Chances are, you know who Warren Buffett is. He’s one of the richest men in the world, and he’s famous for his ability to spot a good investment. He’s also a famous penny pincher who makes it a point to get good value for whatever it is he buys. He also famously gave one of the best pieces of investment advice out there when he suggested that the time to buy is when everyone else is fearful.
Photo from Wikimedia Commons.
Recently, Buffett signed on to voice an animated version of himself in a financial literacy show aimed at children, “Secret Millionaires Club.” Buffett spoke with Yahoo! Finance about money, and the show, and financial education in general. Here are some of my favorite pieces of advice from the piece, with my own thoughts added:
The best investment you can make, is an investment in yourself.
What you learn, and how you develop your own talents and skills can have a big impact on how much you can ultimately earn. One of the best things you can do for yourself is develop a marketable skill. Take the time to invest in yourself, from getting an education (it doesn’t have to be a formal education) to developing skills and expertise that others can benefit from.
The more you learn, the more you’ll earn.
I think this goes beyond just formal schooling. This also includes learning about money — especially how money works. When you put that knowledge to work, you make better financial decisions, and you can even put your money to work on your behalf.
Learn to Spend Less than You Have
Warren Buffett also pointed out that you shouldn’t spend more than you have. The whole “spend less than you earn” things is pretty basic, yet it’s surprising how many people struggle with this. (Although I prefer to flip that to “earn more than you spend” since it seems more active.) In the end, it’s about the importance of learning how to properly manage your cash flow.
Great partnerships make any job easier.
Sometimes, we think that we have to do everything on our own. This isn’t the case. Finding the right people to help you can be a great way to make the most of your situation. Whether you find a mentor to help you improve your career, or find a great business partner, you really can build something that is worth more than the sum of its parts. Don’t forget, though, that you should, in turn, help others when you can.
Don’t Borrow without a Plan to Pay it Back
This was an interesting bit of true business wisdom. Many of us think that all borrowing is bad all the time. Instead of putting a blanket ban on borrowing, Warren Buffett emphasizes the importance of making smart financial decisions, and having a plan to repay any money you borrow. Before you take out a loan, you should have an idea of what you will do to repay it.
Save for the Unexpected
You never know what’s going to happen next. Saving up for setbacks is a good way to be prepared. When you don’t have an emergency fund, any financial setback can turn into a catastrophe. With a little savings, you can protect yourself to some degree. You don’t have to borrow as much if you can handle the situation on your own, with money from your emergency fund.
Learn from your mistakes, and the mistakes of others.
No matter how hard we try, we’re going to make mistakes. I’ve made my share of money mistakes, and I’m sure you have, too. The important thing is to learn from your mistakes. Take your setbacks as learning experiences, and figures out how to do it better. On top of that, you can also learn from others’ mistakes. Reading about the things others have been through can help you improve your own situation, and learn to make better decisions over all.
As always, Warren Buffett has plenty to say about money, and managing it properly.
What do you think of some of his bits of wisdom? Do you have other favorite pieces of advice from Warren Buffet, or from other famous billionaires?
Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.