Wasting Money Is No Way To Get Rich
Warren Buffett has a long history of giving financial advice on frugality and the importance of saving and investing. But what about minimizing financial waste? Yep, he's got advice for us on that, too. According to the "Oracle of Omaha", these are some wasteful expenses that keep you poor.
Credit Card Debt
While credit card companies love to sell you their products, Buffett says they're no way to build wealth. While you definitely can have credit cards and manage them responsibly, spending money you don't have on things you can't afford by paying for them with credit is a surefire way to keep yourself poor.
Keeping Up With The Joneses
While having the latest and greatest in fashion or technology may be fashionable, it's not a long-term wealth solution. Keeping up appearances by having the newest iPhone when your previous one worked just fine is a great way to waste money unnecessarily.
Buffett preaches buying things that are left after you contribute to savings at the end of each month.
A New Car
While we concede that there's nothing quite like the smell of a new car, buying a new car unnecessarily or trading in and financing a new car every few years is also not a great way to build wealth. Cars are depreciating assets from the second they leave the dealership lot. It's far better to buy a cheap, used, practical vehicle and run it into the ground than spend money on a brand-new car every few years.
Regular Nights Out
Do you remember when your parents declared that Friday nights were pizza nights? And that these were special treats, rather than a meal you ate regularly? That same principle can be carried with you into your life today. Spending money regularly on nights out won't leave you with much to save at the end of the month. Make your regular nights out a once-a-month treat, and you'll soon see savings.
Paying Full Price For Items
Rarely does Warren Buffett pay full price for anything. Like a shrewd tactician, he waits until the item goes on sale for a greatly reduced price and then buys it. He says that even if you want something, wait until it goes on sale. Not only does this prevent you from impulsively buying items, but you save money by never paying the big-ticket price.
Gambling
Buffett has called gambling "socially revolting". And while it might not feel like you're gambling, if all you're doing is spending $10 here and there on lottery or scratch tickets, it will all add up over time. Pursuing higher returns on your bet is one of the worst ways gambling companies keep you coming back for more.
Avoid gambling at all costs, says Buffett.
Living Beyond Your Means
We are all very guilty of living beyond our means. And while you don't have to live miserably, living frugally means being aware of your "means". That nice coat that you saw in the shop window, or the brand new car or game console that you've been eyeing for a while—they're nice and everything, but the main message from Buffett here is if you can't afford it, don't buy it.
What Wasteful Expenses To Cut Back On
If, after reading Buffett's advice, you find yourself saying, "Well, I'm spending way too much on X and Y," then consider which of these identifiable wasteful expenses you could cut back on. Here are a few ideas to get your savings started.
Unused Subscriptions
We all love Netflix, Hulu, Crave, Amazon Prime, and myriad other subscription services we've signed up for over the years.
But how many do you use or need? Do you need to get parcels delivered within two days? Or can you save that Prime money every month? Do you need to watch Netflix, Hulu, and Crave? Or could you stick to one for six months or a year? Toss the unused subscriptions and reap the savings rewards.
Food Waste
The food you buy is expensive enough as it is. Food waste is a budget killer. It accounts for about $408 billion in expenses in the US annually. So, if you're wasting food, try meal planning each week rather than just ad-hocing your meals.
Banking Fees
You might not think about your bank weekly, but unless you have a no-fee account, your bank charges you a few dollars every month.
This can be as high as $25/month, amounting to $250+ per year. Check to see if you can move your money to a no-fee bank—these are mostly online banking institutions.
"Convenience" Stores
If you often stop at your local 7/11, you will probably spend more than you need on the same things. To avoid the extra money that convenience stores charge for their goods, buy things in bulk and bring lunch with you.
Soft drinks, for example, have the highest markup in the food industry.
What's The Expense You'll Be Cutting Back On?
What's one expense you'll be cutting back, having read this list from Warren Buffett? Let us know your Achilles Heel in the comments below and how you plan to cut back and save more.
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