“It's not that I want money,” says Buffett. “It's the fun of making money and watching it grow.”
Throughout their years at Berkshire Hathaway, both CEO Charlie Munger and Buffett continued to receive their regular paychecks of $8,500 each month. Despite having a personal net worth in the billions of dollars, both Munger and Buffett rely just on their annual salary of $100,000 for their living expenses. He might be the second richest man in the world, but to look at Buffett one would never know it.
Buffett is unlike most of his peers at the top of the corporate ladder. He looks down on the luxuries that many of them indulge in, from boats to mansions to cars. He continues to reside in the first home he bought in Omaha in 1958, which cost him just $31,500. Meanwhile, Buffett prefers to take pleasure from the simple things that he has been enjoying since his early startup days – hamburgers, Cherry Coke, ice cream. He frequently drives himself to McDonald’s and Dairy Queens instead of five-star restaurants. His one indulgence was the purchase of a private jet, which he bought when too many people started recognizing him on commercial flights.
“We enjoy the process far more than the proceeds,” says Buffett. Buffett and Munger both detest the excess and waste that they see spreading throughout the executives of corporate America. Instead of seeing profits and wealth be put towards individual indulgence, Buffett prefers to save or reinvest his money. And, it isn’t because he plans to go on a wild spending spree once he has retired. Nor does he intend to leave much of it to his children.
Buffett was frugal, but he was by no means selfish. In 2006, Buffett became one of the most generous philanthropists in history when he announced that he would be giving 85% of his fortune away, primarily to the Bill and Melinda Fates Foundation. He wanted his money to be used for the well being of others and to make a contribution to society. He could have done this in many other ways – from creating a Buffett University in Omaha with an endowment larger than Harvard’s or by creating his own foundation to rival the Gates’. Instead, Buffett decided to take the ego out of his money. For him, that was never what business was about in the first place.
Many thought that Buffett would leave most of his fortune to his children, to ensure their security in future years. But, Buffett believed that the most important thing for them was to be productive members of society. “I want to give my kids enough so that they could feel that they could do anything, but not so much that they could do nothing,” he says. Buffett had always taught his children the meaning of value and the importance of working for your earnings. He even went so far as to make his daughter write him a cheque for a $20 loan she needed to get her car out of a parking garage.
Buffett became a success not only because he understood how to make money, but also because he knew how to use it productively once he had it. And, his legacy will endure because of his willingness to give it all away.
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