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“Price is what you pay; value is what you get.” —Ben Graham, quoted by Warren Buffett
Warren Buffett, founder and leader of Berkshire Hathaway, is one of the most successful investors ever. By mid-2021 his net worth was about $108.2 billion. Berkshire owns more than 60 businesses, including Dairy Queen, Geico and Duracell. Buffett began investing at age 11, grew up the son of a congressman, and even approaching 90 remains active and engaged.
Despite his wealth, Buffett lives modestly and follows simple money habits that anyone can use. He still lives in the Omaha house he bought decades ago for $31,500. His approach centers on saving first, avoiding unnecessary debt, keeping cash available, and investing for the long term.
Save first, spend later
“Don’t save what is left after spending; spend what is left after saving.” If you want to build wealth, set aside part of your income before you spend anything. Automate contributions to a 401(k) and a Roth IRA so saving happens without thinking. Track your net worth to see progress and stay motivated. Keep a short-term cash cushion—like a savings account—for emergencies, and put extra money in an investment account for medium-term goals such as a car, a trip, or education. Automatic deposits make this steady saving easy.
Live below your means
Buffett likes simple pleasures—Coke and McDonald’s rather than fancy dinners—and says, “I’m not interested in cars and my goal is not to make people envious. Don’t confuse the cost of living with the standard of living.” Before buying, pause and think whether today’s purchase is worth sacrificing future gains. A quick rule of thumb is to multiply the cost by ten to estimate what that money could become in retirement if invested instead. That perspective helps curb impulse purchases.
Keep cash for opportunities and emergencies
Buffett maintains large cash reserves so he can act on good investments. For most people, having cash available means you can buy bargains when markets fall and cover unexpected expenses without resorting to high-interest debt. Credit card debt is especially costly: charging $1,000 at an 18% rate and paying only the minimum could take over 12 years to repay and more than double the original cost. Keeping an emergency fund prevents that trap.
Use debt sparingly
“I’ve seen more people fail because of liquor and leverage—leverage being borrowed money,” Buffett says. Borrow only when necessary. Interest payments reduce the money you can invest and compound against you. If your investments earn less than the interest on your debt, you’re losing ground. Make a plan to eliminate high-interest debt now.
Delay gratification and invest for the long term
Psychologist Walter Mischel’s marshmallow test showed that children who delayed a small reward for a larger one later tended to do better on tests and handle stress and focus better as they grew up. The same discipline applies to money. Buffett advises buying and holding quality investments—ideally forever. Compound returns need time to work: start small and invest regularly. For example, investing $10,000 a year at a 7% annual return from age 25 to 50 can grow to roughly $732,000. Employer retirement matches can help you reach such goals more easily.
Live simply and invest in yourself
Wanting less makes it easier to save. Lowering lifestyle expectations stops the “keeping up with the Joneses” cycle. Contribute to investment accounts every pay period, and prioritize spending that increases your earning power. Buffett once paid $100 for a Dale Carnegie public speaking course—a small investment that paid huge dividends in his life and career. Sometimes the best use of savings is to invest in skills, education, or opportunities that boost future income.
In short: save first, avoid high-interest debt, keep some cash for opportunities and emergencies, be patient with investments, live below your means, and invest in yourself. These simple habits are the foundation of Buffett’s approach to money.
