14 Ways To Reduce Your Cost-of-Living Expenses, According to Warren Buffett

Legendary investor Warren Buffett is one of the wealthiest people in the world and for a time was the wealthiest. It might surprise you, then, to learn that Buffett is a proponent and practitioner of frugal living and always has been.

Warren Buffett, chairman and CEO of Berkshire Hathaway is interviewed after the annual Berkshire Hathaway shareholders meeting.Photo byKent Sievers/Shutterstock.

Frugal living doesn’t mean hoarding every penny and only buying the cheapest items; it’s about practicing sound budgeting, good spending habits, and other actions that help you get more value out of your money and lead to financial stability.

When someone like Buffett talks about money, it makes sense to listen. Here are 14 ways to reduce your cost of living expenses, as per Warren Buffett.

Live Within Your Means

While it’s easy for Buffett to live within his means now, he wasn’t always a billionaire. Living within his means kept him out of financial pitfalls and helped him amass capital that he kept growing.

Avoid Unnecessary Debt

Sometimes, like when buying a car or a house, it might be necessary to take on debt, but Buffett always sought to avoid debts that weren’t needed. Ways to do that include avoiding impulse spending, evaluating want vs. need, and sticking to a budget.

Prioritize Value Over Brand Names

A lot of the time, the big brands are more expensive than their competitors, but they don’t always deliver better value. Buffett would advise you to weigh what you get against what you pay for it to determine what the real value is. That applies to both spending and investing.

Invest Wisely for Long-Term Growth

Obviously, Buffett is one of the most successful investors of all time. One way he attained that status was by doing his homework so that he could invest wisely in companies with strong prospects. In turn, that set the stage for strong long-term growth for his own assets. Many companies have experienced a meteoric rise only to suffer a catastrophic fall, and unwise investors get badly burned when those things happen.

Buy Stocks With a Strong Competitive Advantage

Competitive advantage refers to a company’s ability to produce goods better or at less cost than its rivals do. Buffett learned that the ability to discern this comes with wise investing, prioritizing value, and patience.

Focus on Long-Term Financial Goals

For understandable reasons, many people put great focus on short-term financial conditions. While that’s important since bills, purchases, etc. are occurring now, it’s important to think of the long term. Always set long-term goals so that you steadily plan for and work toward them.

Be Patient in Financial Decisions

Investing and financial management tend not to reward impulsivity. You don’t have to achieve all your goals tomorrow. Patience helped Buffett make wise investing and other financial decisions that paid off grandly.

Don’t Chase After Quick Gains

Similar to the above, don’t try to get there all in a hurry. Chasing quick gains impairs the ability to make wise choices and stay focused on long-term goals, and it can cost time and resources. Think of it like buying lottery tickets; you can keep buying them and hoping you’ll hit the jackpot, but most likely, you’ll just have ended up throwing away money you could have put to better use.

Stay Informed About Your Investments

As an investor, Buffett has always kept track of his investments and urged his clients to do so. You need to know how they’re doing, when it’s time to buy or sell, etc.

Seek Opportunities During Market Downturns.

Markets always experience downturns, but then they go up again eventually. Investors like Buffett know this, and they look for opportunities to invest in companies that they know will recover and thrive, and they develop a knack for knowing when things are about to start climbing again, which is when it’s time to invest.

Practice Simplicity in Lifestyle

Leading a simple lifestyle means keeping focused on what’s important and not getting distracted by what isn’t. Distractions make it easy to stray from the path leading to your long-term goals.

Avoid Lavish Spending on Luxuries

Buffett famously drove an economy car for years when he easily could have been driving the priciest, fanciest, most exotic cars money can buy. This was an extension of practicing a simple lifestyle; that economy car was all he needed to get around. Just because you can afford something doesn’t mean you have to buy it; there may be a much better use for that money.

Invest in Your Own Education

Education isn’t the only way to financial success, but it’s one of the most reliable pathways. Buffett earned a B.S. from the University of Nebraska, a Masters from Columbia Business School, and a degree from the New York Institute of Finance.

Give Back and Practice Philanthropy

Buffett has always believed that one should pay it back as a way to recognize the help they had along the way and to create opportunities for those without a lot of them. To back that up, Buffett has given billions to charities. In fact, that was what knocked him from #1 to #2 on the Forbes list of the world’s richest people in 2009.

It goes without saying that advice on frugal living and other financial matters from someone like Warren Buffett is worth listening to. Hopefully, these tips can help you set a course for your financial goals!

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