Warren Buffett is a genius – because he has made money his servant and not his master

19th August 2011

"Not particularly because he is one of the world's richest people and a fantastically successful businessman and investor.

He himself isn't particularly impressed by his business genius, probably because he knows something that most forget.

The laws of mathematics mean that in a market you will get most people around average, some unsuccessful and some successful and every so often you'll get somebody who is absolutely unbelievably successful. 

You would also get people who are spectacularly unsuccessful (a mirror image of Mr Buffett) but once they go broke a few times they don't come back.

So while I admire Mr. Buffett's business acumen and envy his track record, I'm more in awe of his attitude.

For many of us, money is the master and we are the servant.  This idea is so prevalent that the subtitle of my website Taming the Pound is – "making money your servant, not your master".

Many people chase the money to have more money.  Premier league footballers have tantrums about playing a game they supposedly love and would play for free, because they "only" get £150,000 a week, (about six times the national average yearly income).

Lottery winners celebrate and are happy – but a year later, most are pretty well back to their starting point in terms of being happy, irrespective of what money they have left.  Similarly, the unfortunate people who are left quadriplegic by accidents become unhappy for a while, but almost all return to their happiness starting point within a year or two.

It is becoming apparent that we have a "happiness set point" and money doesn't do anything to alter it. 

There are ways to alter it, but they are nothing to do with money.  They are to do with purpose in life, values and other intangibles.

Which brings us back to Mr Buffett.

He's got billions.  He could buy pretty much anything he wanted, never mind planes and yachts, he could buy countries, probably planets.

He still lives in the modest house he's lived in for years and drives a modest car. 

His children are comfortable, but they know they aren't going to be left billions of dollars when he dies and they are perfectly happy with that and well adjusted.

He works because he likes what he does, he's good at it, and it gives him satisfaction.  If he didn't like it any more, he wouldn't do it.

His money is his servant.

He doesn't care about having "things".  While some might want a baby Bentley in a different colour for each day of the week to show how wealthy they are, Mr Buffett doesn't care.

He doesn't even care about his "reputation".  His good friend Bill Gates is using his money for a great purpose, and I applaud him for that.  Mr  Gates has his name on the Gates Foundation, and I'm pretty sure that if I was anything approaching as clever as the two of them and had the opportunity, I'd put my name on a foundation too.

But Mr Buffett doesn't bother.  He doesn't have anything to prove, so he just gives money to his friend Bill, and has promised to support the charitable aims.

And that's why, whatever the extent of his business genius, I still admire Mr Buffett most for his ability to be the master of his money and not allow it to dictate to him.

His lack of ego, and his genuine desire simply to be happy, to do what he was born to do, and to help other people in an unassuming way, make him the ideal role model for anybody.

 

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