What makes Warren Buffett one of the riches people in the world? Unlike fellow billionaires Bill Gates, Mark Zuckerberg, and Jeff Bezos, he did not create a ground-breaking high-tech product. Instead, Buffett's wealth began with a series of small, simple habits that anyone can follow and that are guaranteed to bring you greater wealth. The personal finance site GOBankingRates has identified some of the smartest habits that have put Buffett in every top-five list of wealthiest humans. Here are my favourites. You can read the full list here.
1. Think like an entrepreneur.
This doesn't mean you need to quit if you have a full-time job. But if you develop an entrepreneurial mindset, you'll always be looking out for opportunities, whether that means starting a small business on the side, finding ways to expand your job, or even doing extra work for your current employer on a contract basis.
Buffett started his fortune as a teenager, delivering newspapers and selling chewing gum and magazine subscriptions door to door. Keep looking for opportunities, even the ones that seem too small to bother with. You'll be surprised how much of a difference they can make.
2. Invest even small amounts.
You don't need a huge amount of money to become a successful investor. (In fact, here are some excellent investments you can make with $500 or less.) If you have your own business, either full-time or on the side, investing some of your earnings back into your business is one of the smartest things you can do.
Buffett did just that when he and a friend bought a pinball machine for $25 and placed it in a local barber shop. When it earned money for them, rather than spend it, they bought additional pinball machines. In time, they had eight machines in different barber shops. When they sold that business, Buffett used the proceeds to start another business.
Some experts recommend investing some of your earnings outside your business so you'll have those funds to draw on if your business faces a temporary downturn or fails altogether. Whether you choose to diversify your investments this way or fold extra money back into your business, it's important to invest some of your earnings in your future and not just live on them.
3. Borrow as little as you can.
As Joshua Wilson of WorthPointe Wealth Management points out, borrowing is an "anti-investment"--it has negative returns. So keep your debt to an absolute minimum if you want to become wealthy. Taking out a low-interest, fixed-rate mortgage with payments you can well afford in order to buy a house may be a good idea. (Although renting has definite advantages.) Taking out a manageable business loan to get a new business up and running might be as well. Borrowing a large sum so you can drive a nice car, or running up credit card debt for meals out and vacations? Not so much. The less debt you have, the better off you will be.
4. Live below your means.
This is one of the most difficult pieces of advice to follow. Who wants to buy a five-year-old used car when you could--probably--afford to lease a brand new one? Who wants to live in a small suburban home when you could--probably--afford a fancy apartment in the middle of town? But living on less than he needs is one big secret to Buffett's phenomenal wealth. Unlike other billionaires who build multiple mansions around the globe, Buffett still lives in the house he bought for $31,500 in 1958.
You don't have to go that far. But every time you consider a new purchase or financial commitment, ask yourself whether whatever you're getting will really make you happy, or whether you're upgrading your lifestyle just because you can, or think that's what others expect of you. Be on the lookout for small changes that create savings without affecting your quality of life, such as staying home and sharing a pizza and beer with friends rather than going out to a gourmet meal.
You'll save money that you can invest so it can work for you. You'll gain peace of mind because you can stop worrying about how to cover your financial obligations. And Warren Buffett would definitely approve.