Warren Buffett’s 17 Spending Habits That Keep You Poor
Do you feel like you’re working hard but still struggling to make ends meet? It’s a frustrating experience, but the truth is, your spending habits might be the problem.
Warren Buffett, known as the “Oracle of Omaha,” is an expert on all things finance. He shares strategies that make investors richer, but his advice isn’t limited to the Wall Street elite. Anyone can follow his key principle: When it comes to building wealth, smart choices matter more than the money you earn.
Buffett started investing at the age of 11 and currently has a net worth of 113 billion. He’s known for his simple and frugal lifestyle, driving a 10-year-old Cadillac, and has lived in the same home since 1958. Let’s look at some decisions that can get in the way of your financial security.
1. Spending Before You Save
One of Warren Buffett’s most iconic quotes goes, “Do not save what is left after spending, but spend what is left after saving.”
Whether you get paid weekly or monthly, put some money aside before anything else. With a percentage of your salary tucked safely in the bank, you can decide what to spend the rest on.
2. Dining Out Regularly
Craving a good meal? Oftentimes, simple is best. If you want to follow in Buffett’s financial footsteps, stick to a go-to meal with affordable ingredients.
Buffett famously had a straightforward diet that set him apart from other big-shot businessmen. He said, “I like eating the same thing over and over and over again. I could eat a ham sandwich every day for fifty days in a row for breakfast.” See, when you don’t splurge on fancy restaurants, you free up your budget for more special things.
3. Missing Out on Deals
Don’t get too comfortable swiping your card or handing out cash the moment you reach the check-out counter. Before you pay, take a moment to see if you can slash your total amount. By seeking out bargains, you can grow wealth over time.
Warren Buffett loves to bring out his coupons whenever he gets the chance; he didn’t even hesitate to use them in front of Bill Gates. A 2017 letter addressed to Buffett reveals that after the two now-billionaires had lunch at McDonalds, Buffett “offered to pay, dug into [his] pocket, and pulled out coupons.”
4. Forgetting to Invest in Yourself
We rarely think twice about buying material things, but when was the last time you spent money on a learning experience?
Remember to invest in your learning and growth. Warren Buffett saw the importance of personal development and how it contributes to our long-term earning potential. So, whether you like to read books or pick up new skills, don’t forget to make time for self-improvement.
5. Constantly Aiming for a Bigger House
Let’s face it: We’re all guilty of comparing ourselves to others. But when it comes to our home life, it’s best to mind our own business and live practically.
If Warren Buffett could talk to you about what kind of house to buy, he’d probably advise you to look for the most functional one. Live within your means and resist the pressure to spend money on upgrades you don’t actually need. He still lives in the house they bought in 1958 for $31,500.
6. Spending Money on Stuff to Impress Others
Years down the road, will anyone really care about what watch you wear? Or if you wear a branded blazer that costs six months’ worth of utility bills?
Of course, we all deserve a treat every once in a while. But if your goal is to show off and “look rich,” then you’re focusing on the wrong things. Spend your money on items that add value to your life, and you’ll be more satisfied.
7. Using Credit Cards Instead of Cash
Cash is still king, according to Warren Buffett. By avoiding credit card debt, he never had to deal with the cycle of high interest rates. “I’ve got an American Express card, which I got in 1964. But I pay cash 98% of the time,” he once said.
Also, paying with cash helps you stay disciplined and avoid overspending. When you see the actual money leaving your wallet, it makes you think carefully before making a purchase.
8. Shopping for Expensive Clothes
Warren Buffett, the legendary investor, believes in a simple approach to life and finances. This frugality extends to his wardrobe.
Instead of spending a fortune on designer clothes, choose durable pieces that match the rest of your clothes. Your clothes should serve you, not the other way around. A simple, thoughtfully curated wardrobe can look just as good and help lessen expenses.
9. Excessive Gambling
Gambling is nothing more than a game of chance. You will not get richer in a casino or in an online game that tempts you to give up your hard-earned money for another shot at the jackpot.
Buffett believed gambling is “socially revolting,” and that impulsive behavior only gets you burned. To improve your financial situation, patiently building better spending habits is the way to go.
10. Straying from Your Budget
If we set a rule ourselves, no harm in breaking it, right? Well, that may not be the case.
Creating a budget (and strictly following it) will set you up for a successful future. When you understand your spending patterns, you’ll make better money decisions. Plus, sticking to your budget lets your financial cushion grow without any issues.
11. Buying Brand-New Vehicles
New cars lose value fast. Warren Buffett knows this, which is why he buys used cars. He currently drives a 2014 Caddilac that he purchased with hail damage.
If you’re smart about it, you can save a ton of money by buying secondhand vehicles and choosing one that fits your needs.
12. Paying for Unused Subscriptions
Don’t let subscriptions drain your wallet. Regularly review which services you have on auto-pay and cancel the ones you no longer use.
By cutting out these expenses, you can allocate more money toward long-term goals and start working on them.
13. Letting Desires Dictate Your Finances
I used to go crazy for limited-edition sneakers, and I ignored the guilt as I replaced my perfectly good shoes with a newer pair.
I grew up and realized that just because I want something (and can afford it), it doesn’t mean I’m making the right choice. At the end of the day, material things in our possession are just objects, nothing more.
14. Over-Reliance on Multiple Income Streams
It can feel validating to have more than one income stream, but having a primary income is crucial. Keep developing your skills to stay secure in your job.
A solid, fixed salary should be your financial foundation. Explore side hustles or passive income only once you’re sure it won’t affect your main job. Avoid juggling multiple streams before you’re financially stable.
15. Investing in Quantity, Not Quality
Have you ever fallen for the “cheap is better” trap? Warren Buffett teaches us that quality wins over quantity. Sure, you might save a little money upfront, but cheap products often need to be replaced sooner, so they cost more over time.
By focusing on quality, you’re making a smart investment that pays off. This tip applies to everything from electronics to million-dollar acquisitions. As Buffett once said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
16. Focusing on Brands
Fancy labels are designed to fool you. Avoid this pitfall by doing what Warren Buffett would do: Look at quality, not the brand name.
Before you buy something, do your research and invest in high-quality items that are proven to last. You can read online reviews or ask around for testimonials. This practice helps you develop better spending habits and aligns your expectations with reality.
17. Buying Things You Don’t Need
One of Warren Buffett’s most popular lines is: “If you buy things you do not need, soon you will have to sell things you need.”
The path to financial freedom requires mindful spending. Don’t give in to impulse purchases too quickly; your money deserves to be handled with intention. You never know if your initial excitement will fade before you actually get the chance to use what you just bought.
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