- Warren Buffett is one of the world's most notable investors.
- He's offered many words of advice about building wealth.
- His most crucial advice relates to limiting your spending.
Listening to Buffett's advice could really pay off.
Warren Buffett is well-known for his investing skills. Also known as the "Oracle of Omaha," Buffett has built a billion-dollar fortune through smart asset acquisitions. He's also offered lots of advice for other people hoping to build their own wealth.
While Buffett has provided many tips on everything, from what to invest in to why buying a home can be a smart choice, there's one piece of advice that stands out as being especially essential for anyone who wants to be a financial success.
This is Warren Buffett's most important advice
The most important advice that Warren Buffett ever gave was a simple tip that everyone should follow. Buffett famously said, "Do not save what is left after spending; instead spend what is left after saving."
This advice is crucial to follow because it is the cornerstone of financial responsibility. No matter how much money you make, or how good you are at investing, you are never going to get ahead if you are prioritizing expenditures over saving money.
If you want to be able to acquire assets, ranging from a home to investments that produce a reasonable rate of return, you're going to have to devote some of your money to doing so. Unfortunately, far too many people end up prioritizing spending on everyday costs -- including splurging on things that are wants instead of needs -- and then finding themselves with too little money left to save to build wealth.
Instead of falling into this trap, Buffett's wise words suggest that you should make saving your first priority. Decide how much you need to set aside to accomplish the goals that are important to you, do that first, and then you can use whatever you have left over to spend as you wish.
How to follow Buffett's advice
If you're currently spending your money first and trying to save what is left over, you'll need to change your mindset -- and your actions -- if you want to follow Buffett's advice and have the best possible chance of becoming wealthy over time.
The best way to do that is to start by setting some financial goals, figuring out how much you must save for them, and making a budget that allows you to hit those targets. You can make a detailed budget that allocates every dollar if you need to, or take a simpler approach and determine how much to save and how much to use toward essential expenses and then plan to spend anything that's left over.
The key is, whatever budgeting method you pick, savings should be treated as a must-pay bill and you should allocate your cash to it before planning to buy anything else but food, shelter, and other true necessities.
Once you have made this budget, you can set up an automated transfer of the necessary amount you want to save. Move that money right into your investment accounts or into a high-yield savings account automatically on payday. That way, saving will always happen first and you won't be left with too little money to grow your wealth.
Once you get used to this approach, you can hopefully stick to it over the long term and by adopting Buffett's philosophy as your own, you'll be taking a very important step toward becoming rich.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
If you're using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.