Warren Buffett is one of the wealthiest people on the planet, but he's also famously frugal. He's lived in the same modest house in Omaha, Nebraska, since 1958. He still drives affordable cars, eats McDonald’s regularly, and often uses a flip phone instead of a high-end smartphone.
Despite being the CEO of a trillion-dollar company, Buffett avoids flashy spending and prefers simple pleasures.
Save Smart, But Spend Where It Counts
“Charlie and I have always been big fans of living within your income,” Buffett said during one of Berkshire Hathaway’s (NYSE:BRK, BRK.B)) annual meetings with late Charlie Munger, longtime business partner and former vice chairman of the company. “If you do that, you’ll have a whole lot more income later on.”
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He emphasized that good financial habits often start at home. Kids tend to mimic what they see. If parents constantly try to “increase their cost of living without necessarily their standard of living,” children may grow up thinking that lifestyle inflation is normal.
At the same time, Buffett cautioned against taking things to the extreme. “I practice, but I don’t advocate extreme frugality.” His point: moderation matters. It’s important to balance saving with meaningful spending.
“There are plenty of people that I don’t advise to save,” Buffett said. For families living on modest incomes who already have a 401(k) and Social Security, he believes enjoying life now may be just as important. “Who’s to say whether it’s better to defer a dollar of expenditure on your family on a trip to Disneyland or something that they’ll get enormous enjoyment out of so that when you’re 75, you can have a 30-foot boat instead of a 20-foot boat?”
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Frugal, But Not Cheap
Buffett once made a quick cameo on the popular TV show “The Office” in 2011, joking about gas mileage reimbursement. It was a brief, funny moment that nodded to his reputation for being careful with money.
But behind the humor is a serious warning. “I think it’s crazy to be spending 105% of your income, and I think that that results in all kinds of problems,” Buffett said. “I get letters from people every day that have experienced those problems.”
His bottom line is to make money decisions that are true to your values, not based on what your neighbors are doing. “In the end, you want to have an internal scorecard,” Buffett said. “You are not a better person or a worse person because you live a different kind of life than your neighbor. You live a life that, you know, is true to yourself.”
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