- He's also one of the most frugal billionaires , known for his practical investing strategies and modest lifestyle.
- The CEO and chairman of Berkshire Hathaway still lives in the house he bought in the 1950s, which is now worth over $652,000.
- Watch the video above to learn how Buffett makes and spends his money.
- Visit Business Insider's homepage for more stories.
Following is a transcript of the video.
Narrator: In 2018, Warren Buffett's net worth stood at $88 billion, making him the third-richest person in the world. But Buffett doesn't spend like his billionaire peers. He lives in the same house he bought in the '50s and doesn't make lavish purchases. He's even portrayed as frugal in his cameo in "The Office."
Warren Buffett: Can you do any better on salary?
Jim: Unfortunately, that range is set at corporate.
Buffett: What about mileage when I use my car? I mean, gas ain't cheap, you know.
However, the 88-year-old is regarded as one of the most generous philanthropists on the planet. Since 2000, he's donated $46 billion to various causes. So here's how Warren Buffett spends, or doesn't spend, his billions.
Narrator: He had a penchant for making money at a young age. Buffett is the son of a US congressman, and he bought his first stock when he was just 11 years old. As a teen, he delivered newspapers and pulled in $175 a week. At the time, that was more than his teachers. He also buffed cars, sold used golf balls and stamps, and by age 16, he had amassed $53,000.
He earned most of his wealth after his 50th birthday. 99% of his wealth is connected to Berkshire Hathaway, a conglomerate that owns companies including Geico, Duracell, and Dairy Queen along with large investments in Coca-Cola, Heinz, and Bank of America. As the company's chairman and CEO, Buffett became one of the most successful investors of all time. He's been dubbed The Oracle of Omaha for his ability to beat the market with a philosophy called value investing. Buffett looks to take large ownership stakes in companies that have a well-performing stock and are consistently profitable.
Imagine this, for example: If you invested $100 in Berkshire Hathaway's stock in 1965, when The Oracle took over, it would be worth $2.4 million in 2017. If you invested the same amount at the same time in the S&P 500, you'd only have $15,600. His sage investing has helped him rack up a net worth greater than the GDP of Uruguay.
So what does Warren Buffett spend his massive fortune on? He bought his house in Omaha, Nebraska, in 1958 for $31,500. Adjusted for inflation, that would be about $276,700 today. As of 2017, the five-bedroom, two-and-a-half bathroom home is worth over $652,000. Buffett calls it the third-best investment he ever made. In 1971, he bought a vacation home in Laguna Beach, California, for $150,000. Forty-seven years later, he sold it for $7.5 million. And his cars are as modest as his houses. In 2006, he drove a Cadillac DTS, which had a starting price of $42,000. He replaced it in 2014 with a Cadillac XTS, which originally started at $44,600. The same goes for his tech. Even though Apple stock is a major part of Berkshire Hathaway's portfolio, Buffett still uses a flip phone that he showed off on CNN.
Buffett: This is the one Alexander Graham Bell gave me.
Narrator: A typical day for the peculiar billionaire goes like this. He puts on one of his 20 suits designed by his friend, Madam Li. He gets the suits for free but says he wears them because they fit perfectly. During his drive to the office, he stops at McDonald's and spends at most $3.17 on breakfast. He spends 80% of the day reading and drinks five Cokes throughout the day.
Buffett: I'd like to buy the world a Coke And keep it company Boy, that is the real thing.
Narrator: He's known for having the diet of a 6-year-old and even sometimes eats ice cream for breakfast. He does have one expensive indulgence though: a private jet.
Charitable giving accounts for most of his spending. In 2016, he donated $2.9 billion to charities including the Bill and Melinda Gates Foundation and the Susan Thompson Buffett Foundation, which is named for his late wife. Through the Susan Thompson Buffett Foundation, he has donated tens of millions to Planned Parenthood and the National Abortion Federation. In 2018, he made another big donation to the Bill and Melinda Gates Foundation, this time, $2.6 billion in Berkshire Hathaway stock. A week later, he donated $800 million to other various charities.
When he passes, he plans on leaving $2 billion for each of his children. The rest of his estate will be donated to philanthropic causes. Despite his affluence, Buffett doesn't think money equals success. Instead, he said, "I measure success by how many people love me."