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The following article is a guest post by Michael Vincent. You can read more about him at the end of this article.
Most people, if asked about their financial goals, would instantly say they want to be rich, or to have the financial freedom of being able to buy or pay for anything their heart desires. Saving money is rarely ever on the top of anyone’s list.
Investor Warren Buffett himself strongly believes in the value of saving, despite having billions of dollars to his name. You might want to pick up a pointer or two from one of the world’s richest men…
1. Be careful with your investments
Buffett has been quoted as saying that the first rule of investing is to “not lose money”. The billionaire has placed so much emphasis on this rule of investing, that his second rule is “not to forget rule number 1″. Do not get into debt unless you are absolutely sure that you can profit later on, he advises.
2. Do what you love
Another tip from Buffett is to do something you love. Only then can you find satisfaction from work or your job. If it’s not so easy to just pack up and quit your current job, why not make a hobby out of what you love doing? And maybe try making just a little money out of it? Pursuing your passion can bring lots of fulfillment—and that is something no amount of money can buy.
3. Don’t purchase expensive toys
Some people who successfully earn their first million dollars immediately purchase a luxury vehicle or an expensive toy. As a practitioner of frugal living, Buffett avoids luxuries such as yachts and luxury cars. For him, these expensive “toys” only cause headaches. Buffett advises investing extra cash in investments that can yield good interest rates instead.
4. Do not waste time
To the Berkshire Hathaway CEO and founder, time is as valuable as money. When doing business negotiations, Buffett advises researching and making a decision in advance. He advises against any unnecessary talk, which he likens to “thumb sucking.” If you are making a business proposition, be straightforward and name your price straightaway. Buffet says he won’t talk with anyone unless they give him a price. He also makes decisions right on the spot.
5. Put a limit on the amount you borrow
Buffett has been known to dish out tips on the use of credit cards. He advises everyone to borrow just what they can pay, and to not shy away from negotiating with credit card institutions. Work toward paying off your debts, then proceed to saving money, which you may use later on for investing.
6. Wait for a sale
Never pay for an item at its original retail price when you can get it discounted. Buffett always waits for the asking price to go as low as possible before he purchases a company. Similarly, you should not think twice about using discount vouchers and coupons for buying products or services.
7. Invest in yourself
Buffett also highlights the importance of investing in one’s self. Improving your talents and skills makes you more valuable and puts you in a better position to earn more.
8. Clarify the terms of any agreement
Before you sign an agreement for a job or seal any business deal, make sure you have thought thoroughly about all the terms of the agreement. Think of worst case scenarios. Try to calculate if the promised compensation covers extra expenses that may be brought about by bad conditions and unexpected mishaps.
9. Do not depend on one income
Start looking for other possible sources of income by getting side jobs on the weekends or by making smart investments that can yield good returns. Buffet always talks about how he diversifies his investment portfolio to increase his chances of winning.
10. Control impulsive buying
The “Sage of Omaha” attributes his financial success to making good decisions. When making important financial decisions—whether you are buying something, weighing a job offer, or choosing a credit card company—ask yourself why you are making that decision. If you are unable to come up with a convincing answer, then the decision is not worth it.
Regardless of anyone’s financial social standing—whether you are born to parents with platinum credit cards or struggling to pay off your parents’ debt—saving should be more than just an afterthought. Saving improves your quality of life, not to mention, your perception about money.
About the Author:
This article is contributed by Michael Vincent from Money Hero, Hong Kong’s up and coming financial and credit card comparison website. You can compare a broad list of financial products, from credit cards to broadband plans.