Written by Kotoko Allen, ZUU Online
Warren Buffett who owns net asset of $88 billion (Forbes magazine, 17th March, 2018), is the third wealthiest person in the world, however, he was not exactly born with a silver spoon in his mouth. His father was a securities company broker, so he was in fact brought up in a background of privilege. However, this fortunate background did not matter. What made him one of the richest men was himself. He built his own wealth.
For us, would it be possible to turn our life around for the better? We should not be greedy, there’s no need to be super-rich like Warren Buffett. But if there is some way to get a better life, why not try it? Here are 6 tips to be rich, based on Warren Buffett’s belief.
1. Firmly believe that you will be rich
Buffett, who was quoted saying, “I always knew I was going to be rich. I don’t think I ever doubted it for a minute” has never casted doubt on his belief (website “Brainyquote”). Even with your belief, just waiting for the time you become a billionaire does not mean anything. His success was consequently produced by his continuous efforts and unwavering belief in achieving his goal.
Janis Randal who works at Clear Income Strategies Group, the USA financial planning company said that it is important to declare that “you will become a financially independent” from your surroundings and yourself, and plan ahead to identify what you should attack and defend.
Wealth and success are not achievable only by yourself. Support from your surroundings is crucial. Buffett said, “If you hang out with people and companies who have more power, capabilities and finance, you will naturally drift in that direction”
2. Make a habit to save money in childhood and increase savings by investment
To give one example, Buffett bought a pinball machine with his friends when he was a high school student, and asked a barbershop to keep the machine in the shop. Afterwards, instead of saving, he invested the earnings from the first machine in the purchase of a second new machine. The new one that was left at another shop made profits as well. He repeated this process, and eventually earned 1.200 dollars.
3. Always invest in yourself
What you should invest in is not limited to shares or bonds. Buffett said, “The best way to become rich is to invest in yourself, and once you get a habit of that, you are going to achieve a wealthy life.” Let me take another example to make it clear to you, “Many people invest in themselves through pension schemes”
Step forward and start self-investment, such as learning about investment or savings, taking qualifications for promotion, and kicking off ventures, these will pay off in the future.
4. Never give up your goal with perseverance, making the most of failures and humiliations
Buffett had a humiliating experience when he dropped out of the prestigious Harvard Business School. That said, he did not give up and enrolled in Columbia Business School in the hopes of attending Benjamin Graham’s lecture., Graham was dubbed as the “legend of the investment world”
Buffett was impressed by Graham’s books and commented on a TV documentary: “ When I read his book, I believed that he already passed away. When I learned that I could attend his lecture at the university, I was very surprised”
The encounter with Graham was a turning point for him, but the story doesn’t end there. After graduating from the university, Buffett asked to work under Graham, but was immediately turned down. Buffett returned to Omaha, but he stood firm and continuously asked Graham to accept his offer. Eventually Graham bowed to Buffett’s pressure.
The perseverance Buffett showed – to never give up on what you really wish for, such as a job or a company – brought him enormous fortune at last.
5. Be frugal whatever happens
Buffett is also widely known for being frugal, and was quoted saying “without frugality, Berkshire Hathaway would not be created”. Unlike other millionaires, his standard of living is almost the same as before being the super-rich. He is not interested in owning a private jet, luxury cars or huge extravagant mansions.
Buffett emphasized, “There are things that you can not buy with money” and “Your standard of living is not always proportionate to your living costs,” and added: “ If I owned six or seven residences, I would not have been as happy as I am.”
“Being frugal is not being stingy.” Spending well is totally different from wasting money. The frugal do not spend money when it is unnecessary even if it is cheap, while they fork out on essentials even if it is expensive. This is why Buffett succeeded in saving and acquiring Berkshire Hathaway.
6. Stick to your belief
Buffett is also known to be stubborn when it comes to business. Berkshire Hathaway does not pay dividends to shareholders. Apparently the reason is “shareholders have a loss because dividends are subject to taxation” and “further investment brings growth and brings shareholders more benefits”
In 1967, dividends were paid only once. Looking back the event, Buffett commented jokingly, “The decision was made when I was in the toilet” (Investopedia, 14th December, 2016)
Some shareholders have raised their voices to ask for paying dividends. Against this campaign, Buffett has never changed his mind. This attitude, of sticking to your belief is seen as being inflexible, but it may be the most critical thing to make the most of any chance to make you very wealthy.
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This is a guest post by ZUU Online, an Asian-based Finance Education Portal aimed at helping individuals to improve their knowledge on personal finance and money, through educational articles on business, investments, property and insurance.