The Warren Buffett way to teach kids about money

Warren Buffet with young people

Warren Buffett is the CEO of Berkshire Hathaway, a multinational conglomerate holding company headquartered in the United States. In the world of investing, he is considered a famous figure. As of December 2020, he has a net worth of over 85.6 billion USD, which puts him in the top five list of the wealthiest people.

Teaching your kids about money can be an intimidating task. But grasp a tip or two from Buffett, and maybe it might change your perspective on that. Take it from the man himself on five ways to teach your children about money.

#1: Start early

Image Credits: PT Money

Habits are built over time, and overnight efforts are risky. If you want your little ones to grow up with practical financial skills they can demonstrate and pass on to the next generation, start now.

“Sometimes parents wait until their kids are in their teens before they start talking about managing money — when they could be starting when their kids are in preschool,” Buffett told CNBC.

Now, at this point, we see some raised eyebrows over the screen. Is it possible to teach a preschooler about financial literacy? Yes if you’re not referring to the ever-complicated stock market.

As you spend time with your children shopping and dining out, use opportunities to explain that tapping a card to make payment is not as simple as it seems. To do so, clarify that it takes time and effort to earn money and that they should not spend as they please.

#2: Educate on the value of saving
teach kids on saving money

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After getting a headstart on the topic of money, you want to enlighten your kids on the value of saving. Buffett says that even saving a little bit of money regularly pays off. When it comes to money, even the cents count.

“Instead of spending money on a soda, which you don’t really need, put it in savings, and it will make even more money for you by earning interest.”

But lest you become naggy and fill your children with empty words, put it to action. You can open a child’s savings account and bring your kid along to the bank for their first deposit. Think of it as a field trip to teach them on the value of saving and don’t underestimate the impact it can have in the long run.

#3: Walk the talk
be a good role model to your child

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You can continue to blabber on about money-related topics, but if your daily actions show otherwise, it’s going to be just an irony. Worse still, it could confuse the little ones.

Buffett credits his father as a source of inspiration for building the right habits. “He was my hero when I was six, and he is still my hero now. He is an inspiration to me in every way. What I learned at an early age from him was to have the right habits early,” he stated in an interview with CNBC.

Children pick up habits from the things they see, and that’s why you want to walk the talk in your family’s financial decisions. You don’t have to be an expert investor to do so. Just keep yourself in check, which includes clearing credit card debts you’ve accumulated over time.

#4: Identify needs from wants

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Truth be told, even adults struggle with separating needs from wants. Just look at the number of purchases you’ve made from 9.9, 10.10, 11.11, and 12.12. If you don’t want your children to pick up the habits, model and reveal to them the significant difference between needs and wants.

Buffett suggests having your kids create a list of 5 or 10 things they would like to purchase. Then, go through the list with them and label each item as a need or want. Don’t forget to explain why.

As you do your online shopping, seat your child beside you and show them that even when buying a necessary item, it’s essential to compare prices. Different sellers can price the same or similar product at varying prices, so searching for the most affordable piece is also a smart skill to acquire.

#5: Power-up their entrepreneurship

Image Credits: The Straits Times

Did you know that when Buffett was just six years old, he earned his first few cents selling sticks of gum in the neighbourhood? Wanting to tap onto a better money-making opportunity, he moved on to selling Coke cans at a higher price than he bought it.

Asian parents are famed for being a wet blanket, and you don’t want to be one to your kid. Instead, encourage them to see money-making opportunities now can go a long way to fuel their entrepreneurial spirit down the road. Click through the link if you want to learn more on how to teach your kid to think like an entrepreneur.

As Don Bossi, former president of FIRST, a nonprofit organisation that helps young people foster innovations in the fields of science, technology, engineering and math (STEM) rightly assumes, “Kids are just a sponge.” Take time to teach and guide them about money, and they will soak up the right moves to face adulting.


7 Deadly Investment Sins

The definition of INVESTMENT is as follows: it is money committed or property owned that is acquired for future income. It has two main classes namely: fixed income (e.g., bonds or fixed deposits) and variable income (e.g., property ownership).

Mark Tier, the author of “The Winning Investment Habits of Warren Buffett & George Soros”, argues that they are seven deadly investment sins that unwary investors make.

What is observable with these so-called sins is that they are all irrational investment beliefs. Once you clear your judgment, you can make better financial choices.


Warren Buffett does not believe in predicting the market’s next big move and nor does he care about it. He says that “forecasts may tell you a great deal about the forecaster; they tell you nothing about the future”.


Some people are tempted to listen to “money gurus” that are believed to predict the market. “Media gurus” make their money from discussing about investments, selling their advice or charging fees to manage other people’s money. But, their followers are not all rich. If you could predict the market’s future, wouldn’t you shut your mouth and make a pile of money yourself?


Study the companies’ annual reports as Warren Buffett did. He, along with George Soros were once unknown in the investment scenes and now they are making a significant amount of money. You can work your way up the ladder without having to pay for inside information.


The source of Soros’s success is exactly the same as Buffett’s: a handful of investments that produce huge profits. Knowing the right companies to allocate your money to takes guts, wits, and luck.


Like entrepreneurs, successful investors know it is easier to lose money than it is to make it. This is why…they are more concerned with not losing money that making them.


Some people believe that a certain “system” can guarantee investment profits. It is human nature to find patterns and look for the formula. But, by doing so, you are just flushing your money down.


This is far more tragic than just believing you can predict the future. The investor who falls under the spell of the seventh deadly investment sin thinks he already knows what the future will bring. Hence, he or she might gamble it all and eventually lose everything.

Image Credits: reynermedia via Flickr

Image Credits: reynermedia via Flickr

These sins tempt investor and cost them an awful lot of money. This is why it is tantamount to avoid these cognitive illusions. 

Sources: Business Dictionary and Wealth Creator


Be a Smart Consumer: Avoid These 4 Marketing Tricks

To be a smart consumer, you must spend within your needs and not over your means. Marketing or Sales Agents like any other businesses are using the power of persuasion to gain profit. I’m not saying it is a bad thing (personally I think it is a talent), but it may influence the consumers to buy something that is rather unnecessary.

Image Credits: Andrew Stawarz via Flickr

Image Credits: Andrew Stawarz via Flickr

On that note, here are 4 Marketing Tricks you shall learn to avoid…

1. Foot-in-the-Door

It is a technique that starts with small requests in order to gain a “YES” with bigger requests. This works because of our desire to be consistent in our commitments.

For example, Fitness Studios will make you test their services first by giving a 1-week free pass before offering you their packages. Do you really need a $1,800 worth of Gym Membership when you rarely have the time to go?

2. Door-in-the-Face

In contrast, this trick starts with a huge and unreasonable request in order for you to settle with a smaller request.

For example, your friend asks you to donate $100 to a charity institution and you declined. Your friend will then say: “can you at least donate $10”. And, you will agree and comply. The truth is, your friend only intends for you to donate $10.

3. Low-Balling

Technique to purposely offer a product at a lower price than one intends to charge. This tactic will make you buy something at an affordable price before revealing the hidden costs (i.e., insurance, the phone casing, or batteries).

Image Credits: JOHN LLOYD via Flickr

Image Credits: JOHN LLOYD via Flickr

For example, a Car Salesman offers you an initial attractive offer that you can’t resist but then later increases the price because of a “mistake in labeling”. Once again, Psychology dictates that it works because of our need to be consistent in our choices.

4. Brainwashed by Advertising

There you have it! As Warren Buffett once said: “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1”. I hope that by knowing these, you will be able to make smarter consumer choices in the future.