Simplify your finances and enrich your relationships in the second half of life, so that you don’t retire with a wealthy bank account and an empty nest, says Buffet.
Inner circle love
Buffett has said that when you are seventy or eighty years old, the only scorecard that matters is whether the people you want to love you actually love you.
He says you can purchase enough trophies and hospitals to fill Fort Knox, but there is one thing you can’t purchase or trade for; you either have love in your life or you don’t, and you only get love if you are lovable.
It sounds harsh, but think about it. An $80 million net worth is pretty worthless if the only people who like you are doing it so that they can get something out of your estate one day.
Private scoreboard
Most of us look at how we think others perceive us, or how many groupings we have after our name (Ph.D.).
Buffett said that “if you want to be happy, you should concentrate on your inner scorecard.” He regularly asks audiences, “Would you rather be the world’s greatest lover but have everyone think you’re the worst lover? Or would you rather be the world’s worst lover but have everyone think you’re the greatest?”
After 50, you should care less about what the crowd thinks of you and focus on living up to your own internal standards.
Index path
Buffett is one of the best stock pickers ever, but even he tells most people not to try beat the market.
If you’re 50+, stop guessing stocks. Just buy an index fund. Chasing the next Apple or Google rarely works out.
Most people don’t have the time or energy to keep picking winners anyway. And fees quietly eat into returns more than people realize.
An index fund just tracks the whole economy over time. “Set it and forget it” keeps things simple and protects your sanity.
Edge of knowing
Venturing outside of your circle of competence is one of the riskiest moves you can make in your 50s.
Just because you were able to cultivate a successful career in your field for the past 30 years, it doesn’t mean that you suddenly know enough about the complicated inner workings of crypto currency to invest your kids’ college fund there.
Buffett says that you should know what you know and, more importantly, know what you don’t know.
There are thousands of things you can be ignorant about and still be rich and successful; you simply have to be right about the few things you choose to engage in.
Stay disciplined and say no to opportunities outside of your circle.
Time guard
Warren Buffett says that the difference between successful people and extra successful people is that extra successful people say no to nearly everything.
As we age, our time becomes more limited and therefore more valuable. You can’t afford to spend it checking off boxes on your to-do list.
When you say yes to things you’re not passionate about, you’re automatically saying no to the things that you are passionate about.
The only way to spend your time with purpose is to guard it by learning how to say no.
Final words first
Rather than waiting until you’re on your deathbed to reflect on your life, Buffett suggests you write out your ideal eulogy and start living like that today.
It’s a great way to design your life backwards and get clear on what you value most. Not only will it force you to think about your legacy, but it will show you how far you currently have to go to get there.
Aim to be recognized for your giving nature? Start volunteering and sharing your wisdom with someone else today.
Daily build
Buffett often discusses compound interest when it comes to finances, but he also extends that idea to personal growth in terms of knowledge and well-being.
A seemingly small daily improvement of 1% can result in a staggering 37-fold increase after a decade.
Buffett reads 80% of each day and spends more time with his books now than when he was in his 20s and why? Because he knows that knowledge is compounding interest for your brain.
If you’re in your 50s+ please don’t take “learning” or “exercise” lightly. Continually learning and staying active aren’t just things to keep you busy. They are what allow you to enjoy the money you worked for by keeping your machine in working order.
The day you stop learning or moving is the day you start losing all the gains you made in the first half of your life.
Quiet cage
Buffett, even now, resides in the very house he acquired back in 1958, tooling around in a humble Chevy sedan (he had a Toyota before that), a testament to his understanding that a lifestyle unchecked will eventually gain control of you.
He often references something he calls “lifestyle creep.” Letting your bills and expenses rise to match your income will always leave you with $0 in flexibility. You can never change careers, take risks or lose your job in the later years of your life if you have a $0 buffer.
Maintaining low fixed expenses grants you the genuine wealth of being able to leave any situation whenever you choose.
Role models
The people you surround yourself with will determine where you end up, and Buffett says this mantra grows even more important as you age.
He says to look around the office or bar and ask yourself if you want to be like these people 10 years from now. If the answer is no, leave the room, plain and simple.
You can easily spot the thriving spaces from the struggling ones by seeing where the money’s flowing. Pick mentors and build friendships with people that you strive to be like.
If they’re smarter, more ethical, more patient or kinder than you, spending time with them will begin to draw you in that direction as well.
Room to breathe
When analyzing a stock to buy, your margin of safety is how much cheaper you buy it for vs. what it’s actually worth.
In life, that means stepping right into the action. Consider your retirement fund, travel plans, or even your physical well-being.
Buffett says, don’t try to live on the edge of what you’re capable of. Needing a full 10% yearly gain from your investments just to get by means you’re dangerously exposed.
If your flight needs to be on time to make a meeting, you won’t have a margin of safety if it’s delayed.
Always build a buffer for the inevitable surprises in life. That way you’ll be cool, calm and collected when everyone else is losing their minds.
Sources: Please see here for a complete listing of all sources that were consulted in the preparation of this article.
