10 Money Habits That Are Keeping You Broke – Warren Buffett

10 Money Habits That Are Keeping You Broke – Warren Buffett

Warren Buffett, the chairman and CEO of Berkshire Hathaway, is one of the most successful investors of all time. Over the years, he has shared a lot of wisdom on investing, money management, and life. Navigating the complex world of finance can often feel overwhelming, especially when trying to identify the money habits that might be holding you back.

In this article, we turn to the wisdom of Warren Buffett, one of the most successful investors of all time, to shed light on these detrimental behaviors. Drawing from Buffett’s teachings and principles, this post will guide you through the pitfalls to avoid and the strategies to embrace, ensuring you’re on the right path to financial prosperity. Whether you’re a seasoned investor or just starting your financial journey, understanding these habits is the key to unlocking your financial potential.

Based on the teachings, writings, and lifestyle of Warren Buffett, here are ten money habits that might be keeping people broke:

  1. Living Beyond Your Means
  2. Not Investing in Yourself
  3. Following the Crowd
  4. Chasing Greed or Being Fearful
  5. Carrying High-Interest Debt
  6. Being Materialistic
  7. Being Impatient
  8. Not Continuously Learning
  9. Making Emotional Financial Decisions
  10. Not Understanding What You’re Investing In

Warren Buffett is renowned for his investment acumen and timeless wisdom on money and life. Let’s delve deeper into ten money habits inspired by Buffett’s teachings that might keep you from achieving financial success.

Living Beyond Your Means

“If you buy things you do not need, soon you will have to sell things you need.” – Warren Buffett.

Living beyond your means is a surefire way to financial ruin. It’s essential to differentiate between wants and needs. Focusing on necessities and avoiding frivolous spending pave the way for financial stability and growth. Buffett’s frugal lifestyle, despite his immense wealth, is a testament to this principle. Overspending can lead to accumulating debt, which can spiral out of control, making it difficult to achieve financial freedom. It doesn’t matter how much you earn if you spend it all. Wealth is created in the gap between your income and expenses.

Not Investing in Yourself

“The best investment you can make is in yourself.” – Warren Buffett.

Your skills, knowledge, and health are invaluable assets. Investing in education, personal growth, and well-being sets you up for long-term success. Buffett often attributes his success to his continuous learning. You must invest in yourself to avoid stagnating in your career and personal life and missing out on opportunities that could elevate your financial situation. Warren Buffett focused on first being mentored by Benjamin Graham then reading hundreds of pages of books, company balance sheets, and newspapers to build his knowledge base over his life.

“Read 500 pages every day. That’s how knowledge works. It builds up, like compound interest.” – Warren Buffett

Chasing Greed or Being Fearful

“Be fearful when others are greedy and greedy only when others are fearful.” – Warren Buffett

The stock market is not a get-rich-quick scheme. Chasing short-term gains or making decisions based on fear can be detrimental. Buffett emphasizes the value of long-term investing, understanding that markets will have ups and downs, but quality investments will grow over time. Reacting impulsively to market fluctuations can result in selling at a loss and missing out on potential gains. You will never build any wealth chasing the latest investment late in its trend or exiting a great investment too early due to fear.

Following the Crowd

“Our favorite holding period is forever.” – Warren Buffett.

Following the crowd can lead to regrettable decisions, especially in financial matters. Peer pressure or the allure of quick gains can divert you from sound investment and trading strategies. Buffett’s success is rooted in his contrarian approach, often going against popular market sentiment. Unthinkingly following trends in unfamiliar stocks or assets without understanding can lead to significant financial losses. Many people have gone broke when something they invested heavily in was in a bubble that popped.

Carrying High-Interest Debt

“I’ve seen more people fail because of liquor and leverage – leverage being borrowed money.” – Warren Buffett.

High-interest debt, especially from sources like credit cards, can quickly erode your financial health. Buffett warns against excessive leverage, understanding that while debt can amplify gains, it can also magnify losses. Being burdened by high-interest debt can prevent you from investing and growing your wealth. Buffett has lived in the same house since the 1950s and drives the same cars for many years. He doesn’t believe in using debt to buy big houses or new cars, you can see this in his own consumer behavior. Borrowing money to keep up with the Joneses’ is not something he would advise.

