Pattie Lovett-Reid: Money lessons from Warren Buffett (and others)
Experts in the financial industry love to share their advice and some are taken a little more seriously than others, depending on their level of expertise.
For example, when billionaire Warren Buffett speaks, one of the best investors in history, we all listen.
The chairman and CEO of Berkshire Hathaway Inc. believes cash is king. He keeps a lot of cash on hand to withstand unexpected losses, or to jump on an unexpected investment opportunity.
A famous phrase of Buffett’s is: Be fearful when others are greedy, and greedy when others are fearful. So often this has played out in the market. He has reminded us on more than one occasion that dividends are your friends – as it suggests the company is in good financial shape – and he always looks to buy undervalued stock.
Buffett also practices what he preaches, and the “buy and hold” mantra he has subscribed to for years is evident in many of his investments that he’s held on to for over 20 years.
Clearly, there is a mountain of great financial advice available, but I decided to reach out to my followers on LinkedIn and Instagram to ask them the best piece of financial advice they’ve ever received.
Some of the responses were as expected, such as “pay yourself first” – a term popularized by David Chilton who wrote The Wealthy Barber – by spending less than you earn, investing early and often for the long term. And of course, one of my favourite phrases is “a penny saved is a penny earned” – although I suspect that would be more like a nickel today.
There were many other gems I thought I’d share:
- Never lend money you can’t afford to lose
- Stay invested: Don’t try to time the market, know the risk you are willing to take, do your research before you invest, have a plan and know your time horizon
- Get started: Develop a habit of saving and turn it into a habit of investing for the future
- Make a budget: Tell your money where to go with a proper budget instead of asking where it went when it’s gone
- Look out for free money: Maximize any and all workplace programs that match your savings, offer a discount or any program that pays you to invest
- Give: Money is like water – it’s clean and refreshing when it moves
- Avoid overspending: Never purchase something you can’t afford to buy two or three times
- Be boring: It might not make you uber-wealthy, but it sure won’t make you poor
- Put your emotions in check: You can’t manage money until you manage your behaviour and emotions about it
- Buy freedom: Embrace the power of time and compounding, optimize tax efficiency and consider spousal loans to split income
- Don’t delay retirement planning: Begin saving for retirement the day you start working
- Manage your money in your relationship: Be sure to maintain your own financial identity
- Take a daily money minute
- Make bite-sized financial goals in the short term: There can be a tendency to simply give up when the goal is too far in the distance
- Take stock: Learn how to appreciate what you have today
I received so many great money tips that were often passed down from one generation to the next. If you would like to see more, follow me on LinkedIn or on Instagram @pattie_lovettreid to dive in a little deeper and join the conversation.