Our world of capitalism is geared toward constant consumption. More is better! From the first day on the job, everyone seems to chase the same: MORE. Yet, I want to challenge you to think about a question that no-one has probably ever asked. What is enough? (I sincerely hope you come up with a better answer than Jordan Belfort’s – the ‘Wolf of Wall Street – “more”.)
In this three-part series I shine light on three people I admire for their frugality despite their wealth. I discuss their lives, fortunes, spending behaviors, and their philosophies on life. At the end, I provide some food for thought and maybe even help you find happiness in your life. I hope these articles will trigger you to think about what income or sum of money is enough for you to live a happy life.
During my travels and throughout life, I have noticed a tendency in the world to always be striving for more. In and on itself I consider ambition to be a good thing. It brings the world forward. There are plenty of examples: Tesla, Netflix, and peanut butter Oreos. Yet, constantly looking forward to ‘what’s next’ can be devastating. Especially when it comes to this thing we are all looking for in life, called Happiness. Part One of this series is about one of the most respected investors in the world. How does one of the richest men in the world manage his lifestyle?
Once the richest man in the world (currently top 2 after Bill), Warren Buffet has been the focal point for numerous case studies. Not only does his decades-long experience in the financial world provide for a seemingly endless stream of quotes, his letters to the shareholders are legendary for their simplicity and wisdom. Yet, amidst all this wealth he prefer to live the simple life he’s had for decades. To me the ‘Miracle of Omaha’ personifies the credo living below your means.
Born in 1930 rural Omaha, Nebraska; an area hit hard by the Great Depression. As unimaginable as his current wealth must be, so is the poverty he was brought up in. As a result, Warren took to entrepreneurship at a young age. As a teenager he sold chewing gum door-to-door before turning to selling golf balls and Coca Cola. By the time he graduated high school, he had set up and sold a pinball machine business for US$1,200 (US$16,000 in today’s money). Upon his graduation from Columbia Business School he started his professional career working in the financial world. At age 26, he started his own investment firm that would grow to become the world’s largest. Fast forward to today:
- Revenue of his company, Berkshire Hathaway, US$224B on a portfolio of US$621B.
- His personal wealth is estimated at US$78B
- Ireland’s annual government budget is also US$78B.
You would expect all relics of a lavish life: luxury cars, private jets, and more private islands than you could count on two hands. However, you’d be wrong.
What does one of the richest men on earth pay himself?
(To give a hint, Berkshire Hathaway had a US$33 billion profit over 2016) Maybe 200 million? 100 million? OK, let’s go really low. 5 million?
Warren Buffet pays himself the humble amount of US$100,000 per year – a salary that hasn’t changed since 1955.
The lifestyle of the Miracle of Omaha
Buffet is known for his simple taste. A pretty well-known fact is that he still lives in the 5-bedroom house he bought for US$31,500 at the age of 27. He drives around in an old truck he bought years ago. His favorite meal is hamburger with fries. After work, he comes home to play online bridge until he goes to bed. He stays away from cell phones, convinced they are one of the biggest distractions in life. For being such a wealthy man, his spending pattern is far below that of most middle income families. Is this the key to his success?
During an interview with CNBC he revealed his attitude toward success:
“Success is really doing what you love and doing it well. It’s as simple as that. Really getting to do what you love to do everyday – that’s really the ultimate luxury…your standard of living is not equal to your cost of living.”
Warren never takes vacation, stating that he ‘does what he loves and loves what he does – his work’. He sees the expenses and maintenance of ‘luxury toys’, such as cars, the internet, and computers as a burden to his freedom (although he does own a computer to play bridge). In a sense, I regard Warren as the first Minimalist – the art of removing clutter to only possess what provides value and happiness. I love this motto. Realizing what makes you happy and what you need for this. For Warren Buffet it is his work, playing bridge, and a simple life. Everything else is just noise and distraction. It stands in the way from him and his happiness.
The reason I’m writing about Warren Buffet is because I think there is a valuable lesson to be learned. Buffet isn’t concerned about the possessions of others, comparing his status to others, or thinking the ‘the grass is always greener on the other side of the fence’. He knows what makes him happy. He is aware that anything other that what he truly desires is just a hassle and adds distractions to his life.
A common phenomena I notice around me is when people say, “I’ll be truly happy when I reach XYZ.” XYZ usually refers to a salary, promotion, a car, fill in the blank. The idea behind this is that you are not fully satisfied with your current life. Something is missing and you are only happy once you have obtained XYZ. Yet, once we finally reach that point, undoubtedly there will be something else. Did you want to have a cool Mercedes? Now you want a Ferrari. Did you want to go to Italy for a vacation? Now you want to go to the Maldives. The catch is, it’s never enough.
Yet, I choose not to subscribe to this sermon. During my travels, I have realized that the things that make me happy are within arm’s reach. For example, I know that playing sports, spending quality time with friends & family, the freedom to travel, and working on something with purpose makes me happy. Do I really need to work 80 hours a week to make enough money to obtain this? To play any kind of sport, you can probably get away with paying a few hundred dollars a month (and that would be expensive). Spending quality time with friends and family usually means having drinks, dinner, or just a walk in the park. The freedom to travel can be obtained in so many different ways (as this website evangelizes, there are plenty of ways to make travel available and affordable without having to sell your kidneys). Lastly, working on something that provides a sense of purpose and fulfillment is key to a happy life. Whatever you end up working on, the satisfaction from doing what you desire probably outweighs any amount of money.
So next time you catch yourself vigorously striving for some goal that will make you happy, think of a 80 billion dollar guy, driving his old car in the McDonald’s drive through.