Building Wealth

There are only two things that you can do with money; spend it or invest it.  One has a net negative impact while the other has a net positive impact.  Warren Buffet, who is now estimated to be worth well over $50 Billion, is a great example of someone who came from nothing yet became one of the wealthiest people on earth by consistently choosing to invest the money that he had rather than spend it. 

He bought his first three shares of stock in Cities Services at the age of 11 that came from his earnings selling soda, chewing gum and magazines door to door in his neighborhood.  He used the money that he made at his grandfathers grocery store to buy pin ball machines that he placed in barber shops around town to create small amounts of cash flow.  He continuously reinvested his earnings over his first nine years for a grand total of $9,800 (approx. $94,000 in today's dollars) by the age of 20.  He studied under and then later went to work for the famous value investor Ben Graham.  He continued to reinvest his earnings with relentless perseverance and the rest is history.  In addition to being an incredible investor, here are a few additional things I have learned from Warren Buffett:

1) Regardless of the size of his balance sheet, he always lives within his means.  He understands that spending money is the best way to make it go to zero, and investing it will make it grow.  He is quoted saying, "If you buy things you don't need, pretty soon you will have to sell the things you do need."

2) He is a voracious reader.  He only invests his time and money in things he understands fully.  If he doesn't understand something, he takes the time to learn about it until he does. 

3) He believes that money cannot buy happiness.  It can buy you a sense of security and it can open many doors for you.  However, happiness comes from being engaged in fulfilling work; from strengthening your relationships with those who are most important to you; from doing things that make you happy.  

Warren Buffett is proof that you do not have to come from money to become wealthy.  In fact it is many times quite the opposite.  The lessons learned battling your way out of poverty many times sets the stage for great success.  Warren made his success through hard work, perseverance and a disciplined approach to wealth creation.  If there is one great take away from his life, it is that you have two choices regarding what to do with your money.  You can either spend it, or invest it.  Choose wisely. 

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