There was a recent article on the WSJ titled “Warren Buffett and the $300,000 Haircut”, and it is one of my favorite articles I have read in a long time. I am sure many people are familiar with Warren Buffett, one of the richest people in the world and CEO of Berkshire Hathaway.
There is a reason why Warren Buffett is so rich, and it is because of his prodigious investing talent. However, he is also one of the most financially savvy thinkers of all time, and this article details why. In the article, it describes Buffett’s spending habits, and how every purchase is carefully scrutinized.
For those of you who are not yet familiar with compounding, this article is a must read. One of the main points in the article is how Buffett weighs whether it is worth it to get a haircut, because what could seem like only a couple of dollars today could grow into thousands in the distant future with compounding. Most people do not have the long term foresight of Buffett, and this is why so many people prioritize their short-term happiness over long-term gains.
Obviously, it would be unreasonable to save everything for a later day, and there are certain things that you have to buy now. I think the point of this article though, is to show people that they should at least be a little more careful with what they spend money on, and question whether they really need it/want it so badly. With a little more financial planning, luck, and foresight, compounding could make you a rich person in the future (although it is unlikely you will ever be close to the wealth of Warren Buffett).
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