Warren Buffett: The Only Habits You Need To Be Successful And Happy

Warren Buffett: The Only Habits You Need To Be Successful And Happy

Enjoy Warren Buffett’s wisdom on the only habits that you need to be happy and successful in your financial future! Buffett said when they hire people, they look for integrity, intelligence, and energy.

Warren Buffett shared much wisdom at the Nebraska Forum’s “Financial Future of American Youth” talk in 1999.

He said that everyone has the ability to reach their full potential. What holds some people back from reaching their full potential is a lack of education. But what really makes or breaks people are the habits that they form.

You can choose to have integrity and match it with intelligence and energy, and then Buffett said you will get an extraordinary result.

Imagine yourself to be a startup business, how much of an equity stake in your earnings power would you sell to get some seed money? This would almost be like if someone went to college, and their parents funded the tuition, and then that person owed a royalty on their earnings back to their parents for the rest of their lives.

Buffett asked the audience how they would feel if he would like to buy 10% of their financial future? How much would you charge Buffett for this equity stake in your future earnings ability?

At a minimum, in 1999 he suggested $50,000 for a 10% stake, which is now about $86,000 if you adjust for inflation. Over a person’s entire working life, this might equal a total of $860,000 lifetime earnings.

Buffett jokes that he’s glad nobody’s got a 10% royalty on him because we would all want more money than the hypothetical minimum he posed.

He said it’s way more important what we do with ourselves as an asset that we own today, than whether we decide to buy stocks, bonds, or mutual funds. The biggest financial asset that we have going for us is the value of our earning power over the years. He said that’s what we should focus on.

We should also pick the person we admire the most and the person we least like to be. Buffett said write down the qualities of both. We can apply ourselves to become the positive qualities of the people we admire and we don’t have to develop the negative qualities. Or we get rid of the bad habits and qualities early in life.

You want to be somebody you like. Form the right habits early.

Buffett’s “small piece of advice” is avoid credit cards. If people revolve debt on credit cards, they pay 18-20% interest on those credit card balances every month. You can’t make financial progress borrowing money at really high rates, he said.

We don’t want to be on the side of the equation that’s always behind in life.

Buffett said he was lucky, that he had saved $10,000 by the time he got out of school in 1951 ($110,000 in 2022).

If you’re behind the game by tens of thousands of dollars, and paying 18-20% on it, Buffett said you’ll never get out of it.

The trick is, as Buffett cited a quip from Charlie Munger, “All I want to know is where I’m going to die, so I’ll never go there.” This applies to financial matters too.

Figure out where you don’t want to be ahead of time, and avoid that.

What I’d add to what Buffett said is you can take advantage of credit cards if you’re ahead of the financial game if you pay all your bills on time, in full, and without owing interest to anybody. But if not, maybe it’s best to stay away from credit cards like Buffett said.

Someone asked for Buffett’s advice for people who are entering fields without the biggest salaries, and I would suggest asking yourself how much would you like to earn throughout your lifetime, and see what your education level might help you get. It helps to know a range of salaries you can expect if you go into certain fields with certain levels of education or skills.

We should think about what our potential lifetime earnings might be, which is impacted by the careers we go into and how much the market is willing to pay for our skills and contributions.

Buffett said, “teaching does not pay well but what could be more important” to society? He said it’s a fundamental choice whether you go into something you love or into something to try and make a lot of money. He thinks generally it pays to go with what you love.

Buffett said it’s not necessary to have huge amounts of money to enjoy yourself. He enjoyed himself when he first had that $10,000 and he lives in the same house that he bought for $31,500 in 1958 (equal to $313K now). So choose your startup home wisely because Buffett’s forever home is about three times the size of average people’s homes at 6,570 square feet.

If you have a reasonable job, you’ll be eating at the same restaurants as Buffett does, like McDonald’s or Dairy Queen. You’ll drive similar cars and use similar computers. But Buffett will travel fancier on airplanes, that’s the one big difference he concedes.

Other than that, Buffett said he does what he likes everyday, works with nice people, and hopes the same for you.

Great wealth is the tiniest bit different than having a decent income. I expand on this by citing what the minimum salary levels are that research has shown we need to be happy generally.

The moral of the story is to strike a balance between making enough money and achieving happiness in the community that you live in. If you can do it frugally with the right habits, you’ll end up successful!

If you’re interested in learning how to take control of your finances and start becoming an investor like Warren Buffett, check out my free PDF guide.

I look forward to making more investor friends! Add me on Instagram: michellemarki