changed when I decided that it couldn't go on like that and I started looking into
money and finances.
I read a book, namely the biography of Warren Buffett, and learned from it how a billionaire
handled his money.
I analyzed his habits and found 7 frugal habits that Warren Buffett and now I use to save
more money and these 7 frugal habits I will share with you today.
But before we get to the main topic of the video, first of all welcome back and if you
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Many of you surely know Warren Buffett as a successful investor and one of the richest
people on this planet.
However, there is another side to him, a side that has made it possible for him to build
this wealth and prosperity, namely his frugal side.
Yes, that's right, Warren is a frugalist.
What is unusual is that he has even kept this side as his wealth has grown.
In fact, he still lives in the same house he bought in 1958 for $31,500.
Many would probably have increased their standard of living with increasing wealth, but not
so Warren Buffett.
But what makes him live so frugally?
As I read his biography, I noticed a pattern when it came to Warren Buffett spending money.
Every time it came to spending, Warren Buffett would complain with the following phrase:
"If I invested this money, it would be worth more in a few months than if I spent it now."
He doesn't like spending money when he knows the money would be worth more if he had invested
it.
I think that's where his frugal attitude came from in the first place.
He would have preferred not to spend a single $ and would have rather invested everything
he had.
Before we get right into the 7 Frugal Habits, I wanted to share this learning from Warren
Buffett with you:
You need a why.
A "why" why you want to save more money.
For Warren Buffett it was investing, he was obsessed with investing and growing his money.
Think about your why and now let's dive into the 7 Frugal Habits I learned from Warren
Buffett's Biography. #1 Keep your living costs low
The first tip is to keep your living expenses low.
Your living expenses take up on average 40-60% of your total income and from my experience,
this is where the greatest potential to save more money lies, because many live far beyond
their means and far beyond what is necessary.
It is the distinction between the "Need" and "Want".
I gave the example earlier that Warren Buffett has lived in his house since 1958, which he
bought for $31,500, and since then his housing costs have remained the same.
He hasn't bought a more expensive or bigger house.
If you want to do like Warren Buffett, don't buy more house than you really need.
The same is true if you are paying rent in an apartment.
Think about whether you really need that big apartment and whether you can move to a smaller
one.
#2 Eat a Cheap Breakfast The 2nd tip is to eat a cheaper breakfast
or generally watch your costs when it comes to food and drink.
Here, too, many can save money because they live above their means and, for example, only
buy branded products or never pay attention to offers in the supermarket.
Warren Buffett said in his biography that he starts his day with a McDonalds breakfast.
Of course, this is firstly not healthy and secondly not as cheap as it used to be, but
it's about learning what you can from it: namely, paying attention to keeping your food
costs low.
How can you do that?
First of all, pay attention to the offers in the supermarket and secondly, think about
what you really need in terms of food during the week.
Record this in your budget and create a weekly meal plan.
This way you can avoid spending too much money on food and track your spending at the same
time.
#3.
Only Buy used Cars The 3rd tip is to buy only used cars.
Many tend to buy new cars as soon as they have a steady job and a regular income.
Mostly they take out a loan for the car purchase, because you do not have the money at once.
Or they buy a new car, although the old one was still fully functional.
I don't have to explain to you that neither of these things is good for your finances.
But how does Warren Buffett do it?
In the biography he told relatively rarely that he bought a new car, which is related
to the fact that he also really rarely bought a new car, because he drives them as long
as it is possible.
His daughter Susie once said the following in a documentary: "You've got to understand,
he keeps cars until I tell him, 'This is getting embarrassing - time for a new car,'".
In addition, when he bought a car, he mostly bought used cars and cars that had already
been in an accident and repaired.
Ask yourself in the future if you really need a new car or if the old car is still doing
its job and if you really need a new one, follow this rule: if you can't afford it now
3 times, you can't afford it at all.
#4.
Do affordable Hobbies The 4th tip is to do hobbies that you can
afford.
Many people tend to choose the most expensive and newest gym with the newest equipment when
they do sports, for example.
The question is: do you need the latest equipment?
Or is a standard gym enough?
As an example, one of Warren Buffett's hobbies is to play bridge, a simple card game for
4 people.
To do it like Warren Buffett, think about how you can make your hobbies cheaper or if
there are cheaper alternatives.
#5 Keep your Wardrobe cheap The next tip is to keep your closet cheap,
so what's inside the closet.
Warren Buffett often wears suits, but not high end designer suits, but simple and plain
standard suits.
To save money on your clothes, think about what your standard outfits are.
For example, if you often wear jeans, t-shirt with a hoodie, buy these basics in a good
quality without a brand on it.
You can often find them in shopping malls or online.
The advantage is that you buy a quality, whereby you can wear the clothes for a long time,
but at the same time you do not have to spend a lot of money for it.
I have also done so myself, that I have bought relatively cheap T-shirts and now wear them
for over 4 years and have not bought any more T-shirts since then
#6 Use Coupons The next tip is to use coupons.
Yes, this may be really unusual for a very wealthy man, but there is also a story about
this that Bill Gates told.
Bill Gates and Warren Buffett were once on a trip together, where Warren Buffett paid
for their meal at McDonalds with a coupon.
Try using coupons to save money on your next purchases, even if it's just lunch at McDonalds.
You can find coupons relatively easily on online coupons sites.
#7 Don’t Go Into Debt, Unless You Will Profit Later
The next tip is not to incur debt unless you can profit from it later.
There is a difference between good and bad debt.
Bad debts are those that you use to buy consumer goods such as a television or even a car.
Good debts are the ones that will bring you cash flow or wealth later on, such as when
you buy houses with them.
So when you incur debt, it should serve as investment capital and bring you cash flow
and growth later.
Warren Buffett, for example, only buys his cars with cash, which prevents him from taking
out a loan to buy the car and ensures that he can actually afford it.
And now a little investment tip from Warren Buffett: The most important investment you
can make is in yourself.
And if you are unsure what prevents you from saving a ton of money, watch the video on
the right, there you will learn 5 unconscious money habits that are holding you back.
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