Understanding your Circle of Competence: How Warren Buffett Avoids Problems
Each of us, through experience or study, has built up useful knowledge on certain areas of the world. Some areas are understood by most of us, while some areas require a lot more specialty to evaluate.
It is important to honestly define what we know and stick to those areas.
Our circle of competence can be widened, but only slowly and over time.
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If you want to improve your odds of success in life and business then define the perimeter of your circle of competence, and operate inside.
The concept has been used by Warren B...
If you work from a loss, it's much harder to get back to where you started, not to mention ea...
You lose money when the price you pay does not match the value you're getting. For example, when you're paying high interest on credit card debt or spending on stuff you hardly use.
You gain money when you look for opportunities to get more value at a lower price: For example, buying quality merchandise when it is marked down.
Most of your behavior is habitual. You can change your habits and the earlier you start, the better.
Saving is a habit. Learn the habits of saving properly early. Pay attention to your money habits. Strengthen those habits that help your finances, and break the habits that hurt your finances.