Earlier this month, the Oracle of Omaha, the greatest investor of all time, and Berkshire Hathaway’s CEO– Warren Buffett sat down for an exclusive interview with Andy Serwer, Yahoo Finance’s editor-in-chief. The discussion revolved around the importance of good habits in younger generations.
“I think the habits you develop are important. They may be more important than an IQ or something,” Buffett said in response to whether young people should be saving and investing. Reflecting back to his own experience, Buffett credits his childhood habits for his success.
Beginning at the age of seven, Warren started building his empire one nickel at a time. “My grandfather had a grocery store, and he would sell me six Cokes for a quarter, and I would sell ‘em around the neighborhood at a nickel each. It was a 20% profit.” Buffett also read hundreds of books, ran hundreds of paper routes, created different ‘businesses’ and invested the money he earned from it all into different stocks.
“I think it’s a very good habit to develop early,” Buffett repeated, adding that cultivating good habits, such as saving 10% of each paycheck or saying please and thank you, is the key to financial success.
Notably, this advice is far from new for Warren. In 1998, he gave a speech to students at the University of Florida. “Chains of habit are too light to be felt until they are too heavy to be broken… At your age, you can have any habits, any patterns of behavior that you wish. It is simply a question of which you decide.”
Critics counter saying that Buffett grew up in a different time and that (parental) financial advice doesn’t apply to the economic reality of today. Even though 66% of Millennials have nothing saved for retirement, Warren states, “It’s not tougher to save now than it was fifty years ago or seventy-five years ago. It is not tougher to succeed now than it was twenty or fifty years ago.”
The key is simple: “Don’t save what is left after spending; spend what is left after saving.” This rule of thumb prioritizing paying yourself first, so your future self will thank you.
Despite the lack of savings and investing by Millennials, Warren has hope for America’s future. “The America you’ll see twenty years from now or fifty years from now is going to be far more prosperous, and talent will always be rewarded, hard work will be rewarded. We’ve got a wonderful future.”