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What I’ve Learned From Warren Buffett About Wealth

What I’ve Learned From Warren Buffett About Wealth

Warren Buffett is one of the richest men in the world, but his reputation for folksy wisdom, frugality and simplicity make him seem like just a regular guy, like he might be the billionaire next door.  Fortunately, Buffett’s commentary about his investment decisions provide us with valuable study materials in the school of investing. Here are some of Buffett’s biggest lessons that we can learn from him.

1. Focus on long-term success

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” – Warren Buffett

You need a strategy for long-term success in the market. Buffett is always concentrated on finding a company to invest in that he feels will produce long-term results. He is not interested in the latest IPO, or the trendiest stock everyone else is interested in. Buffett possesses a mindset that many investors don’t have – thinking long term.

Find the businesses that you believe have long-term growth potential. It’ll change your mindset, and your success rate.

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2. Invest in quality companies

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren Buffett

Buffett is only focused on discovering worthy companies for investment. He always evaluates the whole company when buying stocks. That make the investment more personal  and will lead you to assess the company on a much deeper level. It’s by trying to shift your mindset from that of an ambiguous stockholder to that of a sole owner of the business that’ll help you find truly quality companies.

3. Get in when others are getting out

“Be fearful when others are greedy and greedy when others are fearful.” – Warren Buffett

Whenever there’s a recession you’ll get lots of news about Warren Buffett. In 2008, Buffett invested $25 billion into the market when the rest of the world was getting out. Buffett always believes that a recession is the perfect time to find quality companies whose stock is cheap. He took advantage of this fact in 2008, and profited by nearly $10 billion!

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4. Start investing today

“Someone is sitting in the shade today because someone planted a tree a long time ago.” – Warren Buffett

Buffett started at a young age, and this was the main factor that lead him to achieve more success later in life. At age 11, he used to take a paper route, sold chewing gum door-to-door, and even bought his first shares of stock. Starting young allowed him to find his own way to success. Don’t wait for the right time to invest or to get your personal finances in order. It’ll influence your financial success later in life. Don’t procrastinate, start investing today!

5. Invest in what you know

“The stock market is a no-called-strike game. You don’t have to swing at everything – you can wait for your pitch.” – Warren Buffett

The most important thing about investment is that you will find thousands of companies to invest in, and different strategies that can all be successful. But, remember don’t use someone else’s investment strategy, or invest in a stock simply because someone else is doing it. Develop your own strategy that fits your personal financial goals, and always look for the companies whose business model you’re already familiar with.

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6. Challenge yourself to be better

“It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.” – Warren Buffett

You can never find success financially, personally or professionally if you don’t challenge yourself and hold yourself accountable. The best way to do this is to associate with smarter and more successful people than yourself. As the saying goes, you’re the sum of the five people you hang around the most – so try to make those five smart people!

7. Do your homework and be disciplined

“Only when you combine sound intellect with emotional discipline do you get rational behavior.” – Warren Buffett

Investors need these two ingredients the most in the investment game. You’ll get sound intellect after doing your homework, your research and an investigation of a company’s value. Discipline, on the other hand, will come with your ability to wait for the best time to enter. Practice both of these and you’ll take your investment to the next level.

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8. Be passionate

“Without passion, you don’t have energy. Without energy, you have nothing.” – Warren Buffett

Be passionate about your work and chase what you are passionate about. Passion will enable you to go to the ends of the earth to fulfill your dream. That will be your fuel in your journey to success. It will make you unstoppable. It will make you strong when times get tough, and ultimately it will make life so worth living.

Featured photo credit: BorsheimsJewelry via flickr.com

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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