Warren Buffett, the chairman and CEO of Berkshire Hathaway, also known as the “Oracle of Omaha”, is undoubtedly the most successful investor of the 20th century and one of the wealthiest individuals in the world. Despite all his worldly success, he is also one of the most humble and generous human beings alive. He recently donated a great portion of his wealth to Bill and Melinda Gates Foundation to be used for philanthropic purposes. At 82 years old, Buffett also has a wealth of life experiences and wisdom to share with the young professionals of my generation. Here are three of his best pieces of advice for entrepreneurs and young professionals to achieve success in business and life:
1. Develop excellent character and habits
Warren Buffett frequently says that there are many things in life that are outside a person’s control. These may include things like the circumstances in which a person is born, or genetic traits like IQ, looks, or exceptional talent in certain areas. He compares these things to winning a lottery; some people are more fortunate than others. However, a high IQ or exceptional talent alone is rarely a reliable predictor of a person’s success in life. Alternatively, there are things that a person can control. These are often choices related to a person’s character, habits, and temperament. These choices are often what determine how efficiently and effectively a person utilizes his/her IQ, talents, and abilities. According to Buffett, many people with exceptional IQ and talents get in their own way of success because they haven’t adequately developed their character and habits. Warren Buffett provides a “motor” analogy to demonstrate this point. He compares IQ and talent to the Horsepower (HP) of a motor. On the one hand, a 200 HP motor could be inefficient and produce only 50 HP output and the rest goes to waste. On the other hand, another motor with only 100 HP could be very efficient and produce total 100 HP output. The second motor with less HP provides greater output than the first. The choices made with respect to character and habits are similar to the efficiency of a motor.“The chains of habit are too week to be felt until they are too strong to be broken”.
Action Step: According to Buffett, it is easiest to cultivate a good character and habits at a young age and anyone can do it. An easy to way to do this is to find people whom you admire and write down all the character traits and habits you admire in them. Next, find examples of people whom you are not too fond of and write down all the qualities and habits that you dislike in them. Then simply emulate the list qualities that you like and avoid the qualities that you dislike, and, in some time, you will develop those likable qualities and eliminate the ones that you don’t like in others.2. Stay out of debt
“All I want to know is where I am going to die, so I will never go there”
Warren Buffett’s best financial advice to young professionals is to avoid credit card debts. He says that it is way easier to prevent financial trouble, than to get out of financial trouble. Revolving credit card debts usually come with interest rates in the 18-20% range. According to Buffett, once a person gets into this debt cycle, it is very difficult, if not impossible, to get out of it. By the time Warren Buffet had graduated from college, he had already saved $10,000. He was already ahead of the game and this put him in a position of advantage in comparison to the rest of his peers. He compares this to getting a head start in a race. If a participant in a race is given the opportunity to start the race even 1 meter ahead of everyone else, it makes a huge difference in the outcome of the race. Similarly, the young professionals who graduate from college without any debt or even with some savings have a huge advantage over everyone else. Action Step: Warren Buffett’s simple financial rule to follow is: “If you can’t pay for it, don’t buy it, and first get yourself in the position to pay for anything”.
