Warren Buffett :" 12 Things POOR People Waste Money On !"

 

 

The biggest financial asset that you have going for you by miles is the value of your own earning power over the years. 

So that's really what you should focus on. Warren Buffett has mentioned 12 things poor people waste money on. 

1. Credit Card Debt 

Credit cards do have benefits. Many providers offer incentives to spend money using their cards. Like cash-back points, airplane miles and etc. 

In this way credit cards are a smart way to spend money only if you clear the full payment every month. The problems with credit cards arise when you carry a credit balance. The interest rate of the credit card is about 20%. 

That means for every dollar you owed to your credit card company you'll pay an extra 20 cents on top of it. Every month there is an extra 200 dollars of interest on a 1000 dollars credit card balance. So never carry a credit card balance. 

This principle applies to any type of loan or financial obligation that requires paying interest. Please make sure the loan is worth it.

 2. Drinks At Bars 

Money spent on pubs and bars amounts to thousands of dollars per year. A bottle of beer usually costs up to $5 at a bar restaurant. Sometimes closer to $10. If you buy from a grocery store. 

You can expect to get a 6 pack of good beer for about $10 which is at least 3 times cheaper than getting from bars. Most people go to bars for social activities but there are many other ways to meet people. 

Bar owners know that people are willing to spend extra on alcohol as a result people spend a huge amount of money on alcohol at bars. If you want to have drinks with friends you can have a house party.

 4. Gadgets & Devices 

You want the newest and greatest technology because of all the features it gives you on your phone, you get a better camera, a thinner or bigger phone and something that looks new and it is what other people want. 

But if you think about it there is very little difference between one phone to the latest. Even if you have the money to pay for a new phone, It doesn't mean you should buy it. We should compare features and specifications carefully. 

While many shoppers justify splurging on a new device for updated specs, experts cash in that the differences between old and new may be minimal and the price to upgrade may not be worth it. We buy gadgets more often than needed. Like back massagers, cool alarm clocks, fancy toothbrushes and sound systems.

 Although cool, these items are truly not necessary. The next time you see a gadget to lust over think twice before you buy, odds are we usually don't need it. 

5. Spending Too Much On Clothes 

Bill Gates spends so little on clothes he famously wears a Casio watch which costs less than $100. It's something that rich people like. Mark Zuckerberg and Warren Buffett also practice as well as Steve Jobs wear the same New Balance trainers for years. 

Why don't they spend more? There are many things out there that billionaire don't fork over because they understand that money doesn't last forever. They know that it takes a lot of work to earn their wealth and that some things just aren't that important. 

This is not to say that you can't afford luxuries but you can perhaps make better decisions about the things you buy. Mark Zuckerberg goes for the basics to create a uniform look which simplifies his life by giving him one last decision to make in the morning. 

This allows him to focus on his work and the things that matter. Gates goes for function and practicality. So he sticks to his Casio watches and simple looks of button-down shirts and chinos. He learned from Buffet that you don't need much to dress well. 

You need to be comfortable and stay productive. The key is repetition, it's about continuing to wear what you already possessed. In different ways getting more out of your wardrobe and not wasting money. 

A lot of billionaires and millionaires stay at the top in part because they live simple austere lives. With clothes being a good place to make it a practice. 

6. Buying New Cars 

Self-made millionaire and best-selling author David Bach once told CNBC, a brand-new car looks good but it's never worth the price. Nothing you will do in your lifetime will waste more money than buying a new car. 

It's the single worst financial decision millennials will ever make. That's because the moment you drive it on the road the vehicle starts to depreciate. Your car's value typically decreases 20 to 30% by the end of the first year. And in 5 years it will lose at least 60% of its initial value. 

Bach says to make matters worse most people borrow money to buy a new car. Why would you borrow money to buy an asset that immediately goes down in value by 30%? But the good news is you can get a shiny nice smelling car without breaking the bank. 

We can buy a used car that's coming off of a 2 to 3 year lease because that car is almost brand new and you can buy it at that 30% discount. To save others from making this costly mistake, we should follow the 1/10 rule for buying a car. It's simple, spend no more than 10% of your gross annual income on the purchase price of a car. 

7. Not Using The Gym Membership

 According to Statistics, close to 61 million people were members of fitness centers in 2017 But some reports stated almost 70% of memberships go unused after the first few months. 

The business model of most gyms depends on people paying for memberships and not showing up. People join gyms to improve their health and physical fitness. 

Gyms and fitness centers offer members a variety of equipment to use and numerous classes to choose from. However many people join a gym membership even though they aren't committed to working out regularly. A gym membership doesn't make sense if you don't use it regularly.

 Until you can budget for a gym membership without adding more debt. Finding free workout options is a smarter choice. There are plenty of low cost and free options for gym memberships. Many people prefer to exercise outside by walking, running or hiking. 

