Warren Buffett Says Inflation ‘Fools Almost Everyone’ – 10 Ways His Frugal Habits Can Help You Save

Warren Buffett Says Inflation ‘Fools Almost Everyone’ – 10 Ways His Frugal Habits Can Help You Save

Warren Buffett may have billions of dollars to his name, but unlike other celebrities and financial gurus, he prefers to live life simply.

The investment icon practices what he preaches when it comes to financial discipline, saving and paying down debt.

This pays off in times of economic trouble like this one. Consider what Buffett had to say during Berkshire Hathaway’s annual shareholder meeting in May, when he acknowledged that inflation was already one of the economy’s biggest problems.

Asked if inflation is “fooling the stock investor,” he replied: “Inflation is fooling the bond investor, too. It cheats the person who keeps their cash under their mattress. He cheats almost everyone.”

When one of the world’s most successful investors says it’s hard to come out on top in such an environment, it’s probably a good time to implement some well-tested strategies to tighten your belt. Here are 10 ways Buffett’s frugality can help you save money and spend wisely.

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1. He lives in the same house he bought in 1958

Warren Buffett at home

TEDizen/Flickr

While many billionaires flock to expensive real estate, Buffett originally paid $31,500 for his home in Omaha, Nebraska—that’s about $318,600 in today’s dollars—and lived there for over 60 years.

However, his house is by no means tiny. The 6,570-square-foot, five-bedroom home has undergone numerous renovations and additions over the decades and is worth around $1 million today. It is also protected by fences and security cameras.

Buffett has no plans to move, calling the house “the third best investment I ever made” in a 2010 letter to Berkshire Hathaway shareholders.

2. He rarely takes out loans

Buffett’s one and only mortgage was on a vacation home in Laguna Beach, California, which he bought in 1971, though he certainly had the cash to afford the $150,000 beachfront property.

He told CNBC that he took out the 30-year mortgage because “I thought I could do better with the money than it being an outright purchase of the house.”

He decided to use the extra cash on shares of Berkshire Hathaway – the company that made him billions.

3. He buys cheap breakfast

Warren Buffett eats a burger

@BusinessInsider / Twitter

While Buffett could simply have a personal chef cook him a gourmet breakfast, he often grabs Mickey D’s on his way to work. He says he doesn’t like spending more than $3.17 on his breakfast.

“When I’m not feeling so prosperous, I might go with the $2.61, which is two sausage patties, and then I put them together and throw in a Coke,” he says in the 2017 HBO documentary. I’m becoming Warren Buffett.

He continues: “$3.17 is a bacon, egg and cheese biscuit, but the market is down this morning, so I’m going to skip the $3.17 and go with the $2.95.”

4. He doesn’t chatter in chips

Buffett doesn’t care much about designer suits or the latest iPhone model.

He relied on his $20 flip phone for years before trading it in for an Apple smartphone in 2020.

The Oracle of Omaha avoids unnecessary spending and once said, “Don’t save what’s left after spending, but spend what’s left after saving.”

5. He doesn’t invest with borrowed money (anymore)

“I have never borrowed a significant amount of money in my life. Never. Never will I. I have no interest in that,” he told Notre Dame students in 1991.

Although a young Buffett once borrowed 25% of his net worth to buy stocks, he warns investors not to repeat the same mistake.

Even seasoned stock traders will tell you that borrowing to invest can be risky.

6. He buys marked down cars

Warren Buffett in his car

Andrew Gombert/EPA/Shutterstock

Many billionaires and millionaires keep a collection of flashy sports cars and vintage models in their garages, but Buffett reportedly prefers refurbished cars that he can buy at discounted prices.

He upgraded from a 2006 Cadillac DTS to a Cadillac XTS for just $45,000 in 2014.

“The truth is, I only drive about 3,500 miles a year, so I’ll be buying a new car very rarely,” he told Forbes.

7. Finds creative ways to save

When Buffett’s first child was born, he turned a drawer into a bathtub. For the second, he borrowed a cot.

“If you buy things you don’t need, you’ll soon sell things you do,” says the billionaire.

Take a good, hard look at your purchases and find where you can cut back.

8. He does what he loves

Warren Buffett plays the ukelele

Financial Freedom / YouTube

Buffett credits part of his success to his passion for investing.

“You have to love something to be good at it,” he says, urging people to take jobs they love instead of jobs that look good on your resume.

Even if you can’t quit your full-time job to focus on the things you really enjoy, you can focus on affordable hobbies. Buffett himself enjoys card games and playing the ukulele.

9. Use cash, not credit

While most of us prefer the convenience of a credit card for our everyday purchases, Buffett uses cash.

He told Yahoo Finance in 2019 that he uses cash “98% of the time. If I’m in a restaurant, I’ll always pay cash. It’s just easier.”

While the method may sound a bit old fashioned, relying less on your credit card can prevent you from spending money you don’t have.

Using up most of your available credit — or worse, falling behind on your monthly payments — hurts your credit score.

If you are struggling to pay off your credit card debt, you may consider consolidating it into a debt consolidation loan with a lower interest rate.

10. Still clipping coupons

Warren Buffett and Bill Gates at McDonald's

Gates Foundation / Facebook

Buffett is a stickler for a good deal and once treated friend and fellow billionaire Bill Gates to a meal at his favorite fast food restaurant with — yes — coupons.

“Remember the laugh we had when we traveled to Hong Kong together and decided to eat lunch at McDonald’s? You offered to pay, dug into your pocket and pulled out … vouchers!’ Gates wrote in a 2017 annual letter.

“Melinda just found this picture of me and the ‘big spender’. It reminded us how much you appreciate a good deal.”

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This article provides information only and should not be construed as advice. Provided without warranty of any kind.

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