Warren Buffett, who is known as the “Oracle of Omaha”, is famous for his simple and frugal lifestyle. Despite being a billionaire, his focus is always on smart investments and avoiding unnecessary expenses. Buffett’s advice is a strong message for the middle class: improve your financial habits and invest for your future.
- Don’t buy new cars: The trap of depreciating assets
“Do not save what is left after spending, but spend what is left after saving.” Buffett says that a new car is a bad investment because its value falls quickly. A new car loses up to 20% of its value in the first year and about 60% within 5 years. Buffett himself prefers to buy hail-damaged (slightly damaged) cars that are reliable and do not waste money in pursuit of unnecessary status.
- Avoid Fake Subscriptions and Fees
“If you buy things you do not need, soon you will have to sell things you need.”
Silent money drains like streaming services, unused gym memberships, and delivery services quietly drain your budget. Buffett says to regularly review your subscriptions and cancel things that are not useful. It is important to understand the value of every penny, just as Buffett once took back his coins when a call on a payphone did not go through.
- Give up the temptation of upgrading in big houses
“The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard.”
Buffett believes that middle class people unnecessarily try to get bigger houses, which becomes a financial burden. He bought a house in Omaha, Nebraska in 1958 for $31,500, and that house is his permanent address to this day. Bigger houses mean more mortgage, property taxes and maintenance costs.
- Don’t buy cheap quality products
“Price is what you pay. Value is what you get.” Buffett suggests that buying cheap and low-quality products is a wrong idea. These things get spoiled quickly and cost more in the long-term. Instead, invest in good quality products that are durable and have a longer life span.
- Stop buying lottery tickets
“Gambling and lottery tickets are a tax on people who don’t understand mathematics.” Lottery and gambling are a financial trap that targets people who do not understand probability. Buffett says that instead of wasting money on lottery tickets, it is better to invest that money in systematic saving and investing.
Result: Principles of Thoughtful Spending
“Someone’s sitting in the shade today because someone planted a tree long ago.”
Warren Buffett’s advice teaches us to focus on long-term financial health and avoid unnecessary expenses. Stay away from new cars, useless subscriptions, big houses, cheap things, and lottery tickets. Allocate your money wisely and build long-term wealth.
By following these principles, even the middle class can make their future financially secure.