Warren Buffett, one of the planet’s most successful investors, has long been a symbol of sound financial wisdom, for people of all income levels. The insights he defines on smart money management have helped millions make it in their lives and gain wealth and financial security.
A recent Federal Reserve study found that 40% of Americans would struggle to come up with $400 for an emergency, leading to the value of Buffett’s advice on shunning unnecessary spending. Here are 15 things Warren Buffett says you shouldn’t waste money on
Brand Name Obsession
Regarding wealth, Buffett warns not to be fooled by appearances, primarily because we often spend a fortune buying expensive branded items to portray success. Real financial success isn’t based on status; it’s about security. Next time, ask yourself if there is the same quality at a fraction of the price—without the designer label.
New Cars
According to Kelley Blue Book, the average transaction price (ATP) for a new vehicle in the U.S. was $48,397 in September. A car begins to lose value as soon as it leaves the lot.
Buffett suggests buying dependable used cars rather than new cars. Making a small habit shift in spending would almost certainly save you thousands over time, allowing you to bank that money to grow wealth through investments.
Gambling and Lottery Tickets
“Gambling is a tax on ignorance,” says Buffett. He refers to it as both “a tax on desperation” and “socially revolting.” A fast way to lose your money with little to no return on investment is to put your money in lotteries or casinos.
Smoking
As much as smoking hurts your health, it drains your budget. Over the years, it can equal a small fortune. So, according to Buffett, quitting isn’t just good for your wallet; it’s good for your life.
Frequent Dining Out
There’s no problem with treating yourself once in a while, but if restaurant outings are a regular occurrence it can eat away at your budget. However, eating out costs loads more than preparing your meals at home – which also means you can create a much better budget. A 2024 U.S. Foods survey found that the average American spends $191 vs. $166 in 2023 monthly per person on dining out.
Excessive Social Spending
Sometimes, people spend too much to sustain lavish social circles. Buffett advocates living within one’s current means and avoiding unnecessary social competition.
Constant Gadget Upgrades
Buffett is relatively frugal regarding gadgets and is famously non-tech savvy. He’s famous for using older technology until it stops working. Instead of buying the latest smartphone model, ask yourself whether it still does the job.
Impulse Buying
In today’s consumer-driven culture, attractive discounts and flash sales tempt us daily. Statistics by Capital One Shopping showed that, in 2023, the average American spent $151 per month on impulse purchases, down from $314 in 2022.
According to Buffett, before making a purchase, one should stop and think about whether that something is really a need or just a fleeting want.
Investing in Businesses You Don’t Understand
Buffett consistently talks about the need to understand where your money is going. If you do not understand a company or an industry, stick only with investments that you know you can do your due diligence on. Losses from investing arise primarily from ignorance.
Short-Term Trading
Patience is one of the things that Buffett preaches. The notion of day trading or short-term speculation sounds lucrative, but the risk is far greater than the potential reward. Building wealth is not an overnight process, and if you don’t have a strategy for it, it will not happen.
Unnecessary Subscriptions
This is one overlooked budget killer: unused subscriptions, whether for streaming services, magazines, or gym memberships. Self states that Americans have 3.3 paid subscriptions going unused, costing $32.84 monthly. Audit your recurring expenses for a few minutes; you may just be throwing your money away.
Credit Card Debt
According to Investopedia, the median average credit card interest rate for December 2024 is 24.37%. The average credit card debt per consumer is approximately $8,000.
Buffett is vocal about the dangers of high-interest credit cards, calling them a “financial trap.” He advocates eliminating credit card debt by using cash transactions and disciplined spending. You should aim to earn interest, not to pay it away unnecessarily.
Neglecting Self-Investment
“The most important investment you can make is in yourself,” says Buffett. These investments pay out returns that not even the stock market can compete with, whether through education, improving new skills, or professional development.
Excessive Holiday Spending
There’s nothing like celebrating the important occasions in your life, but you can spend too much on holidays and the financial hangover lasts until after the holiday. He also emphasizes the need to maintain moderation and keep a careful budget during festive seasons.
Holding Too Much Cash
It’s important to keep some cash for emergencies, but Buffett notes that keeping too much money long-term will cause an asset to lose its value due to inflation. Instead, use extra cash to invest in things that grow in value over time.
Disclaimer – This list is solely the author’s opinion based on research and publicly available information.
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