Do you want to get richer? Here are the 10 expenses Warren Buffett recommends avoiding
Co-Founder and Chief Data Scientist
Americans now owe $1.26 trillion on their credit cards, according to the Federal Reserve Bank of New York's quarterly report released on August 11. The average rate charged on balances carrying interest reached 22.15% in the second quarter. Warren Buffett, who stepped down as Berkshire Hathaway's chief executive at the end of 2025 and remains chairman at 95, has spent six decades arguing that most people lose money not by picking the wrong investments, but by paying for things that quietly drain them.
His warnings look different in 2026 than they did when he first issued them. The rate he once called impossible to beat has since climbed by four points.
The Rate Buffett Said He Could Not Beat
At Berkshire's 2020 annual meeting, Buffett recounted a conversation with a friend who had come into some money and wanted investment advice. His first question was whether she carried credit card debt. She did, at roughly 18%. He told her to clear it before doing anything else."It's going to be way better than any investment idea I've got," he said.
That arithmetic has only widened. The S&P 500 has returned around 10% annually over long periods, while cards accruing interest now average more than 22%, according to Federal Reserve data compiled by LendingTree. Roughly 60% of the 175 million American cardholders carry a balance, New York Fed researchers said this month.
The reservation matters, though. For households where rent or groceries are at risk, covering essentials comes first, and aggressive repayment can wait.
Ten Places the Money Goes
Buffett's positions, taken together, point to a consistent list of expenses that tend to delay financial independence:
- Credit card interest. The single most expensive line item for most households carrying a balance.
- Loans on assets that lose value. Buyers rolling negative equity into a new car loan paid $944 a month in the second quarter, against a $777 industry average, Edmunds reported in July.
- Stretched loan terms. In the first quarter, 43% of negative-equity auto loans ran 84 months, slowing repayment while the vehicle keeps depreciating.
- Overdraft and late fees. Small, recurring, and charged on money already owed.
- Borrowing to invest. Buffett has said he has never borrowed a significant sum and warns against buying stocks on margin.
- Lifestyle inflation. He still lives in the Omaha house he bought for $31,500 in 1958, though a billionaire declining an upgrade is not the same decision most families face.
- Impulse purchases. Each one competes with the cash buffer that keeps a car repair from becoming a balance.
- Missing or mismatched insurance. Insuring ranks among the weakest areas in the 2026 TIAA Institute-GFLEC index, where only 36% of risk questions were answered correctly.
- False economy. Deferred maintenance and cheap goods replaced twice a year often cost more than the durable version.
- High investment fees. He has argued for years that a low-cost S&P 500 index fund beats most managed alternatives after costs.
What He Actually Said, and What He Did Not
Several lines circulating under Buffett's name cannot be traced to any shareholder letter, meeting transcript or interview. "Never depend on a single income. Make investments to create a second source" is among them, as is the warning about working until you die if you do not earn while you sleep. Both appear on hundreds of quote aggregators without a source.
The documented positions are narrower and, arguably, more useful: clear high-interest debt before investing, avoid treating cards as a reserve to raid, and put money toward developing abilities that cannot be inflated away.
The gap between the two matters more than it seems. Financial literacy among American adults fell to 47% of questions answered correctly in 2026, the lowest in the index's ten-year history, with the decline driven by growth at the bottom of the distribution. In that environment, advice tends to travel faster than the evidence behind it. Buffett's actual record offers a starting point for households trying to build margin, not a formula, and the figures above describe populations rather than any individual balance sheet.
