Warren Buffett, often called the “Oracle of Omaha,” has built an extraordinary investment legacy. Berkshire Hathaway has delivered an average annual growth of approximately 20% since 1965. While his investment acumen is legendary, the habits that underpin his success are surprisingly accessible.
Buffett’s net worth of over $166.7 billion wasn’t achieved through complex financial engineering but through consistent application of fundamental principles.
His approach combines discipline, patience, and wisdom in ways anyone can adopt, regardless of financial position. By understanding and implementing these five key habits from Buffett’s playbook, you can apply his wisdom to your life and economic decisions.
1. The Voracious Reader: Commit to Continuous Learning
Warren Buffett dedicates 5-6 hours daily to reading, a habit he considers essential to his success. “Read 500 pages every day. That’s how knowledge works. It builds up, like compound interest,” Buffett has advised. His reading encompasses newspapers like The Wall Street Journal and Financial Times, annual reports, financial statements, and books that expand his understanding of business and investing.
Buffett’s library is filled with books that have shaped his thinking, with Benjamin Graham’s “The Intelligent Investor” holding a special place. He credits this book with laying the foundation for his investment philosophy. His business partner, Charlie Munger, shares this dedication to learning, calling their approach “elementary, worldly wisdom.”
Buffett doesn’t read to collect information; he reads to build mental models and frameworks that improve his decision-making. This habit has allowed him to spot opportunities others miss and avoid common pitfalls.
For those looking to adopt this habit, start small—dedicate 30 minutes daily to reading material that deepens your knowledge in areas relevant to your goals. Like compound interest, the benefits of consistent reading accumulate dramatically over time.
2. The Patient Investor: Embrace Long-Term Thinking
Patience defines Buffett’s investment philosophy. When asked about his ideal stock holding period, Buffett famously replied, “Our favorite holding period is forever.” This patience is evident in his long-term holdings—Buffett first purchased Coca-Cola shares in 1988 and American Express shares in 1963, companies he continues to hold decades later.
During market downturns, when others panic, Buffett remains steadfast. During the 2008 financial crisis, rather than selling, he invested $5 billion in Goldman Sachs, demonstrating his comfort with short-term volatility when the underlying business remains strong. This contrasts sharply with today’s trading culture, often prioritizing quick profits over sustainable growth.
To develop this patience, establish clear criteria for your decisions and stick to them despite market noise. Evaluate your investments based on fundamental value rather than daily price movements.
Buffett focuses on companies with enduring competitive advantages that can withstand economic cycles. By extending your time horizon from months to years or even decades, you align yourself with Buffett’s most powerful investing advantage: time.
3. The Frugal Billionaire: Live Below Your Means
Despite his immense wealth, Buffett maintains remarkably frugal habits. He still lives in the Omaha home he purchased for $31,500 in 1958, a modest residence by billionaire standards. His salary from Berkshire Hathaway has remained at $100,000 annually for decades, significantly lower than most CEOs of major companies. His wealth comes from his ownership of Berkshire Hathaway stock.
Buffett’s approach to consumption is guided by his belief that true wealth isn’t measured by what you have but by the happiness it provides. He drives his car, enjoys simple meals, and avoids luxurious purchases that don’t bring proportional value. “If you buy things you do not need,” he notes, “soon you will have to sell things you need.”
This frugality was instrumental in building his wealth at an early age, allowing him to reinvest more capital. For those seeking to apply this habit, distinguish between spending that brings lasting satisfaction and expenditures driven by social pressure or momentary desires.
Buffett’s example suggests that financial independence comes not from increasing income alone but from maintaining a sensible gap between what you earn and spend.
4. The Focused Decision-Maker: Stay Within Your Circle of Competence
Buffett attributes much of his success to knowing the boundaries of his expertise. “You have to stick within your circle of competence,” he advises. “You have to know what you understand and don’t understand.” This principle guided his decision to largely avoid technology investments during the dot-com boom of the late 1990s, sparing him significant losses when the bubble burst.
Rather than chasing every opportunity, Buffett concentrates on areas where he has deep knowledge. Before investing in any company, he conducts thorough research to understand its business model, competitive advantages, and long-term prospects. This disciplined approach helps him make confident decisions even when popular sentiment contradicts them.
To apply this habit, honestly assess your areas of knowledge and expertise. Invest time in developing a deep understanding of specific domains rather than superficial knowledge. Recognize that saying “I don’t know” and declining opportunities outside your expertise is a strength, not a weakness. As Buffett says, “The size of your circle isn’t important; knowing its boundaries is.”
5. The Time Guardian: Value Your Most Precious Resource
Buffett fiercely protects his time, recognizing it as his most valuable asset. His calendar remains remarkably uncluttered, allowing him to focus on high-impact decisions rather than busy work. “The difference between successful people and successful people is that successful people say no to almost everything,” he observes.
Unlike many executives with packed schedules, Buffett creates space for deep thinking. He delegates operational details while reserving attention for capital allocation and significant strategic decisions. His office lacks powerful computers and contains primarily books and newspapers, creating an environment conducive to reflection rather than reactivity.
This selective approach to time management enables the quality thinking that underlies his investment success. For those looking to adopt this habit, audit how you spend time and eliminate activities that don’t align with your goals. Schedule blocks for focused work and reflection. Practice saying no to commitments that dilute your effectiveness, even when they seem attractive in isolation.
Conclusion
Warren Buffett’s success stems not from complex strategies but from fundamental habits anyone can develop. By committing to continuous learning, embracing patience, living below one’s means, focusing on areas of competence, and guarding your time, you can apply principles that have created extraordinary results over decades.
The power of these habits lies in their compounding effect when applied consistently. While they may not make you a billionaire, they can significantly improve your decision-making and financial well-being.
Buffett noted, “The chains of habit are too light to be felt until they are too heavy to be broken.” By consciously cultivating positive habits now, you set yourself on a path toward greater wisdom and financial freedom.
Buffett’s ultimate lesson may be that extraordinary success comes not from extraordinary actions but from doing ordinary things with exceptional consistency and discipline. These habits can be applied to every area of your life for outsized success.