Warren Buffett: How ANYONE Can Become Rich (5 Steps)

Omission is way bigger than commission. There's big opportunities in life that have to be seized. Uh, we don't do very many things, but when we get the chance to do something that's right and big, we've got to do it. Even to do it on a small scale is just as big a mistake, almost, as not doing it at all. I mean, you've really got to grab them when they come, because you're not going to get 500 great opportunities.

You would be better off if when you got out of school here you got a punch card with 20 punches on it. Every financial decision you made, you used up a punch. You'd get very rich because you'd think through very hard each one. If you went to a cocktail party and somebody talked about a company you didn't even understand what they did or couldn't pronounce the name, but they made some money last week, you wouldn't buy it if you only had 20 punches on that card.

There's a temptation to dabble, particularly during bull markets. In stocks, it's so easy. You know, it's easier now than ever because you can do it online. You just click it in and maybe it goes up a point and get excited about that, and you buy another one the next day, and so on. You can't make any money over time doing that. But if you had a punch card with only 20 punches and you weren't going to get another one in the rest of your life, you would think a long time before every investment decision, and you would make good ones and you'd make big ones. You probably wouldn't even use all 20 punches in your lifetime, but you wouldn't need to.

If you're interested in financial matters, hey, you've got to have something to work with. I mean, I was fortunate in that respect because my dad paid for my education. If he hadn't, I probably wouldn't have become educated if I had to pay for it myself. But I was able to save ten thousand dollars by the time I was 21, and you know that was a huge, huge head start. If I hadn't been able to do that, you know, my first child came along when I was 22. So, I mean, the family—it's much easier to save it in those teenage years if you're lucky enough to be in a family where your parents are taking care of your financial obligations. Every dollar then is worth making 10 or 20 dollars later on.

So if you are interested in financial matters, getting a stake early is very useful, and getting knowledge early is very useful. So, you know, I would say you're well on the way if at 11 you're even interested in coming to a meeting like this. And if that interest is maintained, you know, I would read financial publications. I would read whatever was of interest to me. I'd be curious about how the businesses around the town of Kearney operated.

I would, to the extent that you can get people to talk to you, and people usually like to talk, you know, learn about who's got good businesses in Kearney and why they're good businesses. Learn about the businesses that went out of business and why they went out of business. Just keep accumulating knowledge. That's one of the beauties of the business that Charlie and I are in is that everything is cumulative. The stuff I learned when I was 20 is useful today—not necessarily the same way and not necessarily every day, but it's useful.

So you're building a database in your mind that is going to pay off over time, but you have to have a little money to work with. So there's nothing like getting a few dollars ahead. Stay away from credit cards and you can have a lot of fun if your mind goes along that track as you get older. People always say, "Well, who should I go to work for when I get out?" And I've got a very simple answer. We may elaborate more on this as we go along, but you know, the real thing to do is to get going in for some institution or individual that you admire.

I mean, it's crazy to take in between jobs just because they look good on your resume or because you get a little higher starting pay. I was up at Harvard a while back, and a very nice young guy picked me up at the airport—a Harvard Business School attendee. He said, "Look, I went to undergrad here and then I worked for X and Y and Z. Now I've come here, and I thought it would really round out my resume perfectly if I went to work now for a big management consulting firm."

I said, "Well, is that what you want to do?" And he said, "No, but that's the perfect resume." I said, "Well, when are you going to start doing what you like?" And he said, "Well, I'll get to that someday." It just doesn't make a lot of sense. I told that same group, I said, "You know, go to work for whomever you admire the most." I said, "You can't get a bad result. You'll jump out of bed in the morning and you'll be having fun."

Dean called me up a couple weeks later, he said, "What'd you tell those kids?" He said, "They're all becoming self-employed." So you've got to temper that advice a little bit. The best thing is to have a lot of earning power of your own. If you're the best brain surgeon in town or even the best lawyer in town, you will retain purchasing power in terms of your income no matter what happens.

You know, whether people are using seashells for money or whatever. As time goes by, I'd like for the moment to have you, well, I have you pretend I've made you a great offer and I've told you that you could pick any one of your classmates. You now know each other probably pretty well after being here for a while. You can pick—you have 24 hours to think it over, and you can pick any one of your classmates, and you get 10% of their earnings for the rest of their lives.

I ask you what goes through your mind in determining which one of those you would pick. You can't pick the one with the richest father—that doesn't count. I mean, you've got to do this on merit. But you probably wouldn't pick the person that gets the highest grades in the class. I mean, nothing wrong with getting the highest grades in the class, but that isn't going to be the quality that sets apart a big winner from the rest of the pack.

Think about who you would pick and why, and I think you'll find when you get through, you'll pick some individual. You've all got the ability; you wouldn't be here otherwise. You've all got the energy. I mean, you've got the initiative is here; the intelligence is here throughout the class. But some of you are going to be bigger winners than others, and it gets down to a bunch of qualities that, interestingly enough, are self-made.

I mean, it's not how tall you are; it's not whether you can kick a football 60 yards; it's not whether you can run the 100-yard dash in 10 seconds; it's not whether you're the best-looking person in the room. It's a whole bunch of qualities that really come out of Ben Franklin or the Boy Scout Code, so whatever it may be. I mean, it's integrity, it's honesty, it's generosity; it's being willing to do more than your share. It's just all those qualities that are self-selected.

And then if you look on the other side of the ledger—because there's always a catch to these, you know, free gifts and genie jokes—you also have to, and this is the fun part, you also have to sell short one of your classmates and pay ten percent of what they do. So, who do you think is going to do the worst in the class?

This is way more fun, and think about it again. It isn't the person with the lowest grades or anything of the sort—it's the person who just doesn't shape up in the character department. I mean, we look for three things when we hire people: we look for intelligence, we look for initiative or energy, and we look for integrity. If they don't have the latter, the first two will kill you.

Because if you're going to get somebody without integrity, you want them lazy and dumb. I mean, yeah, you don't want them smart and energetic. So, it's that third quality. Everything about that quality is your choice. You know, you can't change the way you are wired much, but you can change a lot of what you do with that wiring, and it's the habits that you generate now on those qualities or those negative qualities.

I mean, the person who always, you know, claims credit for things they didn't do, that always cuts corners, that you can't count on. In the end, those are habit patterns. And the time to form the right habits is when you're your age. I mean, it doesn't do me much good to get golf lessons now. If I'd gotten golf lessons when I was your age, I might be a decent golfer. But someone once said, "The chains of habit are too light to be felt until they're too heavy to be broken."

I see that all the time. I see people with habit patterns that are self-destructive when they're 50 or 60, and they really can't change them. They're imprisoned by that. But you're not imprisoned by anything. So when you write down the qualities of that person that you'd like to buy 10% of, look at that list and ask yourself, "Is there anything on that list I couldn't do?" The answer is there won't be.

And when you look at the person you sell short and you look at those qualities that you don't like, if you see any of those in yourself—egotism, whatever it may be, selfishness—you can get rid of that. I mean, that is not ordained. If you follow that, and Ben Franklin did this and my old boss Ben Graham did this at early ages—in their young teens—they just—Ben Graham looked around and he said, "Who do I admire?" You know, and he wanted to be admired himself. He said, "Why do I admire these other people?" And he said, "If I admire them for these reasons, maybe other people will admire me if I behave in a similar manner."

He decided what kind of a person he wanted to be, and if you follow that, at the end you'll be the person you want to buy ten percent of. I mean, that's the goal in the end, and it's something that's achievable by everybody in this room.