Warren Buffett, dubbed the greatest investor of all time by many, has long been known for his investment strategies that helped him become the second wealthiest man in the world, as well as head the 4th largest company in the world, Berkshire Hathaway.
Because of his enormous successes, Buffett is often looked to for advice of all kinds— what stocks to invest in, how to run a successful business, or even what to do during retirement. Most of the time, Buffett offers up advice freely, and it’s usually simple and helpful.
This is the case when Buffett is asked what general advice he’d give to the average American— his response is simple enough, though his knowledge about the American economy and spending habits in general seems to give him some better insight.
“My dad went to work… to find out the bank where he worked and held all our money had closed. He had no job and no money and no kids,” Buffett reflects.
You have to be prepared for unexpected situations, such as a layoff or even a death in the family, and try to have an emergency fund or some sort of back up plan in place. This will prevent you getting caught of guard and being put in a situation where you do not have the funds to live.
Don’t Have Debt
“Credit cards are poison. If you make a dollar, only spend 95 cents, not $1.05,” Buffett advises.
I’ll admit I struggle with this part as well— Buffett is famous for his frugal lifestyle, and you should follow in his footsteps. At the very least, be happy to live within your means and don’t try to “keep up” with anyone. Not having debt will help you build an emergency fund and prepare you for unforeseen circumstances.
Stay Ahead of the Game
“You should be ahead of the game all the time rather than behind it, as it is harder to work your way out of a hole. You want to play the game from strength, and you have to think ahead. People don’t always want to hear advice when things are going well,” Buffett warns.
Ultimately, you need to anticipate your own needs. For example; during the summer, I typically do well financially— I’m not in school, so I pick up some extra income and throw it in savings until winter starts to take its toll on me. But, I don’t go on huge spending sprees during the summer even if it seems like I’m doing really well, because I know that in the winter I’ll be happy to have some extra money to survive. By anticipating your own financial needs, you’re able to stay ahead of the game.