You may have heard of Mark Cuban, but who is he and how did he become a billionaire? You may know him as one of the sharks on the popular show “Shark Tank,” but Cuban is more than just a TV star.
He is also a successful investor and the owner of the Dallas Mavericks. Cuban’s businesses are so successful that he made his first million dollars in 1990 when he sold his company to CompuServe. In 1999, when he sold his online streaming audio service to Yahoo, he made $5.9 billion.
Cuban knows what it takes to be rich and successful, and he’s not afraid to share his knowledge. Check out Mark Cuban’s tips to learn how to budget your money and think like a billionaire.
Be a little bit of a risk-taker.
Talk to self-made millionaires or billionaires, and they might preach the importance of taking calculated risks. Sometimes, risks and rewards go hand-in-hand, as Cuban pointed out in a 2017 interview with Money magazine while discussing the value of investing your savings.
He explained that saving a million dollars is possible, but only if you’re disciplined and take risks. Many who achieve higher levels of financial success aren’t afraid to invest for the betterment of their futures, whether they’re investing in the market, a business, or their education.
But invest only up to 10% in risky investments.
If you take risks in the investment realm, limit your contribution. “If you’re a true adventurer and want to throw the Hail Mary, you might take 10% and put it in bitcoin or Ethereum, but if you do that, you’ve got to pretend you’ve already lost your money,” Cuban told Vanity Fair. “It’s like collecting art; it’s like collecting baseball cards; it’s like collecting shoes: something’s worth what somebody else would pay for it. I’d limit risky investments to 10%.”
Put It in the Bank
In an exclusive interview with Young Money, a personal finance education and media company, Cuban offered this general investment advice and then followed the statement by saying, “The idiots that tell you to put your money in the market because eventually it will go up need to tell you that because they are trying to sell you something.”
“The stock market is probably the worst investment vehicle out there.” Although some investors believe the stock market is the ticket to wealth, others believe the market is too risky and volatile. Your stock can be profitable one day, yet it only takes one downturn to lose it all.
Rather than put all your eggs in the stock market, Cubans encourage keeping some money in a savings account for a rainy day, so you’re protected if something goes wrong. In his own words, “Buy-and-hold is a sucker’s game… Those who put their money in CDs sleep well at night and have more money today than they did yesterday.”
Save six months of income
Cuban told Vanity Fair to aim to have six months’ worth of income saved in that bank account. “If you don’t like your job at some point, or you get fired, or you have to move, or something goes wrong, you’re going to need at least six months’ income,” he said.
Find a Way to Invest Inexpensively in the Market
Cuban says that if you want to dabble in the market, you should do it safely to reduce risk.In his conversation with Money, he suggested investing in a low-cost mutual fund. These are investments that let you pool your assets with other investors’ assets, providing a cheaper way to diversify your portfolio. As Cuban puts it, “If you can find a way to invest inexpensively in the market, you can start to build your net worth.”
If you don’t fully understand the risks of an investment you’re considering, it’s OK to do nothing.
Cuban gave this advice in a blog on his site titled “The Best Investment Advice You Will Ever Get.” Although investing can build your net worth and put you on the path to financial freedom, there’s no guarantee that an investment strategy will pay off.
Before investing, make sure you know the risks and are prepared for the possibility of losing money. If you have doubts — or if there’s too much uncertainty surrounding an investment — there’s nothing wrong with holding onto your cash until the right opportunity comes along.
Don’t Let Fear Be a Roadblock
Cuban shared this statement in his book, “How to Win at the Sport of Business: If I Can Do It, You Can Do It.” Fear is a natural feeling, but it’s also one of the worst enemies of success. If you want to get ahead, get out of your way and stop hiding behind fear; it keeps you stuck in the same place and stifles growth.
If investing is new to you, fear and apprehension are normal. Rather than let it hold you back, educate yourself on different investment strategies to build your confidence. When you are ready, start with cheaper, safer investments.
Be a smart shopper.
There’s a definite connection between being a smart shopper and a savvy investor. In one of Mark Cuban’s blog posts on the best investment advice, he explains how cash creates transitional returns. He encourages analