When it comes to personal finance and achieving financial goals, you talk about Warren Buffett. The American and world’s top investor worth over $74 billion.
Most businesses around the globe pay millions of Dollars to have one of the richest men in the world sit down with them for launch.
This underscores the importance and role Warren Buffet plays when it comes to financial issues. People within the finance and business ecosystem are always looking forward to his advice.
The truth is that Buffet is always centered around business, stocks, or just life in general, hence, much of his advice can be applied to helping with personal finance situations.
Here some of the lessons we can learn from Warren Buffet:
Have an emergency fund
It has been emphasized every now then, that, setting aside an emergency fund will play a very critical role in achieving your financial goals.
The American Billionaire talks about having emergency funds set aside, not just for the emergency sake, it positions you to take advantage of good deals.
A reliable report shows that Buffet keeps at least $20 billion cash in Berkshire Hathaway’s bank.
Most of us do not have emergency funds, and that’s not an ideal. Always make sure you have money set aside, so as to help when unexpected problems pop up.
Planning
What does this mean to you? It means Buffet always has long term financial goals and investment. He is a long-term investor.
In most cases, we do not see the long-term vision of investments; the interest is always short term.
Buffet understands the bigger picture when it comes to buying stock. He always thinks what happens in the next five to10 years after purchasing a stock.
When it comes to personal finance, planning is necessary, having a budget is the same thing. Planning will involve a budget, a proper detailed plan of how you intend spending your money.
Aside from that, having a retirement plan is also part of planning, you don’t wait until you’re 45 before saving for retirement.
Understand Price and Value
Buffet said, “Price is what you pay; value is what you get.”
People make the mistake of seeing high priced goods as more valuable than goods that are low priced. Most times the reason could be due to the confusion between cost versus value.
Buffet uses price versus value about buying any stock; hence, you understand if something is worth the money before buying.
Make informed decisions
“Risk comes from not knowing what you’re doing,” according to Buffet. He was referring to the ability of someone to diversify investment of stocks; this can also be applied to your personal financial life.
In that case, knowing the exact risks are when you make decisions that can help improve your financial life. It is important to research and thoroughly think before making any decision.
Take advantage of compounding
Compounding has proven to be one of the ways to double your money. If there’s one thing Warren Buffett likes, it’s the power of compound interest.
As a fact, one could say part of his wealth came through that means. This may look absurd at the moment considering your finances, but when it comes to planning for your future, compounding interest is one of the best tools.
Conclusion
Start today to take actions where necessary. Hope this was helpful.
