Discover Warren Buffett's 8 Rules for Amassing a Big Fortune
The 91-year-old tycoon has applied these rules to his own life, and now he shows how they led him to be one of the most financially stable men in history.
Have you heard the phrase: "crises create opportunities"? This is repeated a lot in the world of entrepreneurship, and more than a form of motivation for new entrepreneurs, the expression is undoubtedly real, since in the midst of crises is when economic needs arise, and avid entrepreneurs provide solutions, with which they can profit and create great businesses.
An example of this has been the current situation in Venezuela, where despite the severe economic and social crisis, in the last two years, when the crisis has been increased by the Covid-19 pandemic, new ventures have arrived to solve the needs that have arisen. It is not the solution for the country, but it is a way for Venezuelan entrepreneurs to generate income.
But the topic of entrepreneurship has been a trend worldwide, since thanks to the appearance of new technologies and the deepening of social networks, it has made people start generating income with something very important and old: Sales, yes, with business models adapted to the new times.
If you are in search of the financial bonanza (I think we all yearn for that), and more now, when we go through the strongest economic moment in the history of mankind, I will leave you at least 8 rules to become a millionaire, practiced by Warren Buffett, American investor and businessman.
1. Pay off the savings. This is the first rule that Buffett has taught in various media interviews. He has said that as an entrepreneur or person looking to have control over your finances, you must "pay yourself first", keeping in mind that you must put a portion of your funds first.
And the truth is that it makes a lot of sense, because, when you create a company, your idea is to be successful, and rarely think that something could go wrong, and this can really happen, so if you start paying your own savings, you will have a fund to face the crisis that may be generated if your business goes badly.
According to statistics, the people who have had the greatest financial security over time have been those who practice financial discipline, those who made the decision to save.
These people, according to Entrepreneur magazine, calculated the money they were going to need when they retired, and they learned how to save the money first.
2. Be careful with the luxuries. Warren Buffett has a policy for buying cars. He buys his vehicles, luxury or not, with little use.
Many of us think that quality things are the most expensive, and that is why we must buy them, we want the best cars, the best clothes, a house in a privileged area, etc. However, Buffett cautions us to think hard about this.
Some advisors recommend dedicating only 20% of income or investments to the purchase of food, entertainment and food. However, you should also consider the purchases you make as a form of investment.
3. Be careful with loans. The credit card has been "the great solution" for millions of people, however, we all know that it can become a guillotine if we do not know how to use it. In fact, Buffett says "if you buy things you don't need, you will soon sell the things you need".
Prominent entrepreneurs point out that more than a great solution, credit cards are a waste of earnings and savings. Rather, they suggest trading with the money you actually own.
4. Avoid debt. There have been many speeches by Buffett on the subject of debt, and how it can lead a person to bankruptcy, even more destitute.
“You really don't need to ask that much. If you are smart, you are going to make a lot of money without borrowing”, has been one of the most important tips of the billionaire businessman regarding debt.
5. You must learn about the good use of money. If there's one thing we all know how to do, it's spend money, but putting it to good use is not part of our lifestyle. Buffett suggests that new entrepreneurs should learn how to find the best investments, and how to manage money, which includes putting a credit card to good use, acquiring really necessary goods, and above all seeing what we acquire as an investment, the latter it will allow us to value our money more.
6. Buy stocks at low prices. One of Warren Buffett's greatest successes in amassing the large amount of money he has been the idea of buying companies at relatively low prices, and then working on creating strategies for the next five years. In fact, the entrepreneur does not take speculative actions, and unlike many of his colleagues, he prefers to wait for the ideal moment to acquire a business.
7. Don't invest in businesses you don't understand. One of the great temptations of entrepreneurs and investors today is to invest their money in businesses that are fashionable or in trend, since according to the market, that is what people are consuming, the problem with this, is that many times, entrepreneurs do not fully understand the business and decide to bet on it.
It is here when our Buffett guide comes to our defense, and teaches us that investors, before making the decision to take their money to any business, must have a broad knowledge of said business or at least have a functional knowledge of it.
8. You must take care of your lifestyle. Finally, Buffett is a living example of this, already at 91 years old he has shown to have a good lifestyle in all aspects. As we increase our socioeconomic level of life, we acquire more properties, goods and articles that we later put aside. In the case of the tycoon, we see that he has always had a fairly normal lifestyle. He lives in the same house he bought in 1958, when it comes to food, he has decided not to spend more than $3.17 on breakfast, and as I said a few lines above, he buys vehicles with a discount or little use.