Information sourced from CNBC, Forbes and Britannica
Warren Buffett, who, according to Forbes, is worth $71.8 billion (Ksh7.7 trillion) as of July 2020, is famous for spending only $3 (Ksh320) on breakfast every day, reports CNBC.
In a previous interview with Yahoo Finance editor Andy Serwer, the chairman and CEO of Berkshire Hathaway, who is the fourth-wealthiest person in the world, said he carries approximately $400 (Ksh43, 000) in his wallet every time he steps outside his house.
“My wife likes to use cash, so I just take home a chunk of cash every now and then and she doles it out,” said Buffett of his wife of 14 years Astrid Menks, 74.
“She looks at my billfold and sees whether all the 100s are gone,” Buffett said.
The 89-year-old business tycoon said he uses cash “98 per cent of the time”.
“If I’m in a restaurant, I’ll always pay cash. It’s just easier,” he said.
Buffett revealed that, unlike most Americans, he has very few credit cards.
“I’ve got an American Express card which I got in 1964,” Buffett said. (Buffett’s holding company, Berkshire Hathaway, owned 17.9% of American Express at the end of 2018, according to its year-end financial report.)
Buffett’s tendency to use cash puts him in the minority among Americans — in 2018, only 18 per cent made “all or almost all of their purchases” with cash, according to the PEW Research Center.
Slightly over a half (52 per cent) of Americans made “some” of their purchases with cash and 29 per cent made none of their purchases with cash.
Research has shown that using cash triggers one to spend lesser money compared to when he or she is using credit card.
Paying with cash can be used as a negotiation tool, according to Mark Cuban. And researchers have found that physically handing over money feels painful, making you less likely to do it, CNBC Make It previously reported.
Who is Warren Buffett?
Warren Edward Buffett was born on August 30, 1930, to his mother Leila and father Howard, a stockbroker-turned-Congressman. The second oldest, he had two sisters and displayed an amazing aptitude for both money and business at a very early age. He first bought stock at age 11 and first filed taxes at age 13.
Buffett currently runs Berkshire Hathaway, which owns more than 60 companies, including insurer Geico, battery maker Duracell and restaurant chain Dairy Queen.
After graduating from the University of Nebraska (B.S., 1950), he studied with Benjamin Graham at the Columbia University School of Business (M.S., 1951). In 1956 Buffett returned to Omaha and in 1965 took majority control of the textile manufacturer Berkshire Hathaway Inc., turning it into his primary investment vehicle.
From the 1960s through the ’90s the major stock averages rose by roughly 11 percent annually, but Berkshire Hathaway’s publicly traded shares gained about 28 percent per year. Though Buffett’s success with Berkshire Hathaway made him one of the world’s wealthiest men, he eschewed lavish spending and criticized governmental policies and taxation that favoured the rich over the middle or lower classes.
In June 2006 Buffett announced that he planned to donate more than 80 percent of his wealth to a handful of private charitable foundations. The main recipient was the Bill & Melinda Gates Foundation—created by Microsoft founder Bill Gates and his wife—which focused on issues of world health and education.
Gates and Buffett had maintained a close friendship since the early 1990s, and the foundation was slated to receive Buffett’s funds in increments that would eventually raise its assets to an estimated $60 billion (Ksh6.4 trillion). The other organizations receiving donations were those run by Buffett’s three children and the Susan Thompson Buffett Foundation, named for his late wife, which focused on women’s reproductive rights and funded college scholarship programs.
During the subprime mortgage crisis of 2007–08, Buffett made a number of deals that, though questioned at the time, proved highly profitable.
In September 2008 he invested $5 billion (Ksh537 billion) in the U.S.-based bank holding company Goldman Sachs Group, Inc., and the following month Berkshire Hathaway purchased $3 billion (Ksh322 billion) in General Electric Company (GE) preferred stock.
In November 2009 Buffett announced that Berkshire was buying the railroad company Burlington Northern Santa Fe Corporation for about $26 billion (Ksh2.8 trillion); the investment group already owned approximately 23 percent of the railroad. In 2011 Buffett was awarded the Presidential Medal of Freedom.
He has promised to donate over 99 per cent of his wealth. So far he has given more than $41 billion (Ksh4.4 trillion) away.
In 2010, he and Bill Gates, the world’s second-wealthiest person with a net worth of $111.1 billion (Ksh11.9 trillion), launched the Giving Pledge, asking billionaires to commit to donating half their wealth to charitable causes.