Warren Buffett, one of the most successful investors in the world, has a reputation for his simple financial wisdom. His advice is certainly worth listening to, especially if it helps you avoid making money mistakes.
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According to Buffett, here are 10 things poor people waste money on and what he does instead.
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Low-Value Investments
“The most important investment you can make is in yourself,” Buffett has said, according to Inc. “That’s how knowledge builds up. Like compound interest.”
One of Buffett’s most famous tips, known as the Buffett formula, is to go to bed smarter each day.
According to Inc., Buffett recommends reading. He spends about 80% of his day reading, and he suggests that anyone hoping to achieve success should read 500 pages per day.
If you’re investing in something other than yourself right now, it might be time to rethink your strategy.
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Credit Card Debt
Buffett is also very against credit card debt. He prefers to rely on cash instead of using a credit card. “I’ve got an American Express card, which I got in 1964,” Buffett told Yahoo Finance. But I pay cash 98% of the time.”
Quantity Over Quality
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” Buffett wrote in his 1989 letter to Berkshire Hathaway shareholders.
Buffett won’t invest in something just because it’s cheap. Although he’s talking about investing in businesses, this can be applied to everyday life. When you prioritize quantity over quality, the short-term gains may not mean much (and it could cost you more) in the long run.
Unnecessary Spending
Buffett doesn’t care about having the latest technology or designer labels. According to AP Moneywise, he used a $20 flip phone for several years before upgrading to an iPhone in 2020.
His advice? “Do not save what is left after spending, but spend what is left after saving,” according to Moneywise.
New Cars
Cars are depreciating assets. According to Kelley Blue Book, most new vehicles have a 20% drop in value in the first year.
So instead of buying a new car, Buffett prefers to buy used vehicles at reduced prices.
“The truth is, I only drive about 3,500 miles a year, so I will buy a new car very infrequently,” he said, according to Forbes.
Full-Price Purchases
Even Warren Buffett looks for good deals. Years ago, Buffett once treated Bill Gates to a meal at a fast food restaurant and used coupons to help pay for the meal.
“Remember the laugh we had when we traveled together to Hong Kong and decided to get lunch at McDonald’s? You offered to pay, dug into your pocket, and pulled out … coupons!” Gates wrote in his and now-ex-wife Melinda’s 2017 annual letter.
“Melinda just found this photo of me and ‘the big spender.’ It reminded us how much you value a good deal,” Gates wrote, using the anecdote to segue to a discussion about the value of philanthropy.
Regular Nights Out
Buffett has a very simple diet and doesn’t like to go out much. In Buffett’s biography, “The Snowball: Warren Buffett and the Business of Life,” author Alice Schroeder quoted him as saying, “I like eating the same thing over and over and over again. I could eat a ham sandwich every day for fifty days in a row for breakfast,” Mashed reported.
Wasted Opportunities
In his early years, Buffett picked up side hustles and made money by delivering newspapers, selling used golf balls and buffing cars, as previously reported by GOBankingRates. He also looked for new opportunities, and when he couldn’t find any, he’d create them.
Gambling
At a 2007 Berkshire Hathaway shareholders meeting, Buffett called gambling “socially revolting,” according to The Motley Fool.
“I’m not a prude about it, but to quite an extent, gambling is a tax on ignorance,” he reportedly said, referring to the tax revenue generated by gambling.
“A government shouldn’t make it easy for people to take their Social Security checks and [waste them pulling] a handle.”
If you have extra money, don’t waste it on gambling.
Living Beyond Their Means
When you’re shopping and see something you like, ask yourself whether you really need it or just want it.
During a 2009 meeting at Emory University, Buffett said something to the effect that his goal is “not to make people envious.” He also said you can’t buy health or love and warned the audience not to confuse the cost of living with the standard of living, according to meeting notes from a student who attended, which appeared on the student’s Underground Value blog.
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This article originally appeared on GOBankingRates.com: Warren Buffett: 10 Things Poor People Waste Money On