The One Thing Warren Buffett Never Leaves The House Without

Warren Buffett is world-renowned for his prolific investment decisions as well as his patience-driven philosophy on wealth. According to a 2023 poll conducted by CNBC, Buffett was also the most popular billionaire in the country, with 11% of the participants voting they had "very positive" feelings about him. You could join that percentage, too, once you realize what happens to Buffett's money when he dies – he has vowed to donate 99.5% of his wealth. No wonder a lot of people trust the Oracle of Ohama for advice on personal finance, sound investing, and money management. 

If you're one of those folks who is always searching for money tips and tricks to steal from Warren Buffett, you might be intrigued to know about the one indispensable thing he always likes keeping close to hand: Cash. "When bills come due, only cash is legal tender. Don't leave home without it", Buffett had advised his shareholders in a Berkshire Hathaway annual report. This emphasis on cash flow from the financial wizard makes sense when you realize that no matter how good a product or service is, you can not play the game if you can not pay the bills!

Warren Buffett is not merely throwing empty words in the ether when he shells out his cash advice. The fact that Berkshire Hathaway, Buffett's company, is currently holding more than $340 billion in liquid cash (enough to buy every NFL team and still have billions left) is a testimony to the fact that he practices what he preaches. This mind-boggling amount of cash is greater than the reserves on some of the biggest companies combined (think Apple, Microsoft, and Amazon together). 

Although these savings are incomparable to what the average citizen makes, the principles remain the same. In fact, even more so in personal finance, having a cash reserve can help you get back on track far quicker in the face of an emergency, like a medical bill.  Apart from managing risks (especially when the market enters a crisis) and preparing you for tough situations, cash in hand can also help you in acquiring new assets at the right time — opportunities that you may have to see go by if you don't have enough funds readily available. 

Even if you're not quite there on the Forbes billionaires list yet (PS: Warren Buffett's first job paid him less than a car payment as well), you can still make his cash-on-hand strategy work in your life. Having a handy pile of cash around would mean that, during rough times, say, if you lose your job, you would not need to bury yourself under debt. A good three to six-month cushion would also help you sleep better during good times, since you know you're covered. In case of any financial setbacks, you would not have to draw from your retirement funds or sell any of your long-term investments — practices that fall out of line with Buffett's wealth principles.

Having said all that, it is interesting to note that Warren Buffett is averse to the idea of too much cash piling up in your cupboard as well. In the past, he has mentioned in an interview with Charlie Rose, "Cash is not king if it just sits there and does not do anything". This is especially true from an investment point of view, since the value of cash is ultimately going to dwindle over time. Preferring good businesses over cash and comparing cash to oxygen, Buffett has made it clear that you do not need a lot of it around, but enough to capitalize on an opportunity when you stumble across one and recover quickly in case of a financial blow.