I’m a Self-Made Millionaire: 6 Warren Buffett Rules That Can Make You Rich
Warren Buffett, the Oracle of Omaha and CEO of Berkshire Hathaway Inc., is perhaps one of the most well-known, most successful investors today. He has an estimated net worth of $130.7 billion, as of April 2024, and is one of the richest people in the world.
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Buffett follows certain tenets that have made him a massive success in the world of investing. Unlike many top billionaires, Buffett has modeled his investment strategy off Benjamin Graham’s method of value investing. In other words, he finds and invests in stocks or securities that are priced far lower than their intrinsic value and holds them for the long term.
Today, Warren Buffett has quite a lot of advice and tips for people looking to become rich themselves. In particular, he advocates for investing in yourself and in what you know, reinvesting profits, being persistent and patient, analyzing risks, setting clear goals, and making informed decisions based on those goals.
GOBankingRates recently spoke with self-made millionaires Bryan Clayton (CEO of GreenPal, an online platform that connects landscapers and clients in the United States) and Steve Davis (CEO of Total Wealth Academy, an intense online course that teaches people how to build wealth through real estate) about their individual journeys to building wealth and how Buffett helped inspire them along the way.
Never Rely on Only One Income Source
When you have only one main source of income, you’re essentially putting all of your eggs in one basket. And when you do that, you’re putting yourself at the mercy of someone else’s decisions. If you have only one income source and something happens to it — say, you lose it or it gets reduced for some reason — your entire livelihood could be at risk.
“Warren Buffett said, ‘Never depend on a sole source of income; always invest to create a second,'” Davis said. “When I was 27, I won a national sales contest and a trip to Hawaii. I had worked for the same company for five years, 60 to 70 hours a week. When I got back from Hawaii, they cut my pay by $20,000 a year. This woke me up to the stupidity of relying on a job as your sole source of income.”
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Focus on Investments That Contribute to Positive Cash Flow
When it comes to investing in and creating another income stream, Davis knew Buffett wasn’t referring to investments that don’t contribute to cash flow.
“I knew he was not referring to stocks or metals since they don’t produce cash flow. He was referring to income-producing assets like businesses and real estate,” Davis said. “I immediately started reading every book I could find on real estate investing. I bought the programs off of late-night TV and took multiple workshops and boot camps.
“I quit my job two months later and, within three years, my passive income from my real estate investments allowed me to retire at age 30,” Davis added. “I now had multiple streams of income from my different investments. I felt a peace of mind that I can’t even describe. It even saved my marriage. Everyone needs to follow his advice and get a side hustle.”
Learn as Much as You Can
Another of Buffett’s financial strategies is to invest in what you know — and to learn the things you don’t.
As Davis pointed out, this method worked well for him; he learned everything he could about real estate investing and was able to use that knowledge to become wealthy (and retire early).
Invest In Yourself
“The best thing you can do is to be exceptionally good at something,” Buffett once told CNBC. “Whatever abilities you have can’t be taken away from you. They can’t actually be inflated away from you. The best investment by far is anything that develops yourself, and it’s not taxed at all.”
As Buffett advised, both Clayton and Davis have invested in themselves in ways that have helped them along the way to building wealth.
Shift Your Perspective About Money
Buffett has also always had a unique perspective when it comes to the value of money.
“Let me share a bit of my journey with you,” Clayton said. “By 27, I hit that self-made millionaire mark. And while hard work and dedication played their parts, so did the pearls of wisdom I gleaned from reading ‘The Snowball,’ Warren Buffett’s biography.”
Published in 2008, “The Snowball: Warren Buffett and the Business of Life” is a biography about Buffett, written by Alice Schroeder.
In reading “The Snowball,” Clayton noted that one particular lesson stood out from all the rest. “His unique perception of money’s value. He says, ‘I don’t look at $100 like it’s $100; I see it as $1,000 because that’s what it could become.’ To make a point, this perspective reshaped my mindset. It made me think long term and recognize the power of compounded growth.”
Be Frugal Even While Building Wealth
Despite being wealthy, Buffett is still frugal in many aspects of his life. He still lives in the same house he bought back in 1958. He still shops smart when it comes to things like food and cars. And he keeps things affordable in terms of hobbies and interests.
“Most people don’t know this, but even after Buffett was worth about $10 million, the man opted to stay in a closet at the Waldorf Astoria just to save money,” Clayton said. “You’d think, ‘Why bother?’ but it’s this frugality combined with a drive to put money to work that truly resonated with me.”
Bottom Line
So, would self-made millionaires suggest others follow Buffett’s rules?
“Based on the results in my own life, would I advise others to adopt Buffett’s rules? Absolutely,” Clayton said. “His emphasis on value, both in investments and in personal habits, can be transformative.”
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This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: 6 Warren Buffett Rules That Can Make You Rich
