Warren Buffet’s name is synonymous with investing. When people mention of Warren Buffett, they often mention stocks and wealth in the same breath. He is one of the biggest role models in the world of finance, so it only makes sense that there would be tons of quotes from Warren Buffett on saving. 

Yes, Buffett mostly talks about investing, but saving and investing go hand-in-hand. Buffett offers profound insight into saving money, and we’ll look at just those insights in this article. 

But first, here are some of his most profound ideas:

• Buffett emphasizes the importance of putting savings first. It should be just like another bill you pay, not something you do after you’ve spent all you like. By prioritizing savings, you can meet your goals more consistently. 
• Building wealth takes time and patience. Avoid trying to get rich quickly or suddenly shifting your goals from one extreme to another. Instead, focus on consistency. Small, steady steps can lead to serious financial gains over time. 
• Differentiate between needs and wants. Avoid impulsive purchases and focus on savings. Getting your wants vs. needs correct is important to avoid overspending and lifestyle creep. 
• Don’t forget to use your savings properly, too. For instance, using your savings to invest in dividend stocks is a solid decision. Letting inflation eat away at your savings is not. Research before you use your savings, of course, such as by reading our free report on “2 Dividend Legends To Hold Forever.“

Why Are We Covering This

Warren Buffett isn’t just great at investing. He’s also great at saving! After all, if you spend more than you save, investing is incredibly challenging. Buffett has a lot to say about saving, and some of it may surprise you. 

Here at 27/8 Wall St., we’re always looking to learn from the greats. We even used Warren Buffett quotes to explain this week’s market turmoil. 

1. The Power of Saving

Warren Buffett once told a group of college students: “The biggest mistake is not learning the habit of saving properly.” Even if you read all the finance books in the world, you won’t get very far unless you learn the habit of saving. 

So, what is saving properly? It’s about building up the habit of saving so that you don’t have to take action to do it. For instance, many people set up automatic withdrawals that take money from their bank account and add it straight to their savings. They never have to touch the money, which means they can’t choose to do anything with it but save. 

Saving even a small amount consistently allows the power of compound interest to work its magic over time. This is the key cornerstone of wealth accumulation. 

Overcoming Saving Challenges

Of course, if saving was that easy, everyone would do it. The truth is that saving is actually very hard. One challenge is lifestyle inflation. As income rises, so do expenses. Therefore, there is little room for saving, even when you start earning more. It’s important to avoid lifestyle creep by tracking your budget and keeping it even. 

A short-term focus can also limit your savings. If you’re more focused on what you can get now, you’ll be less focused on saving. 

2. Buffett’s Bargain Hunting

Despite being worth tons of money, Buffett still shops in the discount bin: “Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.” His whole invest philosophy is about choosing companies that are priced below their value. Just as a savvy shopper would wait for a sale on high-quality socks, a value investor seeks out exceptional companies whose stock prices have temporarily declined.

Of course, when you purchase anything at a discount, you’re saving money. Buffett knows this, so he shops in the discount bin whenever he can. You may have to wait for a sale or delay a purchase until the price drops, but this is one of the most effective ways to save money. 

Quality Over Quantity

Buffett’s emphasis on “quality merchandise” is also crucial. While saving is important, it’s equally essential to ensure your money is well spent. You don’t want to purchase lackluster items just because they’re cheaper. By focusing on quality, you’ll save more money in the long run. 

For instance, a durable pair of shoes might cost more initially but could last significantly longer than a cheaper alternative, ultimately saving you money on replacements.

3. Prioritize Saving

Warren Buffett’s timeless advice, “Do not save what is left after spending, but spend what is left after saving,” is pretty common advice these days. However, many people still don’t undergo this shift of mindset. It’s all about how you look at money. 

Traditionally, many people adopt a reactive approach to saving. They spend their income on various needs and wants, and then whatever is left is allocated to savings.

This method may be the most straightforward, but it leads to inconsistent savings and lifestyle creep. Once you start getting more money, spending more instead of saving more is very easy. 

To counteract this, Buffett recommends a proactive approach. Prioritize saving from the outset, treating it like a non-negotiable expense. 

The Benefits of Buffett’s Approach

By regularly contributing to your savings, you build momentum and let compound interest work. Whether it’s being a home or starting a business, many goals in life have to do with savings. Consistent savings helps you reach these goals faster and easier. 

Trying to willpower your way to saving doesn’t work. Instead, you need to make it automatic and consistent.

4. Separating Needs from Wants

Despite being a billionaire, Buffett does not spend all that much money. In fact, he says, “I’m not interested in cars, and my goal is not to make people envious. Don’t confuse the cost of living with the standard of living.” There is a powerful difference between essential needs and superfluous wants, even as a billionaire. 

Our society often equates material possessions with success and happiness. However, Buffett doesn’t believe in this notion. Instead, he emphasizes that wealth isn’t about what cars you drive or the house you live in. Instead, it’s about financial freedom; you can’t spend your way to security. 

Focusing on Needs, Not Wants

To keep saving #1, it’s important to differentiate between what you need to survive and thrive vs. what you simply want. Focus on the necessities like housing, food, and healthcare. Minimize “extra” spending, including eating out. Allocate as much of your income to saving as you possibly can. 

5. The Dangers of Debt

Warren Buffett’s cautionary words, “I’ve seen more people fail because of liquor and leverage—leverage being borrowed money. You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing,” emphasizes just how important avoiding debt is. 

Borrowed money can amplify both gains and losses. Some people use it as a tool for investment when it’s called “leverage.” However, many people also use debt for their wants. When used unwisely, debt makes it much harder to reach your goals, which is exactly why Buffett recommends a cautious approach. 

Saving as a Shield

In the context of saving, Buffett’s message is clear: build a strong financial foundation before taking on debt. When possible, avoid debt altogether. In many cases, you don’t need debt to do well in the world. It isn’t necessary. Instead, focus on saving money. 

Self-reliance is a cornerstone of financial security. You can’t be financially secure if you’re struggling through debt. 

6. Slow and Steady

We’ve all heard stories of people getting rich quickly, whether due to a good investment or the lottery. You’ve probably also seen advertisements for “do this one simple thing to get rich quick.” Sadly, according to Buffett, “It’s not easy to get rich quick.” Our world may be fast-paced, but that doesn’t mean getting rich is. 

Many people in society try to get rich as quickly as possible. While it’s tempting to think short-term, it’s important to understand that wealth is built slowly over time through consistent saving and investing. 

Quick riches often come with equally fast losses, potentially leaving you even worse off than before. 

The Compound Effect of Saving

Saving may be slow and much less glamorous than some get-rich-quick schemes seem to be, but it works. Small, consistent savings over time compound, leading to substantial sums. The key to wealth building is to take many small steps in the right direction. 

This takes tons of patience and discipline. It means resisting the urge for instant gratification in favor of long-term goals. This is a mindset shift that many people never reach. 

7. Saving Through Mindful Spending

One of the big reasons many people don’t save is because they simply don’t have money left to. If you take the traditional approach of saving whatever is extra, and you never have any extra, you’ll never save a dime. 

Buffett knows just how important mindful spending is: “If you buy things you don’t need, you will soon sell things you need.” This simple statement encapsulates the core principle of saving money. Don’t buy what you don’t need, and you’ll have plenty of money leftover for saving. 

Impulse decisions can lead to a downward financial spiral. When we prioritize unnecessary items, we quickly deplete our resources. When we are faced with financial hardship, we may need to sell our valuable possessions to make ends meet. 

Having the Right Priorities

To break free from this cycle, you need to prioritize your needs. Your real needs. Yes, you need to eat, but that doesn’t mean eating out. That doesn’t even mean eating the fanciest meals at home. Once your needs are taken care of, prioritize saving. By focusing on essential purchases and delaying gratification on non-essential items, you can significantly increase your savings.

This disciplined approach requires a serious mindset shift, but it’s important to save consistently.

8. Small Steps, Big Savings

Warren Buffett has described his investing strategy as “I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.” This approach is a very practical way to save money, on top of explaining investing. 

Many people set ambitious savings goals, which lead to failure. When you fail to save, it’s very easy to fall off the wagon and not save at all! Frustration and failure rarely lead to effective savings. Buffett recommends a more attainable approach. 

Instead of lofty targets, choose a reasonable, smaller target. Yes, saving more is valuable. However, if you’ve never saved anything, trying to save 50% of your paycheck just isn’t going to work. 

You can also cut down bigger goals to much smaller goals. Want to save $10,000? Save $100 first as quickly as you can. 

Building Momentum

Once you’ve found an extra $100 to save, you can find another $100. In this way, you can build momentum to save even more. This positive reinforcement helps build momentum and makes it easier to stick to your plan. 

It’s important to focus on the progress you make towards the goals, not your specific destination. Celebrate small victories and make small changes as necessary. It’s very rare that huge financial changes stick. 

9. Look for Big Opportunities

Yes, small steps are important, as we’ve just discussed. However, you should also keep your eye out for those big opportunities to save a lot. Warren Buffett explained: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

Just as rare investment opportunities arise, so too do exceptional chances to save. These might include limited-time sales, unexpected income, or cost-cutting measures. The key is to be prepared and ready to capitalize on them when they present themselves.

Your first instinct should be to save any extra money that comes your way – not spend it! 

Maximizing Your Savings

When a saving opportunity comes up, use a bucket, not a thimble. You want to collect as much of the potential as possible to maximize your savings. When a chance to reduce your expenses or increase your income arises, take it. Then, use the money to save, not to buy things you don’t need. 

You’ll need to be vigilant and proactive, but these rare opportunities can help you make huge progress towards your goals. 

10. Believing

As for our last quote, we’ll leave you with something a bit more positive: “I always knew I was going to be rich. I don’t think I ever doubted it for a minute.” That may seem easy to say for Buffett since he’s already very rich. However, it opens a door into mindset that’s rarely talked about. 

People who don’t believe they’ll ever be rich don’t make much money. Or, if they do, it gets spent very quickly. After all, when you don’t think you’ll ever be rich and a windfall comes your way, it only makes sense to spend it while you can!

Instead, we recommend taking a slightly different approach. 

The Mindset of Abundance

Buffett’s unwavering belief in his financial future paved the way for his success. This isn’t about the universe sending your way what you think you deserve. It’s about using your resources to achieve what you know will happen. 

When you believe in your ability to achieve your financial goals, you’re much more likely to achieve them. After all, why would you work towards goals you don’t think you can reach?

Saving can be challenging, and setbacks are inevitable. A strong belief in your financial future can help you persevere through difficult times. Otherwise, it’s very easy to give up your discipline at the first sign of something going wrong. 

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