Warren Buffett's Rags-to-Riches Story Has Many Lessons to Offer; Here's A Few We Can Follow

If there is somebody whose financial advice you can blindly count on, it would be none other than "the Oracle of Omaha," Warren Buffett. Buffett's story is nothing short of extraordinary, however, some simple yet effective lessons can be derived from his life story and applied. Buffett, whose early life was marked by poverty resulting from the financial crash of 1929 had exhibited entrepreneurial traits at a young age with him selling and buying things. He reportedly sold various items from chewing gum to magazines, door to door, before investing in his first stock at the age of 11. Buffett bought three shares of Cities Service Preferred at $38 per share, which later ignited his interest in the stock market. While there's a plethora of advice that Buffet has showered on us over the years, it's difficult to pinpoint the ones that will help you get started without having a lot of resources. Having said that, experts have time and again counted on these nine lessons given to us, by Warren Buffett that have proven to come in handy for those in the process of building a fortune.

1. Start young

As mentioned, Buffett started his career when he was just 11. "Imagine a young Warren, a kid with a paper route, saving to buy his first stocks," said Kraig Kleeman, founder and CEO of Z-Branding. "While his friends were spending money on toys, Warren invested in his future."

2. Think about long term

Warren is known for feeling happy when the stock market crashes, as it allows him to buy valuable stocks at a lower price. "Buffett dreams big and doesn’t rush,” Kleeman said. "He’s interested in something other than quick fixes or get-rich-quick schemes. Instead, he plays the long game. Lesson? Think big and be patient; success takes time."

3. Avoid panic

It's a known fact that when the stock market crashes, people start panic selling. This is exactly what Buffett warns everybody against. As Buffett once, said, "I'm Happy when stocks go down." As per Kleeman, he is not afraid to go against the crowd. While others were running from the stock market during crashes, Buffett saw opportunities.

4. Avoiding debt traps

Buffett has time and again spoken against debts and talked about how he likes steering clear of debts altogether. The billionaire is essentially against credit cards and advocates for spending in cash as much as possible. "It’s very tempting to spend more than you earn, it’s very understandable," he said. "But it’s not a good idea," he said back in 2004 at the Berkshire Hathaway annual meeting. 

5. Quality over quantity, always

Buffett is against hoarding random stocks. He suggests everybody study the businesses and invest in them. "I think about what would happen to the business in 20 years," he says. "Buffett doesn’t buy a bunch of random stocks," Kleeman said. "He picks the best ones. He’s not interested in quantity; he’s all about quality."

6. Build and commit to your financial dreams

Buffett urges people to dream big and stick to it. He is known for holding tight to his investments and playing the long game. He often talks about how important it is to build a plan and stick to it. It's important to have a clear set of guidelines that one can follow. Apart from this, he also asks people to remember that simple doesn't always mean ineffective.

7. Planning for your succession is important

He has spoken about succession planning on multiple occasions and believes that things change from time to time and we as humans should be prepared for it. "He also recognizes that things change. In years and decades past, his kids weren’t ready to be executors, now they are. It seems obvious with a large fortune like his — also wrapped up in planning for who would replace him at Berkshire," Cody Barbo, founder and CEO of Trust & Will said, via Yahoo Finance. 

8. Surround yourself with the people who bring out the best in you

Buffett says that you don't need to be a genius in what you do. All he asks people to do is to follow the straightforward principles. "I learned that it pays to hang around with people better than you are because you will float upward a little bit. And if you hang around with people that behave worse than you, pretty soon you'll start sliding down the pole. It just works that way," he said in the book "The Snowball."

9. Stick to what you know

Buffett believes that one doesn't need to study the stock market closely all the time, but rather focus on the fundamentals. "He focuses on businesses and industries he knows well. Whether it’s newspapers, Coca-Cola, or insurance, he sticks to what he knows," Kleeman added. He urges people to develop a deep sense of understanding. Buffett believes in concentrating on the businesses one understands the best.