AUDIENCE MEMBER 00:00
Can you please share the life and financial concepts that you prefer talking to young people about?
CHARLIE MUNGER 00:05
Share — he wants to know your life concepts, and financial concepts, that are useful to young people. (Laughs)
WARREN BUFFETT 00:14
Well, that’s a fairly broad question. But I think the financial concepts, you know, we’ve obviously spelled out in the reports. Charlie’s probably better on the life concepts than I am.
It is true, that I do believe in spending the time that I spend giving talks, or answering questions, doing it with young people. I do, I’m sure, well over a dozen a year.
And I just think that, obviously, young people are more receptive to change, or to actually at even forming habits that are going to be useful in life.
And I think that people underestimate — until they get older — they underestimate just how important habits are, and how difficult they are to change when you’re 45 or 50, and how important it is that you form the right ones when you’re young.
But Charlie, what do you have to say on that?
CHARLIE MUNGER 01:12
Well, all the trite stuff is what works. I mean, you avoid doing the really dumb things, like, racing moving trains to the crossing, experimenting with cocaine, risking getting AIDS or other unfortunate ailments.
There are just a lot of standard things that take people down. And you just give those a wide berth.
And then you want to develop a good character, and good mental habits, and you want to learn from your mistakes, every single one, as you go along. It’s pretty obvious, isn’t it?
WARREN BUFFETT 01:57
Yeah, we would say even though we issue lots of credit cards and everything, we’d say, probably, if I had one piece of advice to give to young people, you know, across the board, it would be just to don’t get in debt. It —
The game plays a lot easier if you’re a little bit ahead of the game than if you’re behind the game. And Ben Franklin said that long ago in better terms, which Charlie can recite.
But there’s a real difference. I get letters every day from people that are in all kinds of financial trouble. And often it’s health related, which is tragic. But very often it’s — it relates to debt. I mean, they get behind the game, and they’re never going to catch up.
And often — it may surprise you — but often, I write these people — they’re very decent people, they’ve just made mistakes — and I just tell them the best course is bankruptcy.
I mean, they are not going to catch up. And they should start all over again, and they should never look at a credit card the rest of their life.
And — but it would have been better if they’d gotten that advice a little earlier. But it’s very tempting to spend more than you earn. I mean, I — you know, it’s very understandable. But it’s not a good idea.
CHARLIE MUNGER 03:14
And of course you particularly want to avoid evil, or seriously irrational people, particularly if they are attractive members of the opposite sex. That can — (Laughter)
WARREN BUFFETT 03:29
Charlie knows more about this —
CHARLIE MUNGER 03:30
It can lead to a lot of trouble.
WARREN BUFFETT 03:31
The expert. The — yeah, the — you know —
It’s better to hang out with people better than you. I found that very easy to do over the years. (Laughs)
But if you’re picking associates, pick out those whose behavior is somewhat better than yours, and you’ll drift in that direction.
And similarly if you hang out with a bad bunch, you’re very likely to find your own behavior worse over time.
But all — like Charlie says, the trite advice which Ben Franklin was handing out a few hundred years ago, really works.
You know, just — we’ve said it, but look at the people you like to associate with. You know, what qualities do they have that you can have if you want to?
Look at the people that you can’t stand to be around. What qualities do you have that they have? Can you get rid of them? You can do all of that a young age. It gets harder as you go along. It’s not very complicated.
CHARLIE MUNGER 04:34
And my final word of advice would be, if this gives you a little temporary unpopularity in your peer group, the hell with them. (Laughter and applause)
WARREN BUFFETT 04:50
And as advice a little more applicable to me and Charlie, I was reading about a woman that was 103, and they said, “What do you like about being 103?” And she says, “No peer pressure.” (Laughter)
We’ll go to number 4.
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