Starting 2023 with no savings? I'd follow Warren Buffett and start building wealth

Here's what Warren Buffett would tell you about getting rich…

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Welcome to 2023! It might be a good year for investors so far, with the S&P/ASX 200 Index (ASX: XJO) now up more than 2.7% year to date. But that is probably cold comfort for those of us starting 2023 with no savings. If that's you, never fear. The wise words of Warren Buffett can be a great place to start building wealth, no matter your age.

The legendary investor Warren Buffett may be in his 90s but he is still regarded as one of the best investors in the world. His holding company Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) has navigated the stormy waters of the past two years with aplomb, and its shares are now sitting at 40% above its pre-COVID highs.

So what would Buffett's first piece of advice for someone with no savings be? I would bet he'd repeat this advice he gave once: "Do not save what is left after spending, but spend what is left after saving".

You can't invest for your future if you have no savings to start with. And consistently building up a healthy savings account starts with spending less money than you earn. You simply can't get ahead unless you master this skill.

But once you have a healthy pile of savings squirrelled away for a rainy day, what does one do next?

How Warren Buffett tells most people to invest

Well, Buffett would tell you to start investing, since cash has proven to be a poor store of value over a long period of time.

Warren Buffett is well known for his value investing style. He loves finding companies that are trading for less than what he sees they are worth. One of his most famous quotes is "price is what you pay, value is what you get".

Buffett loves buying quality companies when they are on the nose with most other investors. Some of his biggest positions were built out when a company had a temporary fall in value.

But what if figuring out what an investment is worth is not your strong suit? Well, Buffett reckons most people would be better off just investing in a simple index fund anyway.

In 2017, he told CNBC that investors should "consistently buy an S&P 500 low-cost index fund" and "keep buying it through thick and thin, and especially through thin".

So that's some of Warren Buffet's wisdom that I think would be of most use to a would-be investor starting 2023 with no savings. Investing takes a long time to bear fruit. But when it does, you'll be glad you started.

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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