Mar 15, 2023
Parents, you want your kids to be sucessful, but how does that happen?
The Oracle of Omaha was already showing signs of financial brilliance at a young age. He started small before rising to the ranks of one of the wealthiest men on the planet.
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And there's a lot to be learned from the early life and career of the billionaire Berkshire Hathaway CEO.
From their hobbies to how they handle rejection, here are 10 things to watch for in your kids that you can nurture to help them become a financial success.
More: How to teach your kids about money
1. She's got a lemonade stand
Warren Buffett was a born entrepreneur. He was 5 years old when he started selling Chiclets gum to kids in his neighborhood in Omaha, Nebraska.
When he was 6, he bought six-packs of Coca-Cola for a quarter, then sold the individual bottles for a nickel each — making 5 cents' profit each time.
A few years later, he was buying used golf balls and reselling them at a markup.
When Buffett had a lemonade stand, he decided against putting it in front of his own house. Instead, he set up shop outside a friend's house, because that area got more foot traffic.
“Sometimes parents wait until their kids are in their teens before they start talking about managing money — when they could be starting when their kids are in preschool,” he once told CNBC
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2. He prefers books about wealth to the Wimpy Kid
OK, maybe this one is pretty obvious, but if your kid's favorite books are about making money, that's a pretty strong clue that he could be on Warren Buffett's trajectory.
When Buffett was just 7 years old, he latched onto a book he found at the library called One Thousand Ways to Make $1,000.
He was fascinated by the book's lessons about how money can grow, particularly if you start early enough.
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More: Best investing books
3. She loves junk food
Warren Buffett is a regular at McDonald's and Dairy Queen, and his diet consists largely of Coca-Cola and snacks you'd find in a vending machine.
It might never be described as healthy, especially not for an 80-something billionaire. But Buffett argues that, statistically speaking, 6-year-olds have the lowest mortality rate. So he follows a diet that he presumes a 6-year-old would eat.
Unlikely business decisions are often made after careful consideration of facts.
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4. He's really serious about his hobbies
Kids might like to play with toy trucks, but how many really dive deep into a hobby like that and fixate on becoming a mechanic or automotive engineer when they grow up?
Warren Buffett loved the stock market and money from a young age, and his pastime became more of a passion as he grew.
Buffett bought his very first stock at the age of 11, with three shares of oil company Cities Service at around $38 per share. He later sold it for a small profit of $2 a share, although he would’ve earned more if he waited out a bit longer — the stock shot up afterward to $200.
He was investing in real estate by age 14, when he bought a 40-acre farm with profits he made delivering newspapers.
Over the years the Oracle of Omaha has offered a few nuggets of wisdom for parents on how to teach their own children about money — and even helped create an animated series for kids called Secret Millionaires Club.
5. She's crazy about numbers
Buffett was enamored with numbers as a child. He gave himself a caption in his high school yearbook that said, in part, "likes math."
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It wasn't just math: He liked statistics, too. While all of his friends were memorizing facts about athletes and drawing comic book characters, he chose to memorize the populations of various cities.
His familiarity with numbers and statistics has helped Buffett understand shifts in the stock market.
More: 10 awesome financial gifts for kids
6. He handles rejection well
Before the age of 18, Warren Buffett was running several businesses and could have reasonably skipped college, since he already seemed to be on his way to great success.
But his dad persuaded him to enroll. And, after spending time at two different colleges, Buffett got his bachelor's degree. Then, he applied at Harvard.
Despite all of his academic and financial success by that time, he was rejected. He ended up at the Columbia School of Business, where one of his favorite authors became his professor.
7. She realizes it's OK to fail
Buffett ran a lot of businesses before he graduated from high school. He delivered newspapers and magazines, sold stamps to collectors, buffed cars, and put pinball machines in barber shops.
Several of these endeavors failed quite quickly. Some were just ideas that couldn't be fully executed. And one — a brief attempt at selling betting tips on horse races — wasn't quite legal.
Still, none of the misfires stopped him from launching his next business. Buffett developed an admirable resilience.
8. He has self-discipline
Believe it or not, by age 13 Buffett's various ventures and investments were earning him a weekly income that was higher than that of his teachers.
It would have been easy for a teenager to become haughty in that situation, but Buffett was always very grounded.
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After losing money on what he later said was an "emotional" horse racing bet, he promised himself he'd never make a financial decision with his heart again.
9. She values wise advice from others
While many look to Warren Buffett for financial advice today, he has made no bones about the fact that he often relies on the good advice of others himself.
Though Buffett considered skipping college altogether, he followed his father's advice and continued his education.
“My dad was my greatest inspiration,” Buffett said in a 2013 interview with CNBC. “He was my hero when I was six and he is still my hero now. He is an inspiration to me in every way. What I learned at an early age from him was to have the right habits early.”
At Columbia, he met two professors who greatly shaped his investment style.
One of them, Benjamin Graham, wrote a book called The Intelligent Investor, which served as a guideline for Buffett's approach to investing. He has called it "by far the best book about investing ever written."
10. He's a penny pincher
Despite being uber-wealthy, Warren Buffett lives a lot like an average, middle-class American. He does not live in a mansion, and he avoids wasting money on status symbols like fancy cars and private jets.
According to popular folklore, Buffett has always been a conservative spender. He graduated high school with $5,000 in savings — about $57,000 in today's money — and he did not blow any of that on expensive hobbies.
“Saving even a little bit of money on a regular basis pays off,” he says. “Instead of spending money on a soda, which you don’t really need, put it in savings, and it will make even more money for you by earning interest.”
Children who are already developing frugal habits will be more likely to carry them over into adulthood, giving them more savings and income to use to grow their wealth.
If your kid doesn't already have a savings account, maybe it's time.
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Doug Whiteman was formerly the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."
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