Avoid Incurring Debt For Depreciating Assets: “Do not save what is left after spending, but spend what is left after saving.” Buffett emphasises the importance of saving first and avoiding debt, especially for items that lose value over time.

As I mentioned earlier, while his friends were buying brand new cars on the HP that lost value as soon as they left the garage forecourt, Buffett drove a cheap second hand car.

Avoid Frivolous Spending: “If you buy things you do not need, soon you will have to sell things you need.” This speaks to the danger of impulsive or unnecessary purchases.

Even small purchases can be dangerous to your finances. A £2 coffee treat at a high street coffee shop is nothing on its own, but do it several times a week (I know some people who do it daily) and it will add up to a lot of money quite soon.

Avoid High-Interest Debt: Buffett advises against expensive debt. Paying high interest on credit cards or loans can significantly drain financial resources.

I also recommend avoiding necessary long-term high interest debt, but if you were purchasing something that would lead you to make more money quickly but have no other way of finding the money, then the debt becomes leveraging a short-term loan which is not a bad thing… just as long as you pay off the debt as soon as possible.

Invest In A Second Income: “Never depend on a single income. Invest to create a second source.” Buffett stresses the importance of investing to build wealth and not just relying on one income.

A second income stream is a must even if it is just for security in case you lose your main income. A second income stream should at least match the amount you make from your main source of money.

Avoid Developing Expensive Habits: Buffett is known for his frugal lifestyle. Avoiding costly habits, like excessive dining out or luxury items, living within your means can lead to significant savings.

Sadly, one of the biggest causes of struggle with young people today is that they spend what they cannot afford. Granted, that is easier today than it ever has been.

Living costs are astronomical at the moment, but I’ve heard a lot of young people complain that they cannot afford XYZ only to go out and spend £120 on a haircut or £400 on a new tattoo!

Get Insured: Buffett understands the value of risk management with him being someone deeply involved in the insurance business. Not having adequate insurance can be a costly mistake.

Become Penny Wise, Pound Foolish: Buffett believes in value, not just cheapness. Sometimes, buying the cheapest item as a way to save money can be a false economy as you will ultimately need to buy more of it.

Cheap shoes can wear out quicker than a more expensive pair and it is possible that a person trying to save money ends up paying more buying several pairs of shoes than someone who pays for a dearer pair of shoes which last.

Become Financially Educated: “Risk comes from not knowing what you’re doing.” Buffett’s success is partly due to his deep understanding of finance and investment.

A risk without adequate information and an understanding of what you are doing isn’t a risk; it is foolishly throwing your money away.

Risks should only be a calculated risk meaning that you have learned all there is to know about the subject before deciding to make your move.

Plan for the Future: Buffett is a proponent of long-term thinking in investing and personal finance.

You cannot control the future fully, but you can shape it and prepare for it. Every pound that you save, earn, and invest today means more pounds available later in life.

Embrace The Power Of Compounding: “Someone is sitting in the shade today because someone planted a tree a long time ago.” Understanding and utilising the power of compounding interest is critical to financial growth.

Compounding feeds on itself. The more you have, the more you can make, and the more you make, the more you have…. and the more you have, the more you can make, etc.

For example:

5% interest on £1,000 is £50 giving you £1,050.

5% interest on £1,050 is £50.50 giving you £1,102.50

5% interest on £1,102.50 is £55.125 giving you £1,157.62

5% interest on £1,157.625 is £57. 88125 giving you £1,215.50

Compounding is a fantastic tool for creating wealth, but there is one tool better, and that is to double your money.

Starting with just £100, it takes only 14 doublings to make £1.6 million.

Hard to believe, but it is true…

£100 doubles into £200.

£200 doubles into £400.

£400 doubles into £800.

£800 doubles into £1,600.

£1,600 doubles into £3,200.

And so on.

The first few doublings can be easy, buy something for £100 and sell it for £200 and then use that £200 to buy something that you sell for £400.

It gets a little more difficult and complicated as you begin to make more money.

But there is a specific plan that shows you exactly what you need to do on each step of the way.

That plan is called How To Double Your Way To A Million, and you can take a look at it here:

Double Your Way To A Million

Kind regards

John Harrison

PS… Several multimillionaires have successfully used this plan to become wealthy; two of them will show you everything you need to do in How To Double Your Way To A Million.

Both Barry Tyler and Stuart Goldsmith lay out everything they did to make over £1 million. Follow their step-by-step lead and you too could become a millionaire.