So I read The Snowball by Alice Schroeder. It’s an absurdly long, absurdly detailed book about one of the most famously wealthy people in the world: Warren Buffett. Notorious for his frugal ways and uncanny ability to predict the future of the stock market (no seriously), Buffett’s name has become synonymous with financial success. Which is why I read the book.
I wanted to see if the Wizard of Omaha (I know—not nearly as sexy as the Wolf of Wall Street) had anything to teach me about making lots of money.
Book in hand, I set about learning from the story of Buffett’s life. And dear readers, I totally did. I read all about his juvenile eating habits and his quirky personality and his oddly wholesome extramarital affairs. I also got way more information than I ever wanted on literally every single business transaction Buffett has ever made.
Here’s what I learned.
Treat every dollar like it’s $10
I don’t know why I’ve never thought about the Law of Compounding Interest in these terms before, but it’s absolutely genius. If you pretend every dollar you have is actually $10 (because it will be, given enough time to gain interest over the course of your investments), then you will treat it with the respect it deserves.
We tend to be much more cautious about $10 than $1. A dollar doesn’t seem worth saving. A dollar purchase doesn’t seem worth agonizing over. Buying a $4 latte doesn’t seem like such a big deal. But are you really willing to spend $40 for that same jolt of caffeine? Are you willing to waste gas driving short distances when it costs you $250 to fill up your gas tank instead of $25?
Buffett was apparently really hesitant to spend $31,500 buying his first house (I know, denizens of the year 2016, I know). But that’s because to him, it wasn’t a $31,500 house. It was a $315,000 house. And in today’s dollars, it probably is! He knew that he could invest and grow that money tenfold over time. So he had to truly want the house more than he wanted $315,000.
Thinking of every dollar as ten dollars will make you carefully evaluate every financial decision to make sure it’s really worth it to you. It will make you cut down on your wasteful spending, more frugal, and far more likely to save your money for when it really matters.
“There’s more to life than sitting in a room making money.”
Buffett’s wife Susie (who sounds like my kind of bitch) used to say this to him early in their marriage, when he was holed up in his office at all hours of the day making genius investment decisions to grow his millions.
And then, spoiler alert, she fucking left him.
Not like she didn’t warn him. By all accounts, Susie was bored out of her goddamn mind. She was into music and the arts. She wanted a life of philanthropy, bohemian artistic ventures, and adoring friends. And Warren wanted her to make hamburgers seven nights a week and see to his every waking need while he made obscene amounts of cash with no end in sight.
The thing is, the Buffetts could easily afford Susie’s hobbies. But Warren was too focused on his work to bother sharing the kind of fulfilling experiences Susie was into. I’m not knocking their marriage here, but it’s clear that something had to give. Buffett’s biggest mistake, as he admits in The Snowball, was not listening to Susie when she expressed her dissatisfaction.
So yes: there’s more to life than sitting in a room making money. Don’t lose sight of what’s really important while you’re building your wealth. Whether it’s your family, a creative project, charity work, or your education, you need to have some other goal in mind besides getting rich. That can’t be the be-all-end-all of your wealth-building plans.
But the money certainly helps.
Ah, the classic American story! A young boy from Omaha pulls himself up by his bootstraps with a paper route and a little experimental investing at the age of twelve. For Warren Buffett, that’s literally how his fortune, the titular snowball, started.
And now he’s a billionaire. He has embarrassing sums of cash at his disposal all because he woke up early to deliver newspapers before school.
You may no longer be a twelve-year-old boy from Omaha, but that’s no reason not to start right the fuck now. You can’t go backwards in time to undo poor financial decisions, but you can definitely start right now, this very day, to turn your fortunes around.
Don’t yet have a 401k? Still making the minimum payments on your debt? Don’t have any savings to speak of? Haven’t yet invested a cent? Haven’t asked for a raise in awhile? Pick one thing, stop reading this article, and go do it right fucking now. I’ll wait.
[Insert elevator music here.]
Welcome back. Now didn’t that feel good? Aren’t you glad you didn’t wait another goddamn minute to start securing your financial future? Don’t you wish you’d done it even sooner? We can’t all be as far-sighted as Warren Buffett at age twelve, but that doesn’t mean we’ve lost our chance to start making serious money.
On the day we closed on our house I said to my husband, “I love you and there’s no one else I’d rather be buying a house with.” Then he said, “There’s a bunch of people I’d rather buy a house with. Warren Buffett, for example. But I guess you’ll do.”