Starting 2023 with no savings, I’d follow Warren Buffett to build wealth

A new year is a new opportunity. Whether from 2023 flush with cash or not a single cent in the bank, I think it is possible to look forward and think about how one can try to improve finances in the coming year and beyond. To do this, I got inspiration from billionaire investor Warren Buffett.

Here are three Buffett lessons to help me build my own wealth, even from scratch.

Allocation of capital and capital

Buffett sees his greatest skill as capital allocation – investing money in productive ways.

There are two important things that people must do if they want to build wealth. First, they need capital. Second, they need to provide that capital in a way that increases it and does not decrease it.

If I don’t have any savings, then my priority from 2023 is to start saving money regularly. I will do it in a way that suits my own financial situation. So the amount I save may be different from what people around me are able to save. That’s good.

But no matter how much capital you end up saving in 2023 – £500, £1,000, £10,000 or even £50,000 – it’s just one part of the wealth building process I mentioned above. The second step is allocation. The good news is, no matter how much capital you can invest, investing in the right way can help you grow.

So, like Buffett, I will learn how to do this effectively. Knowing how to try and find good investment opportunities among others that are just good can help me build wealth faster.

Warren Buffett sticks to what he knows

The most exciting thing about Warren Buffett’s investment career is his phenomenal results.

When it comes to the types of businesses he buys, Buffett can be said to be boring. He stays in the industry he knows. He bought shares in well-known companies like Coca Cola and Apple instead of investing in trendy startups. They look for strong evidence of profitability rather than the potential for supersized profits in the future.

I think that makes sense to me as an investor too. If I focus on industries and companies that I know, I feel like I can better identify the types of great capital allocation opportunities that can help me generate strong investment returns.

Do less, not more

With no bank, it can be tempting to try and build wealth quickly. But more haste can lead to less wealth!

Warren Buffett does the opposite. They are patient investors, sometimes following companies for years or even decades before buying shares. They prefer to invest in a few opportunities that have a very high level of confidence, rather than more investment ideas that have a lower level of confidence.

Trying to do the same, I would still make some mistakes. That’s why, like Buffett, I always maintain a diversified portfolio. But by doing less while focusing relentlessly on finding great investment opportunities, I think I can build wealth. That’s my action plan for 2023!