12 Money Drains Poor People Fall Into, According to Warren Buffett
2. Paying for Convenience You Don’t Need
Relying on pre-cut veggies, single-serve snacks, and bottled water all carry a hefty price tag compared to their less-processed counterparts. According to Buffett, “If you buy things you do not need, soon you will have to sell things you need.”
Spending an hour on the weekend doing basic food prep can save a bundle. Investing in a reusable water bottle is an eco-friendly money saver over buying bottled water constantly.
3. The Lottery Lie
That “what if I win?” feeling lures many into playing the lottery. Despite astronomical odds, it’s a significant expense for those on a tight budget.
Buffett sees the lottery as a tax on the mathematically challenged. Your chances of recouping your investment are abysmal. That money could work for you in a savings or investment account, however small those initial deposits seem.
4. ATM Withdrawal Woes
Grabbing cash at ATMs that aren’t part of your bank’s network. Those fees might seem insignificant, but they add up fast.
Buffett believes that a little planning goes a long way. If you know you’ll need cash, withdraw it with a debit card at the grocery store, where there’s usually no fee, or visit your own bank’s ATM. It’s the simple stuff that makes a difference!
5. Neglecting Basic Maintenance
Putting off minor car repairs, ignoring leaky faucets, or not bothering with weatherproofing. This almost guarantees larger, costlier problems down the road.
Buffett believes that an ounce of prevention is worth a pound of cure – financially, this translates into HUGE savings. Tackle minor fixes yourself or budget for preventative maintenance to avoid major cash emergencies.
6. Brand Name Obsession
Choosing a product solely based on the label, often paying significantly more than store-brand equivalents that are nearly identical, is silly.
Buffett is famously thrifty. Read ingredient lists, compare prices, and don’t fall prey to the notion that the higher price tag always means higher quality.
7. Dining Out Excessively
Relying on takeout, restaurant meals, or delivery apps instead of cooking at home is a money trap. The costs are deceivingly high when done consistently.
Buffett’s philosophy is that preparing most meals yourself is a key pillar of saving money. It doesn’t mean giving up occasional restaurant treats but making them a special rather than a daily event.
8. Not Asking for Discounts
Paying full price without ever asking if there are coupons, senior discounts, or other ways to save is like throwing money away. It takes mere seconds to inquire!
Buffet believes that you should train yourself to be a savvy shopper. Those small discounts add up; many businesses WANT to offer them if you just ask.
9. Bank Fees
Not shopping around for accounts with the best terms for your needs is a no-no. Overdraft fees, minimum balance fees, and monthly charges nibble away at your money unnecessarily.
Many banks and credit unions offer no-fee or low-fee accounts that are perfect for most people. Buffet advises that switching such services requires some upfront effort but saves money every month afterward.
10. Ignoring Free (or Cheaper) Entertainment
Defaulting to expensive outings when boredom strikes is a poor financial move. Movies, concerts, and nights out add up, especially if they become the only form of leisure.
Buffet encourages rediscovering your community’s treasures. Libraries have more than just books, parks offer free fitness, and many towns have festivals and low-cost events.
11. Falling for Extended Warranties
Being pressured into purchasing warranties on appliances or electronics that are often unnecessary and overpriced.
Most items are covered by manufacturer warranties for a reasonable period, and credit cards sometimes double the warranty for free. Buffet urges that before paying extra, carefully read the fine print and determine the true likelihood that you’ll actually need it.
12. Not Taking Advantage of Workplace Benefits
Ignoring employer-offered programs like retirement account matches, tuition assistance, or subsidized gym memberships wastes resources.
Buffett believes that such “free money” opportunities are a no-brainer! Even small contributions add up significantly over time, thanks to compound interest. Carefully review your benefits and fully utilize those that align with your financial goals and well-being.
