By Valencia Higuera GOBankingRates.com
WWR Article Summary (tl;dr) If you're looking for insight on how to make money, you may want to take a look at these six tips for making coin the Warren Buffett way.
If you're an investor, a business person or someone striving for financial greatness, Warren Buffett might be the perfect role model.
Buffett is known for his holding company Berkshire Hathaway, which owns brands such as Duracell, Fruit of the Loom and Geico.
With a net worth estimated by Forbes to be nearly $65 billion, some might say Buffett knows the ways to build wealth better than anyone else. But the way he built his wealth is especially impressive.
The Oracle of Omaha came from relatively humble beginnings. In his early years, he made money at everything from a newspaper route to selling golf balls. Between his determination and business savviness, he amassed a net worth of $1 million around the time he turned 30.
So, if you're looking for insight on how to make a million dollars, he's the guy to follow. Here are six tips for making $1 million the Warren Buffett way.
DEVELOP AN ENTREPRENEURIAL MINDSET EARLY Buffett didn't wait until later in life to get serious about business. As a young adult, he had a knack for thinking outside the box and finding creative ways to earn a buck, which is how he accumulated a net worth of $6,000 at the age of 15.
He had a job delivering the Washington Post, as well as a car-buffing business and a pinball machine business. So, learn from Buffett: If you want to make millions, don't put it off until you're older. Start now and start small. Look for ways to make more money, and once you earn money, start investing.
People who start investing early in life save more and get the benefits of compounding interest, said Joshua Wilson, a Fort Worth, Texas-based partner and chief investment officer with WorthPointe Wealth Management.
"People who start early also tend to become more financially conscious in other areas, so starting young tends to have a positive snowball effect," he said. "They tend to notice areas of waste sooner, and find ways to apply investing wisdom to other parts of their lives."
REINVEST YOUR PROFITS If you dabble in different investments and are fortunate enough to make a profit, don't take your money and run _ reinvest it. Building wealth requires long-term thinking and a willingness to deny instant gratification. Buffett has made money by reinvesting profits back into his businesses.
As a teenager, Buffett partnered with a friend and began a pinball machine business. The pair started with one machine and a $25 investment. Instead of spending all their profits on teenage stuff, they used the money to purchase additional machines. Eventually, they had eight machines in multiple locations.
Once the business partners went their separate ways and sold the pinball machine business, Buffett used some of his proceeds to start another business.
It's great to be optimistic about businesses, but they don't always succeed, said Neil Napier, CEO and founder of KV Social, a company that offers social media marketing solutions. Reinvesting profits is a great way to hedge your bets.
"Every month, set aside between 10 to 25 percent of your profits, and reinvest those into different businesses," he said. That way, even if an industry collapses, "you have some assets secured elsewhere."
MINIMIZE DEBT AND BORROWING You might be familiar with the saying, "You have to spend money to make money." Basically, that means you have to invest money to see a return. Some people rely on business loans to start or expand a company, which is often the only way to turn an idea into a reality.
However, to make millions the Buffett way, avoid unnecessary credit card debt and loans.
In a 1991 speech at Notre Dame, Buffett said he had seen a lot of people fail "because of liquor and leverage." And, he said Donald Trump failed because of leverage.
"He simply got infatuated with how much money he could borrow, and he did not give enough thought to how much money he could pay back," said Buffett.
But investors generally don't need leverage. "If you're smart, you're going to make a lot of money without borrowing," said Buffett. "I've never borrowed a significant amount of money in my life."
Buffett prefers buying companies with little or no debt, and he uses leverage only when it can raise the return on equity. Wilson agreed that you should be careful about not taking on too much debt.
"Most borrowing is essentially an anti-investment, it has negative returns," he said. "There's no greater predictor of future success than the ability to delay gratification, and that's essentially the key to Buffett's philosophy."
If you're striving to make millions of dollars and you must borrow, only borrow what you need at a low, fixed rate of interest. Then, pay off the debt as soon as you can.
LIVE SIMPLY Wondering how to make millions like Buffett? Don't forget to emulate his lifestyle in addition to following some of his investing strategies. Typically, the more people earn, the more they spend. They upgrade their lifestyles with bigger homes, luxury cars and better vacations. But Buffett takes a different approach.
Despite his billions, he lives a simple, modest life. Buffett currently resides in the Omaha, Neb., home he purchased in 1958 for $31,500. He only earns a base salary of $100,000 a year, and he isn't enticed by luxury cars or island properties.
The more you spend, the longer it will take to earn your first $1 million. If you live simply and minimize expenses, there are more opportunities to save, invest and earn from compounding interest. Follow Buffett's way of life, and you could potentially have a higher net worth than people who keep up with the Joneses.
NEVER STOP LEARNING You don't need a college degree to make millions. But according to Daniel Nyiri, founder and CEO of the personal training company 4U Fitness, you do need to feed your mind. Doing so can improve your money skills and help you acquire a thorough understanding of how different investments and businesses work.
Buffett might be an investment genius, but that fact doesn't stop him from reading and building on what he already knows. "Buffett says that he reads at least four hours per day," said Nyiri. "If you want to be a millionaire, you have to be the best at something, and the only way to get ahead is to keep feeding your mind."
It's reported that Buffett spends much of his day reading newspapers, books, financial statements and reports. Granted, the average person can't devote this amount of time to reading. What you can do, however, is take advantage of every learning opportunity, such as:
-Attending business and investment conferences and seminars
-Taking online courses
-Finding a business mentor
SURROUND YOURSELF WITH PEOPLE WHO MOTIVATE YOU Buffett has said it's smart to hang out with people better than you. "Pick out associates whose behavior is better than yours, and you'll drift in that direction," he said.
Always remember that the people in your life can motivate you to do good or bad. To do well, you have to copy successful people. Perhaps this is why Buffett surrounds himself with business people like Bill Gates, a friend of 25 years.
The point is simple: To make more money, choose your associates wisely. You don't have to shun your broke friends. But as Nyiri explained, you're not going to become a millionaire if you hang out with people who make excuses, or tell you that you can't do something.
Between his investment approach, business philosophies and simplistic lifestyle, Buffett is a financial role model. You don't have imitate his every move, but if you incorporate some of his strategies, you can discover a path toward financial freedom.