Warren Buffet is worth around $100 billion and clearly doesn’t have to worry about how much money he spends on a daily basis. But the famous billionaire is actually known for his wasteful spirit and humble approach to life, despite his status as the 8th richest man in the world.
You might be thinking: Why do I care about saving now, with inflation so high? But the pros say we need somewhere between 3-12 months of basic expenses in a high-yield savings account (thankfully interest rates on savings accounts are rising and you can see the best rates on savings accounts here) in case of an emergency — which might be useful if we enter the recession that many are predicting. So how could you earn so 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 life.
Pays cash 98% of the time
Many people tend to ditch plastic when it comes time to pay for something, but Buffett believes in using cash for everyday purchases, according to an interview he gave to Yahoo! Financing. “I have 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 loansexcept mortgage
Buffett has known to have only one mortgage — on a vacation home he bought in 1971. “If you get a 30-year mortgage, it’s the best instrument in the world,” Buffett told Yahoo finance, noting that he chose a mortgage because “I I thought I could do better with the money than it being an outright purchase of the house,” Buffett said. Of course, you pay interest on most loans you take out, but home equity loans tend to have lower interest rates than personal loans or credit cards, and you own your home as soon as you pay off the mortgage.
He doesn’t spend much 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 several times a day, Buffett chooses to eat a cheap breakfast from McDonald’s and is known for making the his own meals. He even forgoes store-bought coffee and prefers to make his own. This may be particularly important right now, as food costs have risen an unadjusted 10% in the past year, according to government figures.
He doesn’t drive super high end cars
Instead of traveling 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 can be especially good advice now that the price of cars has skyrocketed. Even better? Buy a gently used car, as according to some estimates new cars lose around 20% 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’ll soon sell things you need,” Buffett said. For this reason, he has turned the drawers into baskets and will work to find solutions to situations rather than having to buy new items that are not absolutely necessary.
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