Many people believe that to increase their income, they must get a new job or take on a side hustle. But for Warren Buffett, the key isn’t working harder — it’s thinking smarter about money.

The legendary investor, known as the Oracle of Omaha, is currently the fourth-richest person in the world with a net worth of $162.1 billion.

Despite his fame as the largest shareholder of Berkshire Hathaway, Buffett is admired for his practical and down-to-earth financial wisdom.

After more than 60 years in the investment world, Buffett has shared many timeless and simple financial principles that remain relevant today.

According to Go Banking Rates (Monday, October 6, 2025), here are 13 financial lessons from Warren Buffett that anyone can apply — even beginners in investing.

1. Start Small and Be Patient

“Someone is sitting in the shade today because someone planted a tree long ago.”

Buffett didn’t begin his investment journey with millions. He once worked with very little capital and chose small companies he believed would grow.

“If you work with small capital wisely, you can make big gains,” he said during Berkshire Hathaway’s 2001 annual meeting.

For him, patient small investments can grow significantly over time.

2. Choose Index Funds

“I think for most people, the best way is to own an S&P 500 index fund.”

Buffett considers index funds like the S&P 500, which contain 500 large companies from various industries, as the best investment for most people.

It’s a simple, effective, and low-risk method.

“The first rule of investing is don’t lose money. The second rule: don’t forget the first rule,” he said.

3. Own Bonds

“Put 10 percent of your cash in short-term government bonds.”

Buffett recommends an investment mix of 90% S&P 500 index stocks and 10% government bonds.

These can be Treasury bonds starting at $100 or savings bonds from $25. This balance maintains both growth and security.

4. Understand What You Invest In

“Risk comes from not knowing what you’re doing.”

Buffett believes understanding your investments is more important than following trends. You don’t need to know everything about the stock market — just understand the basics of what you invest in and seek advice if needed.

5. Don’t Follow the Crowd

“The most important quality for an investor is temperament, not intellect.”

Buffett never bases his decisions on market trends. He values discipline and composure over hype.

As long as investors understand their assets’ true value, there’s no need to follow the crowd.

6. Keep Cash Ready

“When the bills come due, only cash counts. Don’t leave home without it.”

During the 2008 financial crisis, Berkshire Hathaway survived because it held large cash reserves.

Buffett stresses that cash or cash equivalents such as money market accounts and certificates of deposit (CDs) are vital for liquidity — though CDs may have penalties for early withdrawal.

7. Pay Off Credit Cards

“People shouldn’t use credit cards as piggy banks.”

Buffett believes that before investing, one must first eliminate high-interest debt. Credit card interest can erode income faster than investment profits can grow.

8. Focus on Value, Not Price

“Price is what you pay; value is what you get.”

Citing his mentor Benjamin Graham, Buffett teaches that true investing is based on intrinsic value, not stock price. He buys stocks for their long-term potential, not short-term popularity.

9. Buy Quality on Sale

“Whether it’s stocks or socks, I like buying quality merchandise when it’s marked down.”

Buffett is known for buying high-quality stocks at discounted prices. To him, being frugal means getting value, not just buying cheap items.

10. Seize Opportunities

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

Buffett emphasizes that golden opportunities in the market are rare. When they appear, investors must act quickly and decisively to make the most of them.

11. Maintain a Safety Margin

“Don’t drive a 9,800-pound truck on a 10,000-pound bridge — go for one that holds 15,000.”

Buffett’s margin of safety principle reminds investors to leave room for error. Without an emergency fund, it’s risky to take high-stake investments. Financial security must come first.

12. Focus on the Game, Not the Scoreboard

“Games are won by players focused on the field, not the scoreboard.”

Buffett advises investors to focus on long-term performance rather than daily price changes. Patience, he believes, is the true key to investment success.

13. Keep It Simple

“You don’t need to be an expert to get good returns. Keep it simple and reject get-rich-quick promises.”

For Buffett, the best investments are those that are easy to understand and realistic. He avoids fast-profit schemes and favors slow but steady progress.

“Be the tortoise, not the hare,” he concludes.