Warren Buffett Reveals How You Can Manage Your Money Better Than He Has

Want to manage your money better than billionaire Warren Buffett has? It's easier than you think. Just do this one simple thing.

Massive mistakes
It's tough to believe the man on top of the $315 billion Berkshire Hathaway, who himself is worth more than $65 billion, has ever made a single mistake when it comes to managing money. After all, since he took over in 1965, Berkshire Hathaway has grown by a staggering 693,518%, from $19 a share to $134,973.

But Buffett, like us, is human, and he has made mistakes, which he admits have cost him billions.

At the end of 2008, Berkshire Hathaway had a $7 billion position in ConocoPhillips . Yet Buffett suggests he "made a major mistake of commission," as he "bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak."

Buffett didn't think energy prices would plummet as they did, and as a result, while his position in ConocoPhillips cost $7 billion, it was worth just $4.3 billion. Buffett admitted, "the terrible timing of my purchase has cost Berkshire several billion dollars."

Just this year, Buffett noted he'd lost $873 million in the purchase of $2 billion worth of bonds from Energy Future Holdings, which bought the assets of electric firms in Texas in 2007.

In those two instances, there is one common thing that led to Buffett losing billions, and when we manage our money with it in mind, we'll be in a much better place.

Is it never to invest? Absolutely not. Is it to avoid energy stocks? That isn't it either.

It's that whenever a decision about money is being made, never do it alone.

The simple solution
In 2008, when discussing the ConocoPhillips fiasco, Buffett said he made the investment:

...without urging from Charlie or anyone else.

And in 2013, he said he first bought the debt of Energy Future Holdings:

...without consulting with Charlie. That was a big mistake.

Implicitly in 2008 and explicitly in 2013, Buffett admits the biggest problem wasn't the companies themselves or the industries they found themselves in, but instead that he flew solo when making the investment.

Buffett didn't ask Charlie Munger, the long-standing second-in-command at Berkshire and Buffett's trusted business partner, what he thought about the investments. Instead, Buffett made them alone.

Through this, we can learn whenever any decision surrounding an investment is made, whether it be making an investment in a company, buying a home, or anything of that sort, the best course of action is to enlist the help of someone else, and never make it on your own.

Warren Buffett at the 2013 Shareholder Meeting.

Does that mean you need a financial advisor? That's a real grey area, and there's not a yes or no answer, but it's important to remember they can be incredibly costly, too. Does it mean you should blindly follow "hot" stock market trends?

Considering Buffett says to "be fearful when others are greedy, and be greedy when others are fearful," the answer to that is easier: Of course not.

What Buffett wants us to see is an investment decision should always be made after consulting others -- whether they're friends, co-workers, family, advisors, or others -- who are trusted. While the combined decision may not always be correct -- Buffett and Munger have made mistakes together -- any decision made in isolation has a greater chance of failing.

We can learn a lot from the right things Buffett has done, but learning from wrong things, too, will allow us all to manage our money a little better.

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The article Warren Buffett Reveals How You Can Manage Your Money Better Than He Has originally appeared on Fool.com.

Patrick Morris owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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