Warren Buffett: 3 Best Pieces of Money Advice for the Middle Class

INTRODUCTION
Reduce Your Unnecessary Expenses
On the topic of budgeting, Buffett says that one of the keys to financial prosperity is simply to reduce your unnecessary expenses.

How do you know which ones are unnecessary? If you force yourself to live on a tighter budget, you’ll see right away which expenses you prioritize in life and which ones might be extra costs that you don’t really need. Over time, even a little amount of savings can build into a large amount.

Invest in the S&P 500
It’s true that billionaire investors like Warren Buffett have something of a leg up over the average middle-class American when it comes to picking and choosing good investments. But that doesn’t mean that you don’t have access to wealth-building investments.

The humble S&P 500 index, which can be bought cheaply through an exchange-traded fund by anyone, has a remarkable record of putting even professional money managers to shame. According to Morningstar, the S&P 500 has outperformed the majority of U.S. large-cap fund managers for 14 years in a row. This is why Buffett has been quoted as saying that most investors should just “consistently buy an S&P 500 low-cost index fund. Keep buying it through thick and thin, and especially through thin.”

Avoid Consumer Debt
If you budget properly and spend less than you earn, you should be able to avoid consumer debt. To Buffett, that is an essential piece of advice if you want to get ahead.
Buffett himself says that he has “an American Express card, which I got in 1964. But I pay cash 98% of the time.”

If using cash is one of the tools that has helped Buffett remain wealthy, perhaps it’s good enough for the middle class, also.

Invest in Yourself
In response to a question about “the best investment” at the 2023 Berkshire Hathaway annual meeting, Buffett told his audience, “The best thing you can do is to be exceptionally good at something. Whatever abilities you have can’t be taken away from you. They can’t actually be inflated away from you… So the best investment by far is anything that develops yourself, and it’s not taxed at all.”