Small Habit That Changed Their Finances: Warren Buffett followed one simple money rule that is a masterclass in wealth building

Warren Buffett’s approach to money was developed long before he became one of the world’s best-known investors. As a child, he developed a habit that he later continued to recommend to young people: save money early, make it a regular practice and learn to manage what you have.

For Buffett, the lesson began at home as his father, Howard Buffett, was a major influence on his attitude towards money. In a 2013 interview with CNBC, Buffett said, “My dad was my greatest inspiration.” He added that one of the things he learned early from his father was “to have the right habits early.”

Saving, he said, was an important part of that lesson.

Buffett started saving before he became an investor

Buffett did not begin with a large amount of capital, instead he built his early savings through small businesses and odd jobs, including selling Coca-Cola around his neighbourhood.

In a 2018 interview with Yahoo Finance, Buffett recalled: “I started selling those Cokes that I bought, six for a quarter, and sold them for a nickel each around the neighborhood.”

Buffett said he did do similar things to save money and ultimately had saved up $114 by the time he was 11. That same year, Buffett bought his first stock, Cities Service Preferred.

The important part of the story is not simply that Buffett invested at 11. His early experience shows how saving and investing were connected for him. He accumulated money first, then used those savings as capital.

The habit mattered more than the amount

Buffett has repeatedly argued that the size of the first savings amount is less important than developing the habit itself.

In his Yahoo Finance interview, he said, “I think the habits you develop are terribly important. They may be more important than IQ or something.”

That idea also was also shared by him in a 1998 speech to students at the University of Florida, where Buffett said: “Chains of habit are too light to be felt until they are too heavy to be broken.”

His point was that young people have an opportunity to early on establish the patterns that they want to carry on into adulthood.

For children, that could mean learning to keep some of the money they receive or earn instead of spending everything immediately.

Buffett wanted children to learn about money early

Buffett has also argued that parents should not wait until their children become teenagers before introducing basic financial lessons.

In a 2013 CNBC interview, he said parents could begin teaching children about managing money “when their kids are in preschool.”

The lessons do not need to involve complicated investing strategies. Buffett has spoken about basic ideas such as saving, understanding the value of money, distinguishing between needs and wants, and living within one's means.

He also helped create Secret Millionaires Club, an animated series aimed at teaching children about business, investing and financial literacy.

His own childhood became part of the lesson

Buffett's early experience also illustrates another principle: saving can create the money needed to start investing.

When he wanted to buy stocks as a teenager, he had limited funds and sometimes had to sell an existing holding to free up money for another purchase. His investing journey therefore grew from money he had accumulated himself rather than from a large pool of capital.

Looking back, Buffett has described the process positively. “I enjoyed saving, I enjoyed investing,” he told Yahoo Finance.