Warren Buffett recently hosted the Berkshire Hathaway Annual Meeting. In it we were told that there was a personal financial thing that Warren Buffett would do first with some money.
I think Warren Buffett is one of the best investors in the world. But he also has very good personal finance tips, even among the coronavirus problems.
Warren Buffett would do this with personal finance first
The advice was concentrated around credit cards. It is in this video if you are interested. He said:
“My general advice to people is that people should avoid using credit cards as a piggy bank to attack.
“I got a woman who would meet me not too long ago who had received some money.” He then told this story:
Female friend: “What should I do with it?”.
WB: “What do you owe on your credit card and what is the interest rate?” The friend answered 18%.
WB: “I don’t know how to do 18%. If I owe money to 18% the first thing I would do is pay it. It would be much better than any investment idea I have“.
Warren Buffett then told us that the woman’s daughter had $ 1,000 or $ 2,000 – what would she do with it? He jokingly (or seriously?) Suggested that the daughter lend the woman to 18%.
Even one of the world’s best investors thinks it is best to pay off credit cards first before investing. Don’t forget that you have to pay off your credit card with post income tax.
Banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) as well Australia and New Zealand’s banking group (ASX: ANZ) earns large interest margins on its credit cards.
Warren Buffett has given a number of good lessons for personal finance over the years. But before you think he’s unhappy is one of the gems he says it’s not a good idea to invest all your money and promise that the family can go to Disneyland several times when you’re 80 (and when the baby is grown), it’s is better to go to Disneyland once when the child is small and when they would appreciate it.
The world would be a much more stable place if everyone decided to act financially like Warren Buffett does.
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Motley Fool contributor Tristan Harrison has no position in any of the listed stocks. Motley Fool Australia has no position in any of the listed stocks. We Fools may not all hold the same views, but we all believe that given a wide range of insights makes us better investors. Motley Fool has a disclosure policy. This article contains only general investment advice (under AFSL 400691). Authorized by Scott Phillips.
Post The first personal finance case that Warren Buffett would do was first shown at Motley Fool Australia.