Bill Gates's knowledge of personal finance, saving, economic crises, and inflation is so extensive that any advice the philanthropist gives us should be listened to carefully. This is especially true when it concerns controlling our spending and when we intend to manage our money better, whether for investments or savings.
Gates carries a backpack full of theory, experience, and, above all, sound and responsible money management. It's no wonder he forged a technological empire that made him, at one time, the richest man in the world. Furthermore, his commitment to humanity is reflected in the foundation that bears his and his ex-wife's names.
The year 2022 was marked by an economic crisis that affected every corner of the world. Rising prices and inflation created a bleak scenario from which we have not yet recovered, and which could trigger a deeper and more prolonged recession, according to a group of economists.
It is in this context that voices like Bill Gates' take center stage and become our "gurus" for better managing our personal finances amid these bleak economic scenarios.
In this context, and from the perspective of a mere mortal, Bill Gates reveals his personal finance management tricks from before becoming one of the world's richest people. Among them, he decided to maintain a minimum amount of guaranteed savings before starting to invest. That was always one of his fundamental principles. Gates has acknowledged that for this reason he "was overly cautious," but that he prefers that approach to a riskier one.
The keys to success: training and education
Bill Gates knows that money is never better spent than on training and education. That's why he advocates for these two to be the primary and most important investments anyone can make.
Gates dropped out of college, yet he encourages people to pursue education as a path to success. He demonstrated this in an interview when asked, "What's your best personal financial advice for people earning less than $100,000 a year?" His answer: "Invest in your education.".
In this scenario, those with higher education can aspire to better-paying jobs, hence one of the reasons why education is so important, in addition to offering you knowledge, tools and relationships that can help you in the future.
'Pessimistic-optimistic theory'
One of the key pieces of personal finance advice Gates offers is related to the "optimistic pessimist" theory. The billionaire explains that "you can only be optimistic in the long term if you are pessimistic enough to survive in the short term." The best way to apply this is to save like a pessimist and invest like an optimist.
As for "saving like a pessimist," it allows us to account for the possibility of abrupt and unexpected changes, such as the Covid-19 pandemic, which he himself predicted. That's why he encourages us to always have a good financial cushion available.
Regarding the recommendation to "invest optimistically," Gates argues that this applies once the underlying principles and purposes of any company or business have been taken into account, an idea he learned from Warren Buffett.
Source: El Economista.
