9 Minimalist Rules to Learn From Warren Buffett
With a net worth of over 82.5 billion dollars, Warren Buffett is the third richest man on the planet.
Humble, passionate, and relentless, the 90-year old has become an American business icon but also a model for modesty and generosity.
The founder of Berkshire Hathaway loves simple things and focuses on what matters most. On this basis, here are 9 minimalist rules to learn from Warren Buffett.
1. Always live below your means
What do 80 billion dollars sound like? Lavish palaces, hundreds of sports cars, superyachts, and tons of jewelry?
Warren Buffett couldn’t care less about the usual jet-set lifestyle.
Living in the same house for over 60 years, eating $3 McDonald’s meals for breakfast, and driving a bog-standard Cadillac XTS for over 10 years — these are some of Warren Buffett’s minimalist life choices.
“Always live below your means“ is one of Warren Buffett’s cardinal principles for entrepreneurs.
While you don’t have to take this ethos to Buffettesque extremes, spending only a fraction of your income on consumer goods is a simple yet astute way of improving your finances.
2. Hang out with inspiring figures
Whether it’s like-minded business icons or American history makers, Warren Buffett knows how to pick his peers.
In this respect, the 90-year old Nebraskan attributes a lot of his success to the influence of critical thinkers in his social circle.
Always trusting the guidance of old pals, he still entertains a close association with Charlie Munger, one of his early business partners. The same goes for his 30+ year friendship with Bill Gates.
On some rare occasions, Buffett even invites Gates and Munger out for a McDonald’s dinner. Buffett’s endless stash of coupons usually settles the check.
In accordance with his essentialist mindset, Buffett keeps his circle small but efficacious.
3. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
This stock market quote can easily be applied to other types of consumer habits. In line with Buffett’s minimalist character, genuine quality should always be favored over excessively tempting deals.
In simple terms, don’t buy cheap products if they aren’t any good. Buy good, long-lasting products at a fair price.
4. Never stop learning
At almost 90 years of age, Buffett’s willingness to learn remains incessant. In this perspective, one of Buffett’s most valuable life lessons is to use your free time to learn new things, especially once you become older.
Buffett doesn’t waste his time pursuing activities that don’t matter. He rather uses his free time to read every paper he can find.
He knows that at a certain age, staying attuned with modern developments is more crucial than ever.
In this sense, cutting out unnecessary activities in order to concentrate on fruitful undertakings is one of Buffett’s most practicable minimalist principles.
5. Always think long term
In true minimalist fashion, Buffett invariably favors long-term value over short-term gains.
In the 21st century, we tend to suffer from upgrading addictions as well as momentary consumer urges. This stands in striking contrast with Buffett’s business doctrine.
As he once said: “if you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.“
This philosophy can easily be applied outside of the stock market. If you think about buying something that won’t stand the test of time, don’t buy it.
In more general terms, align your short-term actions with your long-term goals. This mindset made Buffett buy the right stocks at the right time, forging a portfolio of longstanding value in the process.
6. Don’t go into debt unless you’ll profit later
Americans are notorious for their credit card bills. When it comes to consumer debt, the US trumps every other country in the world.
Buffett’s debt principles might prove highly beneficial in this regard. Don’t ever go into debt unless you’ll profit from it later. Accordingly, loans should buy assets, not liabilities.
On this basis, take Buffett’s advice and stop buying consumer goods on credit card debt. If you borrow money from the bank, use it to invest in your future.
7. Always focus on the future, not the past
As with Buffett’s long-term investment strategy, one of his life mantras is to always look forward. Learn from the past, relish your memories, but don’t waste your efforts on things you can’t change any more.
8. Give back to others
Together with Bill Gates, Warren Buffett is one of the co-founders of the “Giving Pledge” campaign. The movement encourages high net-worth individuals to donate at least 50 % of their wealth to charity after their passing.
Gates and Buffett both act as recruiters for the project. So far, they have managed to amass over 204 billion dollars in pledges by prominent figures such as Mark Zuckerberg and Elon Musk.
Buffett has been a committed philanthropist for decades without large-scale promotion.
In 2018 alone, he donated over 3.4 billion dollars to various charities. Unlike other billionaires who seemingly give away to clear their conscience, Buffett always highlights his indifference in relation to material wealth.
Couple Buffett’s complete disdain for luxury with his ordinary yet very sensible social conscience and you get one of the most generous people on earth.
In his own words: “If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.“
9. Discover your passion and follow it
“You only have to do very few things right in your life so long as you don’t do too many things wrong.“
As with lots of successful entrepreneurs, Buffett had one simple passion in his youth. He loved everything related to stocks, numbers, and investing.
Minimalist in spirit, Buffett has never dabbled in things he doesn’t understand. He dedicated his life to his love for numbers and achieved mastery.
In Buffett’s words: “Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”
Originally published at https://minimalistfocus.com on January 2, 2020.