Few billionaires have the brand name recognition of Bill Gates. If you work with a computer, most likely at one time or another, you have used a Microsoft software.
Bill Gates has lived at least three recognizable lives: from technological genius to ruthless capitalist to global philanthropist.
He changed the technology world, the financial world, and from my perspective, the personal finance world.
Here are a few of the lessons I have learned from Bill Gates:
- You don’t need a college degree to be successful in life
Bill Gates dropped out of Harvard University when he was a sophomore at age 19 to found his business, Microsoft.
By the time Bill was in high school, he was already an accomplished programmer and found that college was holding him back instead of pushing him forward.
As I went back to school, I found my classes to be several years behind the real world. I can imagine the frustration Bill Gates must have felt when he found out that he was more knowledgeable than his professors.
If you have an idea and an entrepreneurial spirit, you can just start your business and let the others without an idea finish college.
Many of today’s well-known entrepreneurs didn’t finish college either. For example:
- Walt Disney didn’t finish high school.
- Richard Branson left high school at age 16.
- Steve Jobs left college after his first semester.
- Mark Zuckerberg dropped out of college in his sophomore year.
- Michael Dell dropped out of college at age 19.
2. Build an emergency fund
Bill Gates’ financial philosophy can be summarized as “Save like a pessimist, invest like an optimist.” He insisted on always having enough cash in the bank to keep the company running for 12 months, even if revenue dropped to zero.
This is the equivalent of having an emergency fund. Aim to have 3-6 months of living expenses saved. We learned about the importance of having an emergency fund during the pandemic, when many people lost their jobs.
3. Invest with a long term horizon
Gates believed in the long-term potential of markets and technology, understanding that short-term setbacks are inevitable, but long-term progress is the general trend.
Whenever I think of investments, I think in a 10+ year time horizon. I usually say to myself, “If I buy now, will this be up 10 years from now?” Since I usually buy broad-based indexes, the answer is generally “Yes.”
Conclusion
The lesson taught by Bill Gates are pretty common and universally known. Have an emergency fund and invest with a long term horizon, but we just need constant reminder that those principles have worked in the past, they work in the present, and I am betting all my retirement savings on the idea that those principles will continue working in the future.