Being Materialistic

“Success doesn’t come from wealth, power, fame, or how many expensive toys you own before you die.” – Warren Buffett[1]

Buffett’s modest lifestyle, despite his billions, showcases the value of living. In a consumer-driven world, equating happiness with material possessions is easy. However, accumulating items can lead to financial strain, especially if it involves debt. True contentment comes from experiences, relationships, and personal growth.

“Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you.

I know many people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them.

That’s the ultimate test of how you have lived your life. The trouble with love is that you can’t buy it. You can buy sex. You can buy testimonial dinners. But the only way to get love is to be lovable. It’s very irritating if you have a lot of money. You’d like to think you could write a check: I’ll buy a million dollars’ worth of love. But it doesn’t work that way. The more you give love away, the more you get.” – Warren Buffett

Being Impatient

“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett.

Impatience can lead to rash decisions. Wealth-building is a marathon, not a sprint. Buffett’s long-term approach to investing showcases the benefits of patience. Jumping from one investment to another or seeking quick returns can result in missed opportunities and potential losses. Most of personal finance also comes down to the patience for waiting to buy things when you can afford them versus instant gratification.

Not Continuously Learning

“Risk comes from not knowing what you’re doing.” – Warren Buffett

The world is constantly evolving, and so should your knowledge. Continuous learning reduces risk and opens doors to new opportunities. Buffett, an avid reader, emphasizes the importance of staying informed. With continuous learning, you can avoid making uninformed decisions that can jeopardize your financial health. Your earning power is closely correlated to your education, knowledge and experience. You must learn before you earn. They greater the knowledge the more earning power you will have.

Making Emotional Financial Decisions

“You need to be able to control your emotions in a way that you won’t get too excited during the good times and too depressed during the bad times.” – Warren Buffett.

Money and emotions are a volatile mix. Making decisions based on emotions rather than logic can lead to regrettable outcomes. Buffett’s stoic approach to market fluctuations emphasizes staying calm and rational, ensuring decisions are based on facts and not feelings. Buying big homes, new cars, or toys like motorcycles or boats due to emotional reasons can keep you broke. It’s not good to mix emotions with personal finance, spending, or investing.

Not Understanding What You’re Investing In

“Never invest in a business you cannot understand.” – Warren Buffett

Understanding the fundamentals of any potential investment is crucial. Diving deep, asking questions, and ensuring you’re well-informed before parting with your money is essential. Investing in what you need help understanding can lead to unexpected losses and missed opportunities. People have lost a tremendous amount of money investing in things they don’t understand like cryptocurrencies, NFTs, and penny stocks. Losing your capital in bad investments can keep you broke. Never invest money unless you have a quantified investing or trading strategy with an edge.

Key Takeaways

  • Excessive Spending: Avoid buying non-essentials early in your life, which can lead to financial instability.
  • Self-Development: Prioritize personal growth and continuous education for long-term benefits.
  • Independent Thinking: Resist the urge to follow popular financial trends unthinkingly.
  • Long-Term Vision: Steer clear of get rich quick schemes; focus on valid investments and a profitable strategy.
  • Avoiding Debt Traps: Be wary of accumulating high-interest liabilities.
  • Simplicity Over Materialism: Value experiences and relationships over mere possessions.
  • Patience Pays: Hastiness in financial decisions can lead to missed opportunities.
  • Lifelong Learning: Stay updated and informed to minimize financial risks.
  • Rational Decision-Making: Keep emotions at bay when making financial choices.
  • Informed Investing: Thoroughly understand your investments to avoid unforeseen pitfalls.


Embracing financial wisdom, as exemplified by Warren Buffett, is pivotal for sustainable wealth-building. By prioritizing long-term growth, valuing self-improvement, and making informed and rational decisions, one can confidently navigate the intricate world of finance. Remember, the journey to financial prosperity is not about quick riches but consistent, informed, and patient strategies.

Incorporating Warren Buffett’s wisdom into your financial habits can lead you to success. Remember, it’s not about getting rich quickly but about building wealth sustainably and wisely.