1. Pay yourself first
As Buffett has noted and demonstrated on multiple occasions, you should "pay yourself first" by putting a portion of your funds away first.
Too many entrepreneurs go all in on the company they create and live for the promise of "the big exit." But then it goes wrong. Even worse, some founders have done this multiple times. An expert and friend who owned 29 companies before the pandemic made a funny statement: "You can always tell the entrepreneurs in a room. They have the biggest stories. And then, nearly inevitably, they die broke."
Statistically, the people who are most financially secure are the ones you wouldn't expect. They are ordinary people who practiced financial discipline. They didn't wait to save and invest until "we can afford it" (that would be never) or "when we exit our company."
With or without advisors, they calculated what they'd need to retire and learned to put away savings first (sometimes in a hard-to-access savings account or fund). Then they covered their needs. They used the smallest share of their funds to indulge in luxuries and high-risk investments. They simply practiced and taught financial discipline consistently and early. For example, the young teen daughter of one of my friends is working a part-time job not for the chance to indulge in movie dates or brand-name fashion, but to begin her own retirement fund.
In a similar vein, my barber lives in a mobile home with his partner. They do not have children, but a dog they love as much. This is their second home, the first was small and when sold they were able to downsize to the Moblile home park without a mortgage. They understand that they do not own land, but have no mortage and combined incomes, they are able to save thousands each month. They are very happy and healthy with the likely hood of annual travel holidays and financial success in their favor!
2. Be careful about splurging on brands
In the example of Buffett, consider buying your cars (luxury or not) lightly used.
If you purchase a luxury home, choose a house and location that could allow it to resell easily or serve as a permanent or part-time rental for extra revenue and tax benefits. Or consider owning and living in a conservative home and occasionally renting a luxury home yourself from time to time for a family holiday or a vacation with friends.
A wise advisor I know advises allocating only 20% of your income or investment revenue to "the three "f's'": food, fashion and fun.
Here's a helpful way to think about luxury brands. When you do indulge, consider the purchase as a form of investment. Are the quality and style timeless and classic? Is it something you could adapt and continue to wear two or more decades from now?
3. Be careful about taking out loans
"If you buy things you don't need, you will soon sell things you need," Buffett has said on many occasions. Credit cards can be the highest potential waste of earnings and savings. If you follow the example of Buffett, you operate nearly entirely in cash. If you use cards, learn the systems that allow you to optimize your usage to keep your credit score high and stay eligible for maximum credit when needed while paying the minimum amount of interest (or none).
4. Be even more careful about investing with borrowed money
For the record, Buffett has cautioned against borrowing money to invest in securities .
A fixed-rate loan on a single-family home (as opposed to multi-tenant dwellings of any kind) carries the advantage of allowing inflation to make the payment and balance of your loan an increasingly good deal over time while also allowing the rent your tenant pays contribute to repayment of the loan principle each month.
Buffett acknowledges single-family homes as an attractive investment.
Of course, there are additional rules for saving and investing. But for now, I advise everyone I know to take seriously the advice from classic experts like the "Oracle from Omaha."
Now more than ever, they are principles that can serve all of us well.