If Buffett can live frugally, surely you can too?

2010-07-31 11:40

In a recent TV interview, Warren Buffett, one of the wealthiest ­people in the world, gave viewers a glimpse of what has made him the man he is. Surprisingly, the billionaire leads a simple life.

In the interview, Buffett said the following:

» I bought my first share at age 11 and I now regret that I started too late;
» I bought a small farm at age 14 with savings from delivering newspapers;
» I still live in the same three-bedroom house I bought after I got married 50 years ago. (His house doesn’t have a wall/fence);
» I drive my own car everywhere and do not have a bodyguard;
» I do not carry a cellphone, nor do I have a computer on my ­office desk;
» I never travel by private jet, ­although I own the world’s ­largest private jet company;
» I do not socialise with the high society crowd. After getting home I make myself some popcorn and watch TV; and
» My company, Berkshire Hathaway, owns 63 companies. I only write one letter each year to the CEOs of these companies, giving them goals for the year. I never hold meetings or call them on a regular basis. Buffett added that he has given his CEOs only two rules. Rule No 1: Do not lose any of your shareholders ’ money, and Rule No 2: Do not forget rule number one.

Last week, I did a radio interview where the issue of saving money was discussed. Listeners were asked to call in and give their views as to why South Africa has a culture of low savings.

Interestingly, seven out of 10 callers blamed this culture on low income, the African culture of looking after siblings, extended family, job reservations, and of course apartheid having deprived blacks of a good education.

All this is true but my question has always been: How then did our mothers and fathers, who were maids and garden boys, manage to build their beautiful houses in rural villages and still manage to provide for the ­education to the multitude of great black business people this country has today? My answer to the question is that they saved.

No matter how little they earned and the humiliation they had to endure from their “masters”, they somehow saved. And for the umpteenth time, I wish to emphasise that I am not talking about “the banked”, but about cultivating a culture of frugal ­living and cutting out wasteful extravagance.

Buffett’s way of life may not suit our somewhat distorted ­current value system, but it has worked for the man. Therefore, all of us should take a lesson.

In the interview, Buffett advised youth to stay away from credit cards, invest in themselves and remember the following:

» Money doesn’t create man, man creates money;
» Live your life as simply as you can;
» Don’t do what others say, just listen to them, but do what you feel is good;
» Don’t go for brand names, just wear those things in which you feel comfortable; and
» Don’t waste your money on unnecessary things, just spend on items you are really in need of.

I want to challenge readers of this column to set themselves ­financial and saving targets for the remaining months of the year. However, remember this rule: To save more, you first have to cut down on expenditure.

» Diale is a financial planner. He can be contacted on 078 775 0802

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