New Cars To Lottery Tickets: Warren Buffett's Advice Against These 5 Purchases

Billionaire and ace investor Warren Buffett has been very vocal about how he takes care of the wealth by focusing on value-driven decisions, even when making small purchases. Buffett, with his reputation of having “simple” financial wisdom, is the sixth richest person globally, with a net worth of $164 billion.

In many of his interviews, letters and public speeches, Buffett has often been spotted discussing the poor financial decisions, including his strong position against accumulating credit card debt. He follows the principle of "never lose money" as a key financial rule, advocating for a long-term investment horizon, and advising people to invest only in what they understand.

In addition to these principles, Buffett also advises against certain purchases that may seem valuable in the short term but are a recipe for financial disaster in the long run. He believes that people should avoid "wasting" their money on the following "unnecessary" purchases:

1. New car: While Buffett takes an interest in the automotive sector, when it comes to using a personal vehicle, he still drives a quite modest model. Buffett currently uses Cadillac XTS, a luxury sedan he purchased in 2014. The ace investor has advocated for viewing cars as a "utility" rather than a status symbol. Driven by his consumption philosophy, he believes that further spending on such items does not enhance his quality of life once a certain comfort level is reached.

2. Luxury brand items: While the billionaire certainly has a taste for luxury items, he still follows a ‘simple lifestyle’ approach. Until 2020, Buffett used a $20 flip phone before upgrading to an iPhone 11. He still lives in a 6,570-square-foot home in Omaha, purchased in 1958. One of his most luxurious purchases is his private jet, which he says saves him valuable travel time. To his followers, he advises a similar approach when it comes to luxury or unnecessary purchases: spend what is left after saving, not the other way around.

3. Low-quality goods: According to Warren Buffett, one of the important investments that one can make is in themselves. He advises people to go to bed “smarter” every day, emphasising cultivating money-saving habits. He advises against purchasing things that might seem that they come with “the best price” but it's always better to pay more for a product that's actually worth the money.

4. Credit debt: One of the most popular pieces of financial advices by Buffett is on avoiding any kind of debt. According to the billionaire, paying credit card debt first is any day better than an investment idea. His advice on reducing debt is to ensure that one’s long-term financial health remains stable.

5. Gambling and lottery tickets: Buffett calls gambling “a tax on ignorance.” To teach his children a lesson, he once installed a casino machine in his house with a terrible payout ratio. According to Buffett, gambling and lotteries are a “zero-sum game”, where profits are generated from poor decisions made by the people.