Berkshire Hathaway CEO Warren Buffett is one of the most experienced and successful investors on Wall Street. He’s also a father dedicated to teaching his children the value of the money he’s earned through his investments.
Throughout the years, these lessons have been recorded in the press. One of them was shared by Mary Buffett, who was married for 12 years to Peter Buffett, the billionaire’s youngest son. In 2019, she revealed that the so-called “Oracle of Omaha” used to give each family member $10,000 for Christmas.
A Short-Lived Family Tradition
At 94 years old, the Berkshire Hathaway CEO has a unique investment style, which he’s tried to instill in his children in hopes that they’ll one day manage his wealth. This lesson even extended to how he chose Christmas gifts.
In an interview with Think Advisor, Mary Buffett explained that for years, his father-in-law had a simple yet impactful tradition. He would give each family member $10,000 in hundred-dollar bills. “As soon as we got home, we’d spend it–whooo!” she said.
However, this practice changed significantly at some point in the 1990s. “One Christmas, there was an envelope with a letter from him. Instead of cash, he’d given us $10,000 worth of shares in a company he’d recently bought, a trust Coca-Cola had,” she added.
In his letter, Warren Buffett informed his relatives that they could choose to sell the shares or keep them. The decision was entirely theirs. Mary Buffett told the outlet, “Well, [this stock] is worth more than $10,000. So I kept it, and it kept going up.”
This practice became customary. Instead of receiving an envelope filled with cash, members of the Buffett family would receive an envelope containing a personal letter from the billionaire accompanied by a package of stock valued at $10,000. “Then, every year when he’d give us stock–Wells Fargo being one of them–I would just buy more of it because I knew it was going to go up,” Mary Buffett pointed out.
Warren Buffett’s gesture not only exemplified his approach to long-term wealth creation but also instilled in his family the importance of investing money wisely. However, it wasn’t the first lesson he taught his children about how quickly money can disappear.
In 2006, Howard Buffett, the investor’s second son, shared on Good Morning America, “As soon as he started giving us the allowance [when we were kids], he put a slot machine up in the attic, and we’d go up there and he’d win every penny back of the allowance. In 10 years, I couldn’t get three of those melons to line up.”
Years later, Warren Buffett adopted a similar strategy for his Christmas gifts. He exchanged cash, which can be quickly spent, for shares in companies with strong earnings potential. This approach not only served as a lesson for his children but also aligned with his investment philosophy. During his career, he’s focused on acquiring companies with established “moats” and believed in allowing time to work its magic by increasing the value of the initial investment.
According to Mary Buffett, he left the decision to keep or sell the shares to his relatives, conveying a message of trust, autonomy, and responsibility for their choices. In her case, deciding to keep the shares turned out to be a profitable decision. Shares not only increased in value but also reinforced her confidence in her ex-father-in-law’s investment strategy.
What Do You Give a Millionaire for Christmas?
In the Think Advisor interview, Mary Buffett shared one of her biggest challenges: finding a Christmas gift for her father-in-law, who has a fortune valued at more than $145.3 billion.
Mary Buffett said, “Warren is very rich. Therefore, he doesn’t want anything.” For someone like the Berkshire Hathaway CEO, who has spent decades building one of the world’s largest fortunes, material possessions seem to hold little significance. In fact, Warren Buffett is known for his frugality. He’s lived in the same house for decades and driven the same car.
“I didn’t know what to get him, so I put together our music company’s balance sheet to show him that we were making money… I just wanted to show him, ‘Look, we’re doing good,’” Mary Buffett explained.
Perhaps the biggest lesson that the Oracle of Omaha has imparted to his children during the holiday season is that sometimes the greatest value lies not in the gifts themselves, but in the lessons they carry. As a result of these teachings, Warren Buffett’s children have already accepted that they won’t inherit a large sum from their father.
In a 2017 interview with Business Insider, Susie Buffett, the billionaire’s eldest daughter, said, “I actually agree with his philosophy of not dumping a bunch of money on your kids. And, by the way, my dad gets a bad rap for that. He has been much more generous than people are aware. I feel extremely grateful to have the parents I had and for what they’ve given us. But certainly, he’s not going to leave us $50 billion and shouldn’t. It would be crazy to do anything like that.”
Instead, Warren Buffett plans to allocate a quarter of his fortune to their respective foundations (and that of his late wife) for philanthropic purposes.
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