Warren Buffett’s 5/25 rule makes it easier to decide on priority and come to a conclusion. The 25-5 Buffett strategy is a simple yet effective technique to get the most in life. Warren Buffett is the world’s most successful investor and financial guru.
Warren Buffett is known for his investment in Apple and Coca-Cola. He is the CEO of Berkshire Hathaway and is currently has a personal worth of $90 Billion. His personal fortune has grown tremendously over years.
Warren Buffett is not only known for his modest lifestyle and ethics but he is also known for his high-performing investment over years. Be it American Airlines, Coca Cola or Apple. He has made huge returns from all the investments he has made in his lifetime.
Warren along with Charlie Munger(also a billionaire and Warren’s right hand) are said to be the greatest investors of modern time. Their investments have reaped a lot of profit over a long period of time.
With people who are so consistent in achieving their goals, what could be their secret? I always wondered about it, what made them successful? How would these guys come to one decision? I can’t even decide what to eat when I visit a restaurant.
During the pandemic, I was researching a lot about increasing productivity and get the most of a given time. This is when I stumbled upon “The 3rd Door”. The 3rd Door is a book written by Alex Banayan. The book is about the author’s wild quest to uncover, How successful people launched their careers.
In this book, I came across the idea about Buffets 5/25 rule. After reading about the idea, it tingled my curiosity and I researched about it a little more. Though in an event when someone asked Warren Buffet the question he said he does not remember saying that.
Warren Buffet said he would rather bet on his long-term compounding strategy for success. But still, the idea stuck with me, I used it in my own life and the 25-5 rule really made wonders.
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The story of the pilot ‘Mike Flint’
Mike Flint was Buffett’s personal airplane pilot for 10 years. According to one story one day before taking flight, Buffett jokingly said to Flint, “The fact that you’re still working for me, tells me I’m not doing my job. You should be out, going after more of your goals and dreams.”
Buffett then asked Flint to go through 3 Simple simples, a quick process to gain clarity on his priorities and achieve goals.
But Alex Banayan, the guy who I told was the one who introduced me to this idea of the 5/25 rule, was the one to say it’s fake. In the 2013 Berkshire Hathway Share Holders meet Alex Asked “Mr. Buffett, I’ve heard that one of your ways of focusing your energy is that you write down the 25 things you want to achieve, choose the top five and then avoid the bottom 20. I’m really curious how you came up with this and what other methods you use for prioritizing your desires?”
Buffett chuckled, responding, “Well, I’m actually more curious about how you came up with it.” The audience erupted in laughter.
Buffett went on to explain that both he and Munger live very simple lives, and are not disciplined enough to approach decision-making in that way. “I can’t recall making a list in my life,” said Buffett.
This is not actually a Buffett rule, I guess it sounds more powerful and legit if we add his name to it.
But anyways the rule really stuck with me and I decided to share the same with everyone.
Warren Buffett’s 5/25 rule Simple Guide
Now let’s have a look into the strategy itself. How according to the story Buffett told Flint about the Buffett 25/5 rule.
Below are the 3 steps for Buffett 5/25 Rule
STEP 1: Buffett first asked Flint to write down his 25 career goals(25 goals with the highest priority). Flint then penned down 25 of the career goals that he wished to achieve.
STEP 2: Buffett then asked Flint to have a look at his list once again. And while having a look, circle out the 5 goals with the highest priority and importance in his life.
STEP 3: After all the tasks are done, now Flint had 2 Lists. The one with top 5 priority and the other with 20 goals but with lesser priority.
Then Buffett asked, “what did you understand from the 2 lists”. Flint said, “that the 5 goals are the most important goals in his life and he should work on them diligently. And the rest 20 he will work on the time between.”
But then Buffett interrupted ”No! You don’t work on those 20 goals, you throw away the list and focus all your attention on these 5, till they are accomplished. ”
The strategy focuses on just the task which are of priority and not work on any other goals.
Example of warren buffets 5/25 rule in everyday life
Buffett’s advice to Flint was based on career goals, but the 5/25 strategy can be used in different walks of life. You can use it on improving your relationship, health goals, or maybe study goals.
5/25 Rule if your goal is to study for the exam
Using the 5/25 strategy write down all the topics you need to study. Now prioritize these topics on basis of importance. You can assign priority by marking your weakness and the importance of the topic.
If the topic is important and you are weak in that topic give it a higher priority. Make a list of around 25 topics. Now just focus on the top 5 topics in the list. You need to assign an equal amount of time each day on each of these topics.
Power of Priority
We use multiple to-do list strategies in our work, but do we prioritize work? Understanding our priorities and focusing on them is the only rule of productivity. People often ask how do I become more productive? The answer is simple, to get your priority straight and focus on them.
Be it the 1930’s when Ivy Lee used his method to increase the productivity of the employees or in 2021 where Google uses SCRUM to increase productivity. All of them focus on just 2 things, priority, and focus.
Where the focus is the second step, the first step is of prime importance. We often find it difficult to decide between tasks and juggle multiple things. But if you know your priority and what to work on, you will start succeeding in life.
The 5/25 Strategy is quite a straightforward and simple method to get things in line. If you are currently confused in life regarding your chooses or decisions then this strategy will help you to find the answers that you need.
Life is simple don’t make it too complicated.
That’s my 2 cents on the topic that really intrigues me. I hope, I have added some value to your life by sharing this information.