Warren Buffett, the “Oracle of Omaha,” is synonymous with legendary investing success. Over his decades-long career, he’s built Berkshire Hathaway into a financial powerhouse and become one of the wealthiest people in the world. However, his wisdom extends far beyond the stock market.
His philosophy can offer valuable life lessons applicable to everyone, especially those entering their 40s. At this point in your life, it’s time to solidify the foundation for the future, both financially and personally.
Here are ten key takeaways from Warren Buffett to help you navigate your 40s with purpose.
Why Does it Matter?
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Wealth is important. We wouldn’t be dedicated to bringing you the best financial advice and information if it wasn’t. However, even Warren Buffett knows that wealth isn’t everything!
Warren Buffett has a lot more to talk about than investing, too. Many of his most famous quotes are more about living than they are about investing, especially if you start digging under the surface. As a prominent financial figure, we couldn’t miss an opportunity to talk about Buffett’s wisdom.
1. Invest in Yourself
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Your 40s are a prime time to double down on yourself. Warren Buffett is known for his long-term investment approach, seeking undervalued companies with strong growth potential. He also emphasizes investing in yourself. In fact, he considered it the #1 thing you can do.
Investing in yourself can look different for everyone. Typically, it means honing your skills and expanding your knowledge base. Those investing in themselves may look for courses, workshops, and publications that help them stay ahead of the curve.
Learning new skills allows you to adapt to the changing world, even if you feel like you’re already well-established in your career. Your 40s may bring some different priorities, bringing us to our next point.
Don’t Forget Your Health
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As you approach your 40s, you should take the time to invest in your health, too. Investing in yourself goes beyond professional development. Before now, you may have been able to ignore your physical health to some extent. As you approach your 50s, though, it’s important to focus on your health, too!
That means focusing on healthy habits like regular exercise, a balanced diet, and adequate sleep. Keeping your health in tact is vital for keeping p your stamina and navigating the demands of work. A healthy mind and body are vital as you age.
Don’t think of these habits as extras. Consider them the foundation of investing in yourself.
2. Embrace Long-Term Thinking
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Warren Buffett’s success wasn’t built overnight. He’s a champion of long-term investing, which typically means waiting several years or even decades before you see success. It’s the power of compound interest, which increases with each passing year.
In your financial world, it is important to have long-term thinking. You don’t want to pull out of investments too early or chase the latest fad, for instance. But long-term thinking can help you with other sections of your life, too.
Focus on Delayed Gratification
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Delayed gratification is a skill that takes years to grow. Humans are naturally oriented to choosing the easiest, safest course of action right now – not considering how that action might influence your path years down the line. However, for true success, delayed gratification is often necessary.
Your 40s is the perfect chance to adopt a long-term mindset if you haven’t already. Now is the perfect time to buckle down on investing for retirement and building a nest egg. It’s also a great time to master a new skill or nurture meaningful relationships. You still have decades to profit from these goals.
While instant gratification can be tempting, embracing delayed gratification allows you to build a more secure future.
3. Value Patience
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Warren Buffett famously said, “The stock market is designed to transfer money from the impatient to the patient.” Patience and investing go hand in hand. If you aren’t patient, you often won’t have much success with investing. It’s a key skill any investor needs to focus on building as quickly as possible.
Just like Warren Buffett doesn’t chase fleeting market trends, you shouldn’t chase fleeting fads in your personal or professional life, either.
The Art of Waiting
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It’s easy to give into “the fear of missing out” and follow the current winds wherever they are traveling. However, this often doesn’t result in a very secure, successful life. Instead, cultivate patience. Just like you shouldn’t chase trends in investing, you shouldn’t chase trends in your own life, either.
This doesn’t mean being passive, of course. It means doing your research and making informed choices. Cultivate the discipline to see these plans through, even if you’re faced with short-term setbacks.
In fact, it’s the setbacks you should be looking forward to, as they’re the time when most other people sell. If you play your cards right, you can profit from these temporary drops in the market (and your life).
4. Contrarian Thinking
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One of our favorite quotes from Warren Buffett is: “Be fearful when others are greedy, and greedy when others are fearful.” You’ll find this quote in many of our other Warren Buffett articles, including 10 Life Lessons From Warren Buffett Everyone in Their 20s Should Hear. For a good reason, this quote emphasizes the importance of contrarian thinking.
When the market is booming, it may seem like everyone is getting rich quickly. However, it’s important not to get caught up in the frenzy. Buffett warns that this exuberance often precedes a market correction, leading to a lot of people losing their gains.
Making Better Decisions
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This contrarian thinking is useful in many other areas beyond investing, though. In your 40s, you should avoid blindly following trends or making decisions based on what everyone else is doing. Just because your co-workers are upgrading their cars doesn’t mean you should be.
Whenever the crowd seems to be rushing in one direction, take a step back. You’ll often find that the correct decision is exactly the opposite of what everyone else is doing!
Conversely, when there is widespread fear or panic, don’t give in to the panic. Often, when everyone else is being cautious, it is the perfect time to take calculated risks and look for opportunities. By developing your own informed perspective and swimming against the current when necessary, you can make better decisions.
5. Finding Your Circle of Competence
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Warren Buffett has also talked about your “circle of competence.” Your circle of competence is where you have the most experience and understanding. It’s the area you flourish, whether that’s in terms of investing in what you know or your career path.
Buffett doesn’t invest in technological companies he doesn’t fully understand. You should follow suit in all areas of your life.
Focus on Your Expertise
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By your 40s, you’ve had time to develop experience, try a few things, and learn crucial skills. Now is the time to double down on your hard-earned wisdom. Don’t spread yourself too thin or jump into a new career just because the grass looks greener on the other side.
Instead, focus on the areas where you naturally thrive. This could be your current profession, a specific industry, or even particular personality strengths. Simply put, focus on taking advantage of your strengths more than you focus on trying to build up your weaknesses.
By focusing on what you do best, you’ll be in a position to make a bigger impact.
6. Differentiate Between Price and Value
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Price and value are completely different things. According to Warren Buffet, “Price is what you pay; value is what you get.” This simple statement is the whole foundation of his investing philosophy.
In investing, this quote makes perfect sense. Just because something is priced a certain way doesn’t mean it’s actually worth that price. Conversely, sometimes stocks are priced far below what they are actually worth.
However, there are other areas you can apply this wisdom, too.
Focusing on Worth
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Simply put, just because something is expensive doesn’t mean that it’s worth it! This concept is very simple to grasp, but it’s often harder to put into practice. After all, if a car is more expensive, there must be a reason why, right?
Sadly, this isn’t often the case. Trends can easily push the price of something very high while its intrinsic value stays low. It’s important to see through these trends and consider the actual value of something.
This doesn’t just apply to things you buy with money. It also applies to things you spend your time on. Just because a new course is the talk of the town doesn’t mean it’s worth the time investment. Often, it’s the tried-and-true courses and books that have the most to give, not new industry fads.
Always ask yourself if you’re truly getting an investment from your money or time.
7. Avoid Get-Rich-Quick Schemes
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Everyone wishes they could get rich quickly, and that’s exactly why get-rich-quick schemes are so popular. According to Warren Buffet, trying to get rich quickly is often the “quickest way to get poor.” It’s important not to chase easy money. If something sounds too good to be true, it often is!
It’s important to keep your long-term goals in mind, especially in your 40s. There aren’t any bandaids. Don’t invest in schemes that are risky, even if they seem to lead to quick gains in the short-term.
Sustainable Wealth Building
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So what should you be doing? Instead of trying to earn as much money as possible, focus on sustainable wealth building. This means building tried-and-true (and often boring) financial habits like saving consistency, investing wisely, and living below your means.
While these habits often aren’t the most exciting, they are the foundation of financial health.
8. Living Below Your Means
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Warren Buffett is one of the richest people around. However, he lives a very modest lifestyle. If you want long-term wealth, it’s important to live below your means. That means spending less on your expenses than you could get away with.
This method ensures you have plenty of money to save. However, “lifestyle inflation” catches many people off-guard. It starts with a simple added expense, and soon, you’ll be spending hundreds more each month than you used to. While frugality isn’t fun, it’s necessary.
Frugality and Saving
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In your 40s, it’s time to start thinking about retirement. That means saving as much as possible, which means spending as little as possible. Living below your means doesn’t mean extreme deprivation. It’s about prioritizing your needs over wants and making conscious spending choices.
If you don’t need something, don’t buy it!
Track your expenses and note if you see an upward trend. This lifestyle inflation is easy to miss, making tracking your expenses vital!
9. Delegate and Build a Strong Team
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Warren Buffett may be brilliant himself, but he’s also a firm believer in the power of teamwork. He prioritizes hiring the best people he can and letting them do their job.
If you’re in a position to hire and manage other people, you should be doing the same! However, this can be easier said than done if you have a hard time letting go. Allowing others to make decisions can be a skill in itself.
Leverage Others’ Expertise
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We can’t all be experts in everything, even if we’d like to be. It’s much more efficient to focus on what you’re good at (your circle of competence) and rely on others’ expertise for other things. Often, this means delegating as much as possible.
This advice applies outside of the workplace, too. Maybe your spouse has a different skill set than you. Can you enlist them to take on certain tasks that they’re just better at? It also means hiring people to do things that you don’t know how to do.
Yes, you could do some basic home repairs. But if you have to miss work to learn how to do the repair and then do it, it may just make more sense to hire someone else. Consider how much money you could potentially make in that time compared to how much hiring an expert costs.
10. Define Success on Your Own Terms
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Warren Buffett is obviously successful. Anyone can see that. However, he also understands that true success goes beyond the bottom line. He once reflected, “It’s far better to be admired for something you did than to be envied for something you have.”
It’s important to define success on your own terms, focusing on the things that bring you happiness. Your wealth is just a number in your bank account at the end of the day.
Yes, money can help you reach your goals. Whoever said that money can’t buy happiness has never lived in poverty. However, it’s important to make your money work for you. Don’t just accumulate wealth. Use it.
Focus on Fulfillment
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Your 40s are a time to figure out what you want out of life. You’ve had several years to develop life experiences, which should help you figure out what you want. Don’t fall into the trap of equating a high salary or title with success. Instead, define what success feels like to you.
An easy way to do this is to imagine what you want life to look like when you’re in your 70s. What are you doing? Who is with you? What does your day look like?
Figure out that vision and work towards it! This exercise helps you figure out your core values and what you consider important. Once you know what you want the future to look like, you can take steps to get there.
Otherwise, you’re just working in random directions.
Remember, true success is far more than wealth. Aiming to have a certain amount in your bank account can be helpful, but it shouldn’t be your only goal.
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