Principles of Financial Success: Billions of Reasons to Think Like Warren Buffett

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I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over

Look how exhausted they are. Try stepping over smaller bars first. Credit: By Phil Roeder via Wikimedia Commons

This is sage advice, indeed, because we can all do it. Start with the little things and fix them. Push the bar up a little higher, rinse, and repeat. Keep doing so over and over until you’ve morphed into the financial equivalent of an Olympic hurdler.

For example, an initial step might be to make sure the budget is balanced. If you’re not profitable (whether personally or in a business), decrease expenses and/or increase revenues until you are.

Step two could be pushing the bar a little higher by putting more money aside than you’re used to, adjusting discretionary expenses accordingly.

Step three might be adjusting your 401k balances so that your principal risk cannot be completely devastated by a major stock market correction. Keep doing little things like these until you find yourself with less debt, more savings, and an overall improved financial condition.

I buy on the assumption that they could close the market the next day and not reopen it for five years

The asset bubbles that popped over the past dozen years or so were inflated by rampant speculation. The markets were literally overrun by short-term thinkers attempting to get rich quickly. Resist the temptation and think long-term in your decision-making.

Someone’s sitting in the shade today because someone planted a tree a long time ago

Money doesn’t grow on trees, but smart management certainly can help it grow. Credit: Astanhope

Another quote that references Buffet’s overriding mindset. With savings yields so low today, it is difficult to earn much in low-risk investments, but rates won’t stay down forever. The beauty of compounding interest is how principal literally builds upon itself over time. A mere $100/month put into a tax-deferred investment over 40 years at an average return of 6% will end up at $200,000. That’s basically one less drinking binge at the local bar per week. Considering the average American retires with $88,000, that means you can practically buy and sell your neighbors by not drinking yourself into a stupor quite so often.

It’s never too late to think like a billionaire

Nobody’s naive here. The odds of anyone becoming a billionaire might well be a billion to one. However, you don’t need to be a billionaire to achieve financial independence. Follow the rules above, and make good, smart, long-term decisions with your money. Don’t wait for a sunny day in Seattle; start today. Surely, that’s what Warren Buffett would say were he here right now. Just one thing, though — don’t call him “Shirley”.

Resources:

Scott, Kelly. Five Amazing Quotes by Warren Buffett(2012). WarrenBuffett.com. Accessed on October 17, 2012.

The World’s Billionaires(2012). Forbes. Accessed on October 17, 2012.

A&E NetworksWarren Buffett Biography(2012). Biography. Accessed on October 17, 2012.

Kitchen, Brett and Kap, Ethan. Saving or Investing? (2012). True Financial Age. Accessed on October 17, 2012.

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