Avoid These Financial Habits in 2024 (Warren Buffet)

at work for Warren Buffett. Six things that you must stop doing if you want to build wealth. If you constantly are dipping into credit to make ends meet every month, you're living beyond your means. You want your money working for you. Savings will only get you so far. Learn to shop by need, not impulse. Warren Buffett drove the same old station wagon for decades, and he wasn't worried that he didn't keep up with what his friends were buying.

Hey everyone, welcome to another edition of We're Talking Money. Now, if you're new here, I'm Phil Clark, and today we're going to talk about something that I think is really important if you want to build wealth. Building wealth is not just about what you do, it's also about what you don't do. These are things that I want you to stop doing if you want to see your bank account really grow.

I've been following Warren Buffett for years. I've been in the wealth advisory business for 33 years. Warren Buffett has been at it for a lot longer than I have. He's one of the people that subscribes to many of the things that we're going to talk about today, and I've learned these things by reading his work and simply listening to him when he does interviews. He uses the same ideas over and over, and it's allowed him to build incredible amounts of wealth. All right, let's get into it.

Warren Buffett would be the first to tell you: don't spend more than you earn. You just spend a little bit less than you earn, and you can spend a little bit more than you earn, and then you've got debt. I see this one more than any other, and it seems to be a constant. In fact, there was a time in my life when I fell into this very trap. If you constantly are dipping into credit to make ends meet every month, it is time to reassess your budget. The credit will continue to mount, and eventually you're going to have high interest payments, and that is going to constrict your spending and restrict your wealth building.

Next, I want you to stop avoiding investing. When you keep all of your money in a savings account, it can feel safe and probably seems like you're getting ahead, but savings will only get you so far. Investing, on the other hand, allows your money to really work for you, even at the same time that you might be earning a great paycheck. Whether you're investing in stocks or bonds or real estate, whatever it is, this is just smart business, and it's the only way that you're going to grow true wealth. Educate yourself on investing. Warren Buffett was doing this before he was an adult, and look at him now. He's one of the richest people in the world.

So the next habit that you must stop is impulse buying. That is a big no-no. Those small, frequent purchases, they can add up so quickly. Before you make that purchase, ask yourself: is this required or desired? Give yourself a cooling-off period before you make any non-essential purchase. One of the biggest mistakes I see is when friends shop together, they tend to do what the other one does. They don't want to be left out. This is a vulnerability that can cost you a lot of money. If you want to emulate something, somebody, you better pick very carefully who you want to emulate. Learn to shop by need, not impulse.

Even today, Warren Buffett, he still lives in the home that he bought so many years ago, and it only cost him $31,500 when he purchased it. Now, sure, it's worth about $1.4 million or so today, but the point is, all of the spending is not what brings Warren Buffett joy, and he learned that early on, which is why he had so much money to invest.

Now, the next thing that you need to stop: it's delaying debt repayment. This is a major roadblock when it comes to building wealth, especially when you have high interest rate associated with that debt. One of the things that Warren Buffett will say about debt is debt is a good thing when it comes to using leverage the right way, but that's not what we're talking about here. I'm talking about credit cards, primarily. The interest rate on these cards can be 20, 25, 30, even 35%. You can do the math. If you've got a $1,000 balance and you're only making minimum payments, you're going to spend $1,000 in interest in just three years if it cost you 30%. Whatever it takes, you have to put a system in place that allows you to pay off the high-interest debt and pay it off fast. The faster you pay off the debt, Warren Buffett says, the sooner you'll have more money to invest, and that means growing your wealth.

And credit cards, I've got an American Express card, which I got in 1964, but I pay cash 98% of the time. If I'm in a rur, I always pay cash. It's just easier.

One of the things that changed my life is the next habit that I want you to break, and that is not setting financial goals. Whenever I didn't have goals, it was so much harder to stay motivated. I lost interest in some of my savings, I lost interest in trying to invest. That happens if you don't have a goal. Warren Buffett learned early in his life that having goals for where he wanted to be was very important to his success, whether it's buying a multi-billion dollar business or things much simpler than that. Bottom line is, Warren Buffett believed in goals, and if they work for him, I bet they'll work for you. You've got to set specific financial goals and make sure they're achievable and stick to them. That allows you to be focused. You're going to make better decisions when it comes to spending your money. That means more money for investing, more wealth is being created.

And finally, this is one of the most common wealth killer traps that you must avoid: comparing yourself to others. It's so easy to get caught up in highlights of social media reels where people are flaunting their latest expensive purchases. Maybe your friends are buying new cars or expensive watches, that list can go on and on, but it's easy to get caught up in thinking that you need to do the same thing, or that maybe they're so far ahead of you financially. These very people, they could be up to their eyeballs in debt. You just don't know.

Everyone's financial journey, it's different. It's unique to you. You have your own journey, and that's the journey you should be focused on. Set goals, decide where you want to be in life, not that you want to be where someone else is. That's a fool's game. Warren Buffett drove the same old station wagon for decades. He didn't care what he drove, he cared that he could get where he needed to go, and he never worried that his car wasn't as shiny and new as his friends'.

You need a stable personality. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.

So there you have it, six things that you must stop doing if you want to build wealth. Hey, it worked for Warren Buffett. If you want to grow wealth, why not take something from the playbook of one of the richest people in the world? Remember, wealth does not happen overnight. Building your wealth requires time and patience. It requires making good choices, and only you can control your choices.

If you found this video helpful, I hope you'll give us a thumbs up and consider subscribing to our channel so that you never miss a great episode designed to help you take control of your finances and make better decisions to grow your wealth. I'll see you next time on We're Talking Money.