7 Unbelievable Ways Warren Buffett Practices Frugality

When you first think about billionaire chairman and CEO of Berkshire Hathaway Warren Buffett, you probably can’t help but think about how much wealth, power and business success he’s accumulated over the last half-century.

However, Buffett is most proud of being frugal with his spending and savings, prompting him to share frugal living tips during interviews and public appearances on several occasions.

Living frugal might not be at the top of a to-do list for many people, yet that’s exactly what Buffett practices on a day-to-day basis. With a net worth of $46 billion, according to Business Insider, it’s undeniable that Warren Buffett must be doing something right when it comes to managing his personal finances.

7 Ways to Be Frugal Like Warren Buffett

We’ve gathered the seven best frugal habits Warren Buffett practices so that you too can live like a billionaire on a budget.

1. Buy a Modest and Affordable Home

Believe it or not, Warren Buffett has lived in the same five-bedroom Omaha, Neb., home since 1958, when he bought it for just $31,500 — the equivalent of roughly $255,000 today.

Although buying a lavish home in a wealthy neighborhood can be tempting at times, buying a modest and comfortable home like Warren Buffett will free up extra money you can use to build your savings and retirement accounts, or even invest.

Being frugal when it comes to owning a house will pay off in the long run, especially if it helps you avoid substantial mortgage payments that could quickly escalate into mortgage debt if you’re unable to keep up.

2. Handle Investments Carefully

When it comes to making investments, Warren Buffett is often quoted saying, “The first rule of investing is don’t lose money; the second rule is don’t forget rule No. 1.” As far as investing goes, Buffett discourages anyone going into debt unless they’re certain they’ll make a profit later.

However, Buffett also stresses that one of the best investments you can make is in yourself, according to San Diego Union-Tribune.

“Anything that improves your own talents; nobody can tax it or take it away from you,” Buffett said. “You can have all kinds of things happen. But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold. ”

3. Avoid Expensive Toys and Luxuries

This might seem like one of the more obvious frugal habits, but if you have billions like Warren Buffett, sometimes it can be a hard one to employ. According to Business Insider‘s “15 Frugal Billionaires Who Live Like Regular People,” Buffett doesn’t own a yacht or other stereotypical luxury items because, as he said, “Most toys are just a pain in the neck.”

Take a hint from Warren Buffett and avoid splurging on a new sports car or expensive wardrobe. Instead, take your extra cash and place it in a certificate of deposit offering a competitive interest rate. You can sit back, relax and watch your money grow.

4. Pursue Your Passions Relentlessly

While this might seem like a luxury to some people, Buffett does not consider it one. Buffett has said countless times that he loves what he does for work, meaning he doesn’t have to spend much money on travel or leisure.

Although you might not be as in love with your job as Buffett is, you can find an inexpensive hobby that you do enjoy. You can even possibly earn side income while being frugal, rather than spending hundreds of dollars on spas, relaxing therapies or exotic vacations to de-stress.

5. Never Pay Retail Price

For all you bargain hunters out there, you’ll be happy to know that Warren Buffett also shares your love for a good sale. By practicing patience and waiting for sales on the market, Buffett often finds a great company he can purchase on clearance.

Don’t be hesitant to take the extra time to find sales, clip coupons or wait for deals on big purchases like cars, homes or getaways.

6. Give Back to Others

Philanthropy is an art Buffett has no doubt mastered thanks to his significant net worth, and many people wouldn’t consider it an act of frugality.

That said, donating old clothes to Goodwill or canned goods to food drives can be a great way to give back to others while clearing your home of unnecessary items.

7. Weigh the Pros and Cons

Sometimes we forget to think things through and review the pros and cons before making personal financial decisions. This can often lead to hasty spending and money trouble. Buffett often credits his commitment to thinking decisions through to his financial success.

“You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be, ” Buffett told the U-T. “And if you can’t write an intelligent answer to those questions, don’t do it.”

Photo credit: WarrenBuffettGroup

  • Joel @ SaveOutsideTheBox

    Great thoughts Amanda. Thanks for sharing. Tips 1 and 3 are my favorites. They are two of the biggest game changers when it comes to becoming fiscally responsible.

  • FactChecker3

    These are wise rules to follow. Buffett is a genius investor, but a lot of geniuses are not wise. Buffett is also wise.

  • drT

    Buffett’s principles make tremendously good sense. While we may not become billionaires like Buffett, we can use them to increase our own relative prosperity. What’s wrong with that????

  • Iwontbefooledagain

    Yep, I’ve owned the same house for almost 18 years, my mortgage is a little over $500 and I’m satisfied to keep it

  • Jkbman

    “…with great interst rates…” Uh. Where do you find those? What about inflation? How do I keep up with inflation while “investing” in CD’s?
    Buffett owns exactly $0 of CD’s.

  • My boss met a billionaire that bought everything used: furniture, home, cars, and even his mobile phone!!!

  • og2dn

    I think Warren Buffet is a f%%%ing nut, having all that money and living like he is middle class!!

    • Kyle Benjamin Fishman

      Buffett actually bought a new cadillac recently.
      And his humble lifestyle is very much worthy of respect. Just because you have more money doesn’t mean you should spend more. You’d seriously rather see a Donald-Trump-like-billionaire spending money on frivolous things all for himself than an honest, genuine, humble guy like Buffett who gives to charity and lives below his means? I prefer honor and respect to materialistic crap. Simplicity is good.

      • Tashima LaTania Beach

        Thank u!!! exactly what I told my husband. He seems to think if we won we will never fly coach and get a private jet, buy a 10 million dollar home for location and security, and some other off the wall stuff. I remember where I came from and would alway want to hold on to my humbleness through being frugal. I would travel all over and buy a home but it would be Ryanair if in Europe or coach elsewhere and buy a beautiful home by the city. Smh just because u have it doesn’t me u have to spend it.

  • njp

    Money is simply a means to buy things that give each person some happiness (short-term or long-term). So Buffet buys companies, we buy nice vacations, BMWs, and iPhones. Buffet enjoys seeing his net worth go up, we enjoy the happy memories with our families and friends when we reminisce about that vacation in Riveira Maya or Greece. What is the use of all those billions invested because when you depart Mother Earth, you cannot take all that with you 🙂

    • Ken

      Yup. Money is meant to be spent. U can be frugal when u r poor or have not made your retirement funds and you should seriously consider buffets advice. But when u r so mighty rich like him and still frugal, whats the point of making so much money then? Just to fulfil your satisfaction of seeing the numbers grow?

      • Pavan Parikh

        I think its more like he’s trying to say he’s content in the way he lives he’d rather donate the money to the people who need it rather than him spending it on luxury. He doesn’t live miserly he lives in whatever he feels comfortable in.

    • Marinajkk

      Exactly! As I stated in my post, money is wasted on some people!

  • Marinajkk

    As though living this way is noble somehow! I agree with Sophia Loren who said that living like the middle class when you have money is an insult to them. What’s
    the point in having money if you don’t take full advantage of it? Americans have adopted a bum’s mentality. This reminds me of Ebenezer Scrooge who ordered a bowl of god awful broth because he was too cheap to have anything else. Once upon a time, when Americans still had a bit of pride and class, there was a saying. “You can’t take it with you.” Money is wasted on some people.

  • Customer Support

    Oh ye$, money money money. Warren made a killing after and during the Great Rece$$ion. Which huge bank (too big to fail, too big to jail) did Warren make a very lucrative deal with??? Hmm.