One of the most successful and well-known investors of all time is Warren Buffet. Already well into his eighties, Buffet has an existing net worth of approximately $87 billion – making him the fourth richest person in the world.
Throughout the past few years, he has provided several meaningful quotes with regards to the subject of investing, philanthropy and financial risk management. Below are some of his better-known quotes as well as information regarding how the information in them can be applied to specific areas of your personal financial situation.
“Someone is sitting in the shade today because someone planted a tree a long time ago”
This can be applied to many areas of your personal financial situation such as:
Accumulating large sums of wealth will not occur overnight or even within a few months. It requires flexibility, preparation and intense perseverance over a fairly long period of time. Putting a workable plan into place that is appropriate for your specific financial situation, objectives and end goals will enable you to start your journey towards making your dreams and goals become a reality.
Spending time with your children and teaching them about finances will be extremely beneficial because it will allow them to learn and apply positive financial habits, as they grow older.
This quote is also able to be associated with the various benefits that other can enjoy when you engage in philanthropic endeavours – however, it is crucial that you have a very carefully planned and appropriate approach to this. Before getting involved in any form of philanthropy, it’s essential to consider these aspects:
- What resources do you have available to give?
- What are your reasons or motivations for giving?
- Is there anything that could affect your ability to give?
- What people, charities or causes would you like to see benefitting from your giving?
“It is not necessary to do extraordinary things to get extraordinary results”
Where your personal finances are concerned, it’s most likely to be the small things you do that compound over time that will produce the extraordinary end results. Look at an ordinary savings account for instance. If you open an account and regularly make $50 deposits each week into an account that generates a net return of 5% per year over a period of 30 years, the initial investment of $50 would grow to $180,880 ($78,000 would have been invested and $102,880 would have been earned in interest).
Superb results can occur when all of the small things you do regarding personal finances are taken into consideration and compounded over time.
“Risk comes from not knowing what you’re doing”
Each person has their own specific set of skills and gifts and it’s essential that you know where yours end and someone else’s begins. This is especially crucial where personal finances are concerned. Individuals can often find themselves stressing a lot when trying to deal with something that they are not familiar with. Instead, building and working with a reputable professional advice team, you will be able to use their skills and gifts to reach your financial objectives and goals.
“Do not save what is left after spending; instead, spend what is left after saving”
If you were provided with a choice, would you start over with regards to how you deal with your income and expenses? Instead of thinking about what you can purchase with your next pay cheque, would you rather think about how much you will need to save to reach your financial objectives and goals, and then only spend what is left?
“Predicting rain doesn’t count. Building arks does”
It is extremely difficult to predict the future with regards to when any type of unexpected event could occur. However, when they do occur, the results thereof can be devastating for anyone who was not adequately prepared.
This is why it is essential to take risk management into consideration where your personal finances are concerned. This can involve several aspects such as investments (dollar-cost averaging and diversification), superannuation (planning for retirement), estate planning (power of attorney and your will) and insurance planning (general and personal insurance products).
“The investor of today does not profit from yesterday’s growth”
This is a crucial reminder to ensure that you do not allow procrastination to get in the way of reaching your financial objectives and goals. Not being proactive when putting your plans into action with regards to accumulating wealth could see you missing opportunities that arise during your lifetime. However, it’s important to remember that it is never too late to start saving.
As an old Chinese Proverb so aptly states, “The best time to plant a tree was 20 years ago. The second best time is now.”
“If you buy things you do not need, soon you will have to sell things you need”
This is highly applicable when considering healthy financial habits in debt management and cash flow. For instance, consistently spending your money on wants and using credit cards to fund this habit could result in your expenses starting to exceed your income. After this happens, you will need to make some difficult decisions to help get your finances back on the right track – in some cases, this could involve selling valuable assets to repay debt obligations that you cannot meet with your current level of income. In short, never ever spend more than what you are earning.