Yahoo Finance 6 Ways To Save According to Warren Buffett, Suze Orman and 3 More Financial Gurus
Saving money is easier said than done. According to a 2024 survey of 1,000 Americans with savings, Forbes found that one in four Americans (28%) have savings below $1,000. This includes personal savings, emergency funds, non-workplace retirement accounts and investments. Saving money can give you more financial stability, and even small changes in your spending and saving habits can make a big difference.
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To help you reach your financial goals, here are six ways to save according to top financial gurus.
Automate Your Savings
In a speech to college students, billionaire and CEO of Berkshire Hathaway Warren Buffett said, “The biggest mistake is not learning the habit of saving properly.” He also stated that “most behavior is habitual.” Getting into the habit of saving money isn’t easy, but one way that can help is to make it automatic.
“I also would automate,” said financial advisor and author Suze Orman during an interview at CNBC’s Women & Wealth event. “Meaning, I would choose that you do $50 a month, $100 a month, whatever it may be, and automate it, and you will find that you do not miss it.”
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Earn More Money
If you’re living paycheck-to-paycheck and have no money left over to save, consider asking your boss for a raise. “One of the most accessible ways to have an additional $10,000 over the next 12 months is to ask your boss for a $10,000 raise,” money expert Jaspreet Singh said in an episode of “Minority Mindset” on YouTube.
Another way to earn more and start saving is to earn income outside of your job. “This might be creating a side hustle, this might be becoming a freelancer, becoming a contractor, getting a second job or working to build your own business on the side,” Singh added.
Avoid Bad Debt
Another famous piece of advice from Buffett is, “Do not save what is left after spending, but spend what is left after saving.” In other words, save first and once you’ve stashed away as much as you can, then you can allow yourself to spend the money.
He also prefers to spend with 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.”
Opting to pay with cash can save you on credit card interest and prevent overspending. According to MIT Sloan School of Management professor Drazen Prelec and University of Utah professor Sachin Banker, people are more likely to spend more and make impulse purchases when using a credit card.
Live Below Your Means
Don’t spend what you don’t have. “You have got to live a life below your means but within your needs,” Orman said during her CNBC’s Women & Wealth interview. “You’ve always got to be prepared that something could happen in your own life, like an illness, an accident, a layoff — whatever that may be.”
Before you spend money, ask yourself if it’s something you really want or need, Orman explained to CNBC. If it’s a want, save your money.
Don’t Spend Money to Save Money
“Spaving” is a new term that means spending money to save money, such as adding more items to your cart to get free shipping or buying something just because it’s on sale. Personal finance expert Rachel Cruze said this is a marketing gimmick to get you to spend more money on things that you don’t really need.
“It’s important to be aware that there has been a process behind ‘deals’ and ‘sales’ that are classic marketing schemes that companies know about, and they know that you are more likely to fall for it,” Cruze said in a video on her YouTube channel.
However, Cruze is on board with one “spaving” hack — “buy one, get one” deals. Some stores will also mark down by 50% if you just purchase one item.
Start Investing
“If you invest $425 a month, or basically $14 a day, starting at the age of 25, you will easily be a millionaire by the time you’re 65,” said author and entrepreneur Ramit Sethi. This is assuming a 0.1% fee and a 7% return over 40 years.
And how do you do this? Increase your investment rate by 1% per year, he advised. For example, if you start by investing 5% of your income, do 6% the next year and so on. “That single decision alone would make you hundreds of thousands of dollars,” he said.
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This article originally appeared on GOBankingRates.com: 6 Ways To Save According to Warren Buffett, Suze Orman and 3 More Financial Gurus