Train your mind and be persevering until you can commit to a fitness routine program. In this situation, then you only can fully utilize your gym membership. 

8. Cancel The Cable & Unused Subscriptions 

Thanks to the technology and internet there are endless new ways to spend money. You can sign up for any subscription like a monthly delivery of beer, a new wine each month, a monthly cheese club or even the candy of the month and have it delivered to your doorstep the same day. 

You even can fully customize your television experience. Unfortunately, subscription services can inflict more damage to your finances than other types of purchases. This is because they are set up to charge your credit card automatically through this method. 

It makes them far too easy to keep in perpetuity or even forget you're paying for them all together. A 2018 study from West Monroe Partners concluded that, consumers may be spending a lot more in total than they realized on subscriptions although those surveyed by the firm did report being satisfied with their purchases. 

Overall, most people are unaware of how much they spend on subscription services. When pressed for a quick answer they dramatically underestimate the amount. This is a boon for companies operating subscription models and a bust for advocates of conscientious budgeting. 

If you're no longer sure which subscriptions you're paying for, there are several apps and services that can help some apps let you take stock of all regular and recurring charges made to your accounts including subscription services. You can also take stock of your subscriptions on your own by breaking out your last 6 months of bank statements and credit card bills. 

Then look them over for subscriptions you've paid for. From there you can figure out which ones to keep and which ones to cut then call each company you plan to nix from your budget or cancel them online. Many Personal Care Products moisturizing and cleansing are important for skin care but if you are using lots of different products you might be overdoing it. 

With the beauty and skincare market constantly evolving it may be very tempting to try every new product that hits the shelves. With so many skincare choices available people often overuse or combine products that can worsen their skin. 

Your best bet here is to keep things simple. Find a hair face and body care routine you like and stick with a handful of affordable products when you're tempted to add more products to your routine, ask if you're accomplishing anything new or just changing for the sake of change. 

9. Spending Too Much At Restaurants 

We all need to go out and enjoy ourselves from time to time. It's great to go out with your friends for a drink or go out with your partner to a movie but how much money are you spending on it that could go elsewhere? 

This is not to say that you shouldn't go out and enjoy a night now and then but you don't need to do it every Friday night or every payday. You should try to cook and eat at home instead of going out .

Almost anything you cook yourself will be far cheaper than anything you can get at a restaurant. Even a fast food restaurant, you'll see the savings immediately if you compare the price of ingredients to a restaurant bill. Over time eating healthy, home cooked food will mean lower medical bills and less misery compared to eating out. 

You'll probably use more organic ingredients and more vegetables, fruit and whole grains. If you know that your anniversary is coming up in 3 weeks and you are craving fine dining, wait and go out for it for your anniversary if your friends go to the club on Fridays Stay in and enjoy a gentle and quiet evening at home for at least 3 weeks every month. 

10. Gambling 

Gambling can be anything from going to the casino to buying a lottery ticket. Sure the chance of putting a dime into a machine and getting back $50 sounds great. 

But what will you do once you win just a little money? You think this is your lucky day and soon you're leaving a casino with less money than you came with. This doesn't mean you can't go to the casino, But you need to make sure of 2 things before you go. 

First you can afford to go to the casino? Just because you have money in your account doesn't mean you can afford to spend it gambling. 

Second, you need to have a budget. Go to the casino with 20 dollars and once you spend that money get out of there. 

11. Junk Food 

There is a myth that poor people can't buy healthy foods because they are too expensive. Have you stood back and looked at the price of fresh fruits and vegetables compared to chips, ice cream and cookies? 

When it boils down to it, junk food is more expensive as it doesn't last as long as a bag of carrots or a head of lettuce. Plus the way your body feel. Simply isn't worth the price of junk food. Many poor people think rich people will go for lobster often or that they eat in fancy restaurants. 

But the reality is that, most people who are considered rich don't do this they like to focus on eating healthy in their own home by buying fresh vegetables, fruit and raw food. Put down that nearly $5 bag of chips and pick up the bag of carrots that cost 82 cents per pound. 

12. Smoking & Vaping 

Not only is this harmful to you but poor people spend more money on smoking and vaping than any other socioeconomic status. 

Smokers will spend around $200 on a pack of cigarettes every month especially if you go through half of a pack to a whole pack every day, the cost you spent on cigarettes every year is $2,400 and the price for 10 years is $24,000. 

Now take a moment to think about what you can spend that money onsuch as repairing your car or even saving up for a new car or house. If you want to stop smoking, there are multiple ways; you can give your mouth something to do to resist a tobacco craving chew on sugarless gum or hard candy or munch on raw carrots, nuts or sunflower seeds. 

Something crunchy and tasty. Most importantly tell your friends, family and other people you're close to that you're trying to quit.t 

They can encourage you to keep going especially when you're tempted to light up.