I’m not a huge fan of any single guru out there. I listen and learn from a lot of people. I try to learn why they think the way they do, what is their motive, their goal, etc. Fortunately for us, sometimes they give advice that makes a hell of a lot of sense. These 6 powerful Warren Buffet lessons resonate with me because of that. I can relate them to my own life and apply them when I see fit. Let’s jump into the lessons from Warren Buffet.
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“Never Depend On A Single Source Of Income. Make investments to create a second one”
I’m not going to sit here and say you can’t get rich off of one source… But it makes it a hell of a lot easier when you have several sources. I love passive income. I keep track of my seven sources here. I also love looking for ways to increase my other sources, but the truth is, all other sources are an investment. Whether you go in the market, real estate, or just decide to create your own blog, there is investment involved. Most times its money, sometimes its time, but you’ll have to invest if you want to see these sources grow.
“If You Buy Things You Do Not Need, Soon You Will Have To Sell Things You Need”
This is a tough one for a lot of people. My wife has an extremely hard time with this one. What I found that helps out a bit is asking the Who, What, Where, When questions. When are you going to wear those shoes? Where do you plan on putting that in the house? What do you own that’s similar to that?
It’s easy to make an impulse buy because something looks nice, but why do you feel you need it? Cutting expenses is a huge way to increase your savings!
“Do Not Save What Is Left After Spending, Spend What Is Left After Saving”
I love a good zero-sum budget. Pay yourself first. If you were a company that you yourself was running, would you stay afloat? How can you cut expenses to help this company? Now don’t start laying off your staff (Husband) to cut expenses! Start thinking like a company and try to get your profits up!
“Never Test The Depth of The River With Both Feet”
Do you think Bitcoin is interesting? Go buy Some! Marijuana stock calling your name? Go invest! But keep in mind these are risky investments. You don’t want to put your retirement in something that MIGHT make you a millionaire, or MIGHT leave you homeless. Get some ‘play’ money and test the waters!
“Do No Put All Eggs In One Basket”
You remember in 2008 when people lost ALL their money? The problem was that a lot of people were heavy into individual stocks. Your job offered you 401k and let you invest in company stock, so you went all in because it was gaining 15% a year! Then the market crashed, the company went under, and you lost 80% of your retirement.
Diversification is key when it comes to investing. Don’t know what other companies to invest in? Go with a mutual fund and let them diversify for you! Learn more about investing here.
“Honesty Is A Very Expensive Gift, Do Not Expect It From Cheap People”
The truth is, most people have their own intentions. You go to a free seminar and you better believe they’ll try to sell you a book. I’ve mentioned before to be wary of you listen to. Whether someone is a financial guru, a financial advisor, whatever; proceed with caution. Working in the financial industry, I had a ton of people approach me and tell me the next big stock. They heard from *whoever* that this is the right way to do things. Be careful!
When it comes to the stock market, no one knows what’s going to happen. The market is an emotional thing. Sentiment plays a huge factor in pricing, and there is no one who can predict how people will feel in the future.
When it comes to your finances, no one knows them as well as you do. My theory is: learn as much as you can from as many people as you can. Whatever resonates with you, take it and make it your own. You can be successful on your own.
Learn more about Warren Buffet and his philosophies:
What financial advice have you heard that has resonated with you? Which one of the 6 powerful Warren Buffet Lessons is most important to you?