The Warren Buffett You Never Knew Existed

Source: Aaron Friedman

Before he was the most prominent investor in the world and chairman of Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) , Warren Buffett was just another Midwest transplant surviving in New York City.

As an investor he had plenty of early success, but how he managed his personal life may have had just as much impact on his wealth than his investing savvy. Two things really define who he is:

1. He was downright cheap
In a biography, The Snowball: Warren Buffett and the Business of Life, Alice Schroeder tells the story of the early Buffett we never knew. The early Buffett wasn't the generous philanthropist we know today. He was a hardworking investor, but he worked doubly hard at saving money.

Schroeder tells the story of the many ways Buffett made his money, but also how he kept his money. In his early days as a 20-something analyst, he would save a few dollars per week by buying week-old magazines from the newsstand. His thinking was that these magazines would soon go to the trash can, giving him an opportunity to grab a bargain.

At the same time, Buffett didn't own a car. He'd save money by borrowing his neighbor's car and never filling the tank. He traveled on borrowed gasoline.

And even when Buffett was undeniably successful, he still wanted to save a buck. At a meeting with investors who would fund his first investment partnership before Berkshire Hathaway, Buffett insisted that prospective investors "go dutch" at a dinner meeting at one of the finest restaurants in Omaha. Yes, even though Buffett wanted their investment capital, he was unwilling to pay for their dinners to make a pitch.

2. He hid much of his success
We hear all the time of wealthy Americans who look closer to broke than rich. Buffett certainly fit in this category.

After working for years in New York City and stockpiling a formidable investment account, he moved back to Omaha, Neb. Here he rented his first home. To rent at the time was unheard of, particularly when Buffett had a net worth of $174,000 at the age of just 26 years old.

Warren Buffett didn't only hide his wealth on the outside. He hid it inside the family, too.

At the same time Buffett borrowed cars from neighbors to save on gas, he was making thousands of dollars from his stock picks. But no one knew -- not even his wife, Susie.

One day, Susie accidentally threw out uncashed dividend checks from Warren's desk. She hurriedly called the neighbor, telling her something terrible had happened. After opening the apartment incinerator and tearing through piles of garbage, they found the checks, which were worth "thousands," not the "$25 or $10 as she had assumed."

Needless to say, the couple quickly had a discussion about their shared finances, and Warren made a few compromises on how much the two could truly afford to spend.

The Buffett you know now
Warren Buffett may be a billionaire investor and the chairman of Berkshire Hathaway, the world's most successful investment company, but the ways in which he became wealthy are hardly unique to him. Buffett may invest better than anyone, but his towering billion-dollar would be nothing without his ability to cut corners.

Warren Buffett became obscenely wealthy the old fashioned way, living on less than he made and investing in high-quality businesses at attractive prices. For us -- those of us who aren't billionaires -- his story should serve as inspiration that common sense still goes a long way.

Learn from the greatest investor of all time
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

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  • Report this Comment On November 10, 2013, at 9:15 AM, caaaad wrote:

    The article is written in a foolish way. He is brilliant and no fool so to speak

  • Report this Comment On November 10, 2013, at 10:21 AM, loomis4 wrote:

    Mr Buffet

    I don't want your billions. I just want to get out in the world , that I have and idea that can change the sports world -- A Non Lethal football helmet-- I just want to stop these , or slow down the blows to the head, that are taking place. I think, I have the way in my ---- Non Lethal helmet .It has a shock absorber built in David Loomis

  • Report this Comment On November 10, 2013, at 10:56 AM, Annie wrote:

    sellous1 what you are doing is truly noble but here is my slant. It is a terrible thing that people go hungry but it is not up to the rich and governments to feed them but to educate them about not bring into this world children they can not feed. We have to put the responsibility on the ones who bring babies into this world knowing they will not be able to care for them. Educate Educate Educate. If we don't change this behavior this is a battle NO ONE will win.

  • Report this Comment On November 10, 2013, at 7:51 PM, chieftp wrote:

    most rich people are stingy tightwads and had rich parents. no surprises here.

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