Warren Buffett’s Smart Money Tips Anyone Can Use

The good news is that you don’t have to be an investor – or a millionaire – to learn from Buffett’s guidance. He has provided many valuable tips that are useful to ordinary American families trying to save money, budget wisely and make smart financial decisions. Here are some of his popular insights on savings, credit, home ownership and more.

To save

Buffett often praised the value of compound savings that allow your money to grow over time, and the importance of having cash on hand. Here are some of his money-saving ideas:

• “Even a passive savings account will generate interest that increases slightly each year due to compounding.” (Letter to Berkshire Hathaway shareholders, 1977)
• “We will always manage our affairs so that any cash needs we may have are mitigated by our economy.” (Letter to Berkshire Hathaway shareholders, 2009)
• “When bills come, only money is legal tender. Don’t leave home without it.” (Letter to Berkshire Hathaway shareholders, 2014)
• “Combining savings with compound interest works wonders.” (Letter to Berkshire Hathaway shareholders, 2019)
• “You should spend less money than you earn.” (Berkshire Hathaway Annual Meeting, 2023)

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Price

Buffett famously knew how to make good money in business, and his insight applies equally to a supermarket or a big box store:

• “In our opinion, it is foolish to risk losing what you need in pursuit of what you desire.” (Letter to Berkshire Hathaway shareholders, 2014)
• “None of us have a sense of urgency to buy a $1 value for 95 real cents.” (Letter to Berkshire Hathaway shareholders, 2019)

Debt

In both his business and personal finances, Buffett did not encourage borrowing. Here’s what he has to say about credit:

• “In general, we continue to dislike debt, especially the short-term kind.” (Letter to Berkshire Hathaway shareholders, 1992)
• “I think people should avoid using credit cards as a bank that’s going to be attacked … If I owe 18 percent, the first thing I’d do with any money I have, would be to pay it off. It’s going to be better than any investment idea I have.” (Berkshire Hathaway Annual Meeting, 2020)
• “If you’re paying 12% or 14% or whatever percentage you’re paying on a credit card, you know, you’re saying, ‘I’m going to earn more than 12% or 14% on my money.’ And if you can do that, come to Berkshire Hathaway.” (Berkshire Hathaway Annual Meeting, 2023)

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Home ownership

While making a distinction between mortgages and other types of debt, Buffett had some advice for buying a home – America’s largest asset:

• “Buying a home should involve an honest to God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income.” (Letter to Berkshire Hathaway shareholders, 2008)
• “Last year I told you why our buyers – usually people with low incomes – did very well because of credit risks. Their attitude was very important: They signed up to stay at home, not to resell or renovate it. As a result, our buyers often took out loans with payments directed at their guaranteed income (we did not ‘lie them they could expect to borrow their money in a day’) (Letter to the shareholders of Berkshire Hathaway, 2009)

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Balance

But Buffett’s financial wisdom wasn’t just about being tight-fisted with your money:

• “I think there’s more to be said for doing things that bring you and your family happiness than trying to save all the money.” (Berkshire Hathaway Annual Meeting, 2019)