Though he has announced plans to retire at the end of 2025, Warren Buffett, CEO and chairman of Berkshire Hathaway, remains one of the most renowned money experts of all time. With an estimated net worth of about $144 billion, if anyone knows about amassing wealth, it’s him.
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However, Buffett has remarked that making money is also about shifting one’s mindset regarding finances. He differentiates his approaches to money from those of a typical middle-class way of thinking. Read on to find out how Buffett and other wealthy folks view money differently from those in the middle class, courtesy of a video from Brothers Invests.
Money Is a Way To Create More Wealth
The middle class might look at money as a way to live a better life and pay off debt and bills. However, the wealthy view cash as a way to generate more cash and build generational wealth. Through investments and passive income, the wealthy take their money and grow it exponentially.
Buffett doesn’t use money to buy luxury items or signal his wealth to others — he famously eats at McDonald’s and still lives in the house he bought in 1958. The video pointed out that trying to signal status through expensive purchases can leave people in a cycle of chasing wealth. Instead, Buffett has dedicated his life to investing money in ways that generate more wealth.
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Business Is About Passion Over Profit
When it comes to business, Buffett prioritizes doing what he loves with people he cares about. This approach is more about creating value rather than simply making money and will be more sustainable in the long run.
Wealthy people can derive more than just money from their business ventures. They also look to gain personal fulfillment.
Wealth Is Not Just About Money
There are two kinds of wealth: monetary and personal. The latter consists of maintaining healthy and supportive relationships, as well as seeking experiences that make life feel more full.
Buffett prioritizes relationships over money, leading to a more well-rounded life than someone solely focused on accumulating wealth. He said, “If you’re lucky in life, make sure a bunch of other people are lucky, too.”
Investing in Yourself Is Key
Instead of spending all their cash on fancy cars and gadgets, wealthy people use money to invest in themselves. This could mean learning a new skill, going back to college or finding some other way to grow what one is capable of.
Buffett emphasizes the importance of continuous learning, which fosters a growth mindset and expands one’s knowledge.
Long-Term Gains Are More Valuable Than Immediate Gratification
Generating wealth is a long game. The middle class might focus on buying what is new and trendy, or using their money as a tool to impress others. Instead of succumbing to those desires, it’s best to think of money as a way to set up future generations for success. This mindset allows for investments that will grow over time, rather than purchases that will lose value as soon as they’re bought.
Buffett emphasizes that it’s important to “buy low and hold,” which means investors should buy stocks when they’re priced low and hold onto them for a significant amount of time to experience the most growth potential. Perseverance is a key trait for those who want to build wealth.
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This article originally appeared on GOBankingRates.com: 5 Approaches to Money That Set Buffett & the Wealthy Apart From the Middle Class
