You Can Get Richer Pinching Pennies Like Warren Buffett
Many people have tried to emulate Warren Buffett’s investment style. More may attempt it as they search for the best investing ideas for 2012. But here’s a more attainable goal: Pinch pennies like the Oracle of Omaha. This might turn out to be a New Year’s resolution you can actually keep. And you’ll be richer for it.
When his first child was born, the famously frugal Buffett turned a dresser drawer into a bassinet. For the second one, he borrowed a crib. While in New York signing up clients to invest six-figure sums with him during the 1960s, he reportedly phoned a friend from New York’s Plaza Hotel to bring over a six-pack of Pepsi so he wouldn’t have to pay for room service. He drove a Volkswagen until his wife decided it was bad for his image and upgraded him to a Cadillac.
Roger Lowenstein recounts these and other examples of Buffett’s personal spending habits in his biography Buffett: The Making of an American Capitalist. Buffett, he writes, once said about himself that he was “working [his] way up to cheap.”
Whether investing in companies or buying everyday necessities, the Berkshire Hathaway Chairman and CEO (currently #3 on the Forbes Billionaires list) has been driven by the notion that small sums compound. He runs the calculations to prove it. If that’s more math than you’d like to do, look at it this way: every penny that you don’t spend unnecessarily leaves more money to invest for the future or allocate to something you might enjoy more—like your next vacation.
By example, Buffet has demonstrated that being thrifty isn’t just for poor folks. So in the spirit of Warren Buffett, look for ways to cut your spending this year. Here are 40 relatively painless (or even pleasurable) ways to be fabulously frugal.
1. Brown bag breakfast and lunch at work. Make your own muffins instead of buying one on the way to work. (For an easy, versatile recipe, check out “Muffin Madness” in Moosewood Restaurant Cooks At Home.) An easy way to prepare lunch is to simply cook extra for dinner and take the leftovers to work the next day.
2. Purchase seasonal foods and shop for supermarket specials.
3. Buy in bulk and freeze.
4. Don’t go food shopping when you’re hungry.
5. Cook meals instead of relying on takeout and ordering in. Eat at restaurants only on special occasions.
6. When ordering from a restaurant menu, choose something that you can’t prepare as well as home.
7. Scoop your own ice cream. The markup for ice cream cones and cups bought at those cute little joints is enormous. You’re much better off buying your favorite flavors on sale at the supermarket by the quart or the gallon. If you’re watching your waistline, confine yourself to half-cup servings and resist the temptation to eat directly from the container.
8. Bring coffee to work in a Thermos.
9. Carry a refillable water bottle instead of buying bottled water.
10. Unless a restaurant offers free soda refills, drink tap water with your meal.
11. Have wine or cocktails at home before you eat out, rather than ordering them with a meal. (Wine by the glass typically costs as much as an entire bottle of the same stuff bought in a liquor store.)
12. Cut open squeeze tubes and pump bottles—for example, of shaving cream, sunscreen, cream rinse and moisturizer—once they yield nothing but air. (There’s usually at least another full ounce of liquid inside.)
13. Wait for items you covet to go on sale—either in stores or online. (By then you may have decided you don’t them after all.)
14. Avoid recreational shopping. Instead, make a list of what you really need.
15. Don’t buy an article of clothing unless you already have something that matches it.
16. Look for items that can be dressed up or down.
17. Unless you need something immediately (and chances are you don’t), buy seasonal clothing once the season is already underway. Examples: bathing suits in July; winter coats at after Christmas sales.
18. Leave your credit cards at home and pay in cash.
Love And Marriage
19. Take your date to a freebie.
20. Cook together; how you cope with kitchen mishaps could speak volumes about how you would weather life’s serious ups and downs.
21. Look for a partner whose money styles are compatible with your own.
22. Shop for engagement rings at auction.
23. For newborns, borrow cribs, carriages and clothing from friends and family, rather than buying things new. But buy a car seat new, since safety features are continually being updated.
24. To reduce the price of formula, nurse your baby for the first year, if possible.
25. Until children reach age 12, buy clothing on sale at the end of the season and put it away for the following year. (Once they become teenagers this doesn’t work anymore, since their growth rate can be dramatic and unpredictable.)
26. Check thrift shops for lightly used children’s clothing, especially sweaters, fleeces and outerwear.
27. Buy toys and children’s books at yard sales and rummage sales.
28. Plant most of your garden with perennials. It reduces the need to fill in with costly annuals.
29. Buy furniture at auction.
30. Hire painters and contractors during the winter. They are hungry for business then and likely to offer you a better price than if you ask for estimates during the busy summer months.
31. Get plumbing repairs done during the summer if you live in a climate with seasonal differences. (Plumbers are busiest during the heating season.) Unless there’s an emergency, hold off on getting a house call until you have a list of things that need to be done.
32. Avoid impulse purchases at the cash register in hardware stores and kitchen supply stores. If something catches your eye there, force yourself to come back the next day instead of buying it on the spot. (By then you may have decided that you don’t need it after all.)
33. Pay down your mortgage (and other debt), as described here.
Recreation And Travel
34. Don’t see a movie in the theater unless it has gotten great reviews or has so many special effects that it can only be thoroughly enjoyed on the big screen. Otherwise rent it.
35. Drop one subscription or membership and see if you really miss it.
36. Patronize your local library. Many make new releases available almost as quickly as you can get them from a bookstore (though there may be a waiting list for popular titles, like Walter Isaacson’s new biography of Steve Jobs).
37. Travel on the cusp of high season if your schedule permits; rates tend to be lower, and chances are the weather will be about the same.
38. Find the swankest hotel in town, and look for a cheaper place next door. (That way, you can enjoy the same desirable location, without paying top dollar for it.)
39. Bring your own food and soft drinks instead of buying food on board planes; at airports; or relying on hotel minibars and room service. Some hotels will provide you with a refrigerator at no extra charge; if they don’t, fill the ice bucket and store your food there or if the bathroom has an extra sink, fill that with ice and turn it into a makeshift fridge.
40. Buy your own wine instead of drinking it at a restaurant. When checking baggage, you can include a corkscrew. If you carry on your bags, you can always ask the store were you purchase wine to uncork it for you.