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Borrow Wisely

Borrow Wisely

Warren Buffett advises against excessive borrowing, such as credit card debt or unnecessary loans.

Some experts divide borrowing money into "good debt" and "bad debt."

  • Good debt is investing in your long-term future, such as a mortgage or student loan. Ideally, it should not have a negative impact on your finances.
  • Bad debt drains your finances with no prospect for future growth.

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MORE IDEAS FROM THE SAME ARTICLE

According to Warren Buffet, if you invest in a very low-cost index fund over time, you'll do better than 90% of people who start investing at the same time. To start, Buffet advises to put 10% of the cash in short-term government bonds, and 90% in a very low-cost S&P 500 index fund.

Warren Buffet is known for his frugality. Frugality isn't about buying anything at a low price - it is about buying value at a low price.

Trying to patch up financial issues that are causing you to live from paycheck to paycheck can keep the cycle going, such as payday loans, and hardship withdrawals from your retirement account. It may get you out of immediate trouble but will set you up for eventual failure.

Prioritise your savings, not saving what is left after spending.

Many people fall into bad money habits and don't realize it until their habits become hard to manage.

Warren Buffet's index fund investing strategy is to "set it and forget it" and not to get caught up in daily valuations.

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