If anyone knows the value of a dollar, it’s Warren Buffett. After all, the famed CEO of Berkshire Hathaway — and one of the richest people in the world — has more than a few of them of his own. Buffett has continually grown his wealth, not to mention his brand as a commonsense financial expert, through tried-and-true, and surprisingly easy-to-do, methods.
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Notoriously frugal, Buffett is known for living in the same Omaha farmhouse he purchased for just $31,500 in 1958. It should come as no surprise that the “Oracle of Omaha” has similarly sensible words of wisdom about managing your debt if you’re looking to grow your wealth (and, of course, you should be looking to grow your wealth).
1. Clear High-Interest Debt Possible As Soon As Possible
In a viral TikTok, Buffett recounts the tale of a woman who came to him with a sudden windfall of cash and wanted his take on what to do with it. His first question to her: Did she have credit card debt? After finding out that indeed she did, with a whopping 18% interest rate, his immediate advice to her was to use it to clear her debt instead of playing the market.
“I don’t know how to make 18%, and if I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off,” he said. “It’s going to be way better than any investment idea.”
Remember, high interest debt costs you more in interest than you could earn from CDs, savings accounts, or even investments. You’re better off paying it down before you get more creative with your strategy.
2. Steer Clear of Consumer Debt
In a world where a single swipe of a card can get you seemingly anything you want, Buffett still prefers to use cash instead of a credit card as much as he can. Though he is the owner of an American Express card, obtained all the way back in 1964, Buffett makes a point of avoiding it. By using cash, he avoids accruing debt — and, importantly, the interest that comes along with it.
Knowing that you can only buy what you can afford immediately can not only keep you from swinging perilously above the deep cavern of debt, but it can also serve as an immediate mental check on how much you’re spending. If you’ve got moths fluttering out of your wallet every time you open it instead of cash, you’re likely prone to do an inventory of what you’re spending — and what you can cut.
Being clear of consumer debt and high interest rates also puts you in a sweet spot to start exploring investing or looking to high-yield savings accounts or CDs.
3. Get a Better Attitude Toward Saving
Buffett’s love of a low-key, frugal lifestyle isn’t just some quirk that separates him from other, more ostentatious billionaires; it’s about him living his values. And a big part of his values includes living within his means. Giving yourself a permission structure to overspend can ultimately stymie your long-term goals to grow your wealth.
Let’s say you come into an extra $50 a week (or even just $25). Even small amounts, consistently saved, can grow significantly over time with the right mindset. Logic might suggest that you can spend that extra $50 however you want because the next week, another $50 will roll right in to replace it. But not so fast. If you’re continually living at the edge of what you can afford — reaching, or even exceeding, your means — you’re more likely to go into debt.
So, let’s indulge in another hypothetical: Let’s say you saved that extra $50 a week, or even just half of it. In a relatively short period, you’d have grown your wealth instead of going into debt — and you could even use that chunk of change to start investing or pad your emergency savings.
By consistently saving small amounts, you’re creating a buffer that will protect your financial future. You don’t need that extra-fancy new iPhone, but you do need an emergency fund that will keep you from having to put everything from major car repairs or hospital bills on a credit card.
Warren Buffett knows more about making and saving money than almost anyone in the world today. Fortunately, the Oracle of Omaha suggests that you don’t have to have elite knowledge about stocks or investing to grow your wealth. You just have to take a proactive stance on paying down your debt, and avoiding taking on more debt by living within your means.
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This article originally appeared on GOBankingRates.com: Warren Buffett: 3 Debt Rules You Should Follow if You’re Looking To Grow Wealth