Updated: Apr 17, 2020
Video Link: https://youtu.be/O0KkvzNWZeY
In this episode, Warren Buffett and Charlie Munger were asked on recommendations for teenagers to prepare for their future and become as successful as them?
In this episode, you’ll learn:
What is Buffett and Munger advice for the teenagers.
What should you learn first, if you are interested in business.
What should you do to gain business experience.
Why should you start saving when you are young.
Why should you save before starting a family.
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AUDIENCE MEMBER 00:09
My name is Sheena Cho (PH) from the Academy of Finance.
What recommendations would you give us as teenagers to prepare for our future and become as successful as you? (Laughter)
WARREN BUFFETT 00:26
Well, if you’re interested in business, I definitely think you ought to learn all the accounting you can by the time you’re in your early 20s. Accounting is the language of business. Now, that doesn’t mean it’s a perfect language, so you have to know the limitations of that language, as well as all aspects of it. So I would advise you to learn accounting. And I would advise you to be — in terms of part-time employment or anything else, work at a number of businesses.
There’s nothing like seeing how business operates to build your judgment in the future about businesses. You know, when you understand what kind of things are very competitive, and what kind of things are less competitive, and why that works that way, all of that adds to your knowledge.
So I would do a lot of reading. If you’re interested in investments, I would — A, I would take the accounting courses. I’d do a lot of reading about investments and I would get as much business experience. I would talk business with people that are in business to find out what they think makes their operation tick, or where they have problems and why. I just think you just kind of sop it up every place that you can.
And if it turns you on, you’ll do well in it. I mean, I think that, you know, certain activities grab different people. But if business is of interest to you, my guess is you’ll do well. And if you understand business you understand investments. Investments are simply business decisions in terms of capital allocation. I wish you well on it.
CHARLIE MUNGER 02:09
Yeah, there’s also the little matter of underspending your income year after year after year.
WARREN BUFFETT 02:15
Which we have mastered. (Laughter)
CHARLIE MUNGER 02:16
Yes. That really works if you keep at it.
WARREN BUFFETT 02:21
Yeah, I mean, Charlie and I both — Charlie started having children at a rapid rate, so — and he was lawyer when there was not big money in then. But, I was — any money you save before you get out and start having a family is probably — any dollar — is probably worth $10 later on simply because you can save it.
The time to save is young, and you’ll never have a better time to save than really, free formation of a family. Because the expenditures come along then whether you like them or not. So I — You know, work for yourself first and put the money aside. I was lucky that way, I didn’t have to pay for my own college. Probably wouldn’t have gone to college if I’d had to pay for it.
But I, you know, I was able to save everything I made in my teens and those dollars got magnified quite a bit. Whereas the money I — when I started first selling securities, I mean, the money I made then was taken up by family needs to quite an extent. So start saving early. A lot of it’s habit anyway, so it’s a great habit to have.
OK, zone 1, please.