Warren Buffett is known to be frugal.
Warren Buffet is worth about $100 billion, and clearly doesn’t need to worry about how much money he spends on a daily basis. But the famed billionaire is actually known to for his spendthrift spirit and modest approach to life, despite his status as the 8th wealthiest person in the world.
You may be thinking: Why do I care about savings now, with inflation so high? But pros say that we need somewhere between 3-12 months of essential expenses socked away in a high-yield savings account (thankfully savings account rates are rising and you can see the best rates on savings accounts here) in case of emergency — something they say might come in handy should we enter the recession that many are predicting. So how might you sock up that much savings? Take a page from Warren Buffett’s book. Here are 5 things the business tycoon does to save money — that you might want to do in your own life.
He pays cash 98% of the time
Many people are accustomed to swiping plastic when it comes time to pay for something, but Buffett is a believer in using cash for everyday purchases, according to an interview he gave Yahoo! Finance. “I’ve got an American Express card, which I got in 1964,” he said. “But I pay cash 98% of the time.” For people with a tendency to overspend, this is a good rule to follow: You can’t spend cash you don’t have.
He rarely takes out loans, except for a mortgage
Buffett has notoriously only had one mortgage — on a vacation home he purchased in 1971. “If you get a 30-year mortgage it’s the best instrument in the world,” Buffett told Yahoo finance, noting that he opted for a mortgage because “I thought I could probably do better with the money than have it be an all equity purchase of the house,” Buffett said. Of course, you pay interest on most any loan you get, but mortgages do tend to have lower interest rates than personal loans or credit cards, and you own the home outright once you repay the mortgage.
He doesn’t spend a lot on meals
Although he could afford to hire any chef in the world to cook his meals, or even dine at the most expensive restaurants multiple times a day, Buffett opts to eat inexpensive breakfasts from McDonald’s, and is known for making his own lunches. He even forgoes store-bought coffee and prefers to make his own. This may be especially relevant right now, as the cost of food has increased an unadjusted 10% in the past year, according to government data.
He doesn’t drive super-high-end cars
Instead of cruising around in a collector car that costs as much as a house, Buffett prefers a more modest vehicle. Forbes reported that in 2014, he bought a Cadillac XTS after driving his previous Cadillac DTS for 8 years. This might be especially good advice now as the price of cars has skyrocketed. Even better? Buy a gently used car, as by some estimates new cars lose 20% or so of their value in the first year.
He buys what he needs, and not much else
“If you buy things you don’t need, you will soon sell things you need,” Buffet has said. For this reason, he has repurposed dressers into bassinets and he’ll work to find solutions to situations instead of having to buy new items that aren’t totally necessary.
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