11 stupid expenses that prevent you from accumulating wealth: wealth strategy from Warren Buffett

Billionaire Warren Buffett is known for his frugal lifestyle: he lives in a modest house, drives an old car and, although he can afford Michelin-starred restaurants, prefers McDonalds and Coca-Cola. America's poor and middle class would do well to learn from the Oracle of Omaha. Edition GOBankingRates talked about 11 things that Warren Buffett thinks poor people will spend money on in 2024.

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With a little planning, you can avoid these financial pitfalls and set yourself up for a richer 2024.

Your house

If you're buying a home in 2024, keep Warren Buffett's lifestyle in mind. A billionaire once said, “Cost of living does not equal standard of living. “I wouldn’t live any better if I had 8 houses, if I had a 400-foot yacht.”

He bought his home in Omaha 55 years ago for $31 and, despite his billions in income, sees no reason to move.

“It’s warm in the winter, cool in the summer and has everything I wanted. In addition, a variety of pleasant memories are associated with him,” notes the billionaire.

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While Buffett's five-bedroom, 6-square-foot (750 sq. m.) home is by no means small, he could buy something much more extravagant.

In an Investor Weekly YouTube video, the narrator observed, “If your initial purchase meets your needs and brings you satisfaction, do you really need a bigger, more expensive home?”

New cars

According to the video, Warren Buffett drove a 2014 Cadillac DTS until 2006. Then in 2014 he bought a Cadillac XTS. But it's not just money that keeps Buffett from buying new cars.

At a shareholders meeting, he explained: “It would probably take me half a day to buy the car and read the owner's manual and all that. And this is just half a day, which I don’t want to waste without benefit.”

If your old car is still running and you're not spending money on repairs, invest that time and money into something that will help you make more money.

Car and home maintenance

By learning how to perform basic home and auto repairs, you'll save money and keep your car running longer. Learn basic DIY skills that can potentially save you money on repairs and setups.

Likewise, according to Buffett, "finding advantages in using your current home can be cost-effective."

Food

It's no secret that eating out is a huge drain on your budget. A steak dinner cooked at home will cost less than even a cheap fast food meal.

The same goes for meetings with friends - instead of going to a restaurant, arrange small gatherings at home.

Credit card expenses

Warren Buffett uses cash everywhere, according to multiple sources. In Berkshire Hathaway's 2014 annual report, Buffett noted: “Cash is the only legal tender. Don't leave home without them."

Shopping on a credit card will get you into financial trouble because it's easy to lose control of how much you spend. More importantly, the balance costs a lot of money. According to The Motley Fool, Buffett once said in a press release: “Credit card interest rates are very high. Sometimes they are 18%. Sometimes they are 20%. If I borrowed money at 18% or 20%, I would go broke.”

Games of chance

Gambling at a casino or even buying lottery tickets seems tempting. The chance to win millions in minutes encourages you to make bets you shouldn't.

Buffett's approach teaches us that success lies in thoughtful and conscious choices.

Gambling, whether it's on stocks in companies you don't understand or on the blackjack tables in a casino, rarely pays off.

Risky investments

“Risk comes from not knowing what you are doing,” Buffett said.

And one more piece of advice from him: “Never invest in a business you can’t understand.”

Always research a business before investing in its stock, and don't be afraid to seek help from a financial advisor if you're new to investing.

Latest gadgets

Warren Buffett didn't upgrade his flip phone until 2020, when he finally got an iPhone. Before you buy the latest gadget, decide whether your current devices, appliances, or other tools meet your needs.

Low quality goods

“Price is what you pay; value is what you get,” Buffett noted in a letter to Berkshire Hathaway shareholders. While he doesn't need the latest car or phone, he makes sure his purchases last.

“Whether it's socks or deals, I like to buy quality items when they're marked down,” he admitted.

Wasteful shopping

Even an item that is of great value can be a bad financial decision if you don't need it.

“If you buy things you don't need, you'll soon have to sell the things you do need,” Buffett once said.

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If you have extra money, consider increasing your retirement savings or investing in high-value stocks that pay dividends instead of cluttering your home with unnecessary items.

Unused subscriptions

A Forbes Home study recently found that 47% of Americans are paying for streaming services they don't use. If you look through your bank statements, you'll likely find a few subscriptions, be it streaming services or gym memberships, that you're not using. These costs may increase.

Unused subscriptions often turn into financial traps for many Americans. Now, as we enter 2024, it's time to evaluate your budget and cut all unnecessary expenses, including unused subscriptions.

Buffett's advice runs through the world: live within your means, don't spend money you don't have, and don't spend money on things you don't need.

Of course, you can treat yourself from time to time. But make sure your purchases align with your financial goals and will improve your life in the long run.

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