Warren Buffet, the billionaire investor known as the “Oracle of Omaha,” knows a lot about building wealth. He’s not into get-rich-quick schemes, though — he’s more into down-to-earth wisdom and advice. That said, his advice is very good and something we can all learn from.
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Here are five Buffett-approved ways to build wealth quickly, and in ways that are doable for most of us.
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Develop a Smart Spending Foundation
Buffett says that before you do anything else, you’ve got to get your spending under control. For example, despite being one of the richest people on Earth, Buffett still lives in the same modest house he bought almost 70 years ago. Why? Because he knows the value of a dollar.
Here’s a mind-blowing stat for you: 78% of Americans live paycheck to paycheck. Buffett’s advice? Plan your income and expenses, no matter how much you earn.
Figure out how much you earn per hour, then compare that to the price of stuff you want to buy. That $50,000 Tesla suddenly looks a lot less appealing when you realize it’ll cost you 2,283 hours of work, doesn’t it?
Oh, and credit cards? Buffett’s not a fan. He suggests cutting out your credit card debt first if you can.
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Make Your Money Work for You
Once you have your spending under control, it’s time to put your money to work!
Buffett says you don’t need to be a genius to invest. You just need to be smart about it. Don’t let your savings sit idle. If you do, inflation will make sure it’s worth way less when it’s time to retire.
Consider moving your savings into a high-yield savings account. But if you really want to grow your wealth, look into dividend stocks. You can start with as little as $100.
Just remember, cut back on those nights out and fancy gadgets. Your money can’t work for you if you’re spending it all on appetizers and the latest iPhone.
Have a Good Circle
Ever heard the saying, “You’re the average of the five people you spend the most time with”? Well, Buffett believes that.
He thinks you should surround yourself with people who are better than you. Take his partnership with Charlie Munger, for example. Together, they built Berkshire Hathaway into a powerhouse, achieving an annual average gain of 20.1% from 1965 through 2021. That’s nearly double the pace of the S&P 500 Index.
Fill your circle with excellent peers, advisors and investment powerhouses — including advice from Buffett himself!
Invest in Yourself
Here’s where Buffett drops some real wisdom: “By far the best investment you can make is in yourself.”
Buffet wants you to make yourself indispensable. Companies are always reluctant to let go of adaptable, multi-skilled employees, especially during tough economic times. Learn new skills, continue your education, do whatever you can to stay ahead of the curve.
Buffet also suggests keeping up-to-date on news from the business world, so you know what skills are valuable now and how to cultivate them in yourself.
Think Value and Think Long-Term
Last but definitely not least, Buffett’s all about value investing. Find undervalued companies, invest in them, and wait. Over time, the market usually recognizes their true value, and boom — your investment grows.
But here’s the key — you have to think long-term. As Buffett says, “Stocks are very safe for the long run and very unsafe for tomorrow.”
Thinking long-term has tons of benefits. It lets compound interest work its magic, encourages diversification (aka not putting all your eggs in one basket), and helps you avoid making rash decisions based on emotions.
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This article originally appeared on GOBankingRates.com: Warren Buffett: 5 Ways To Build Your Wealth Fast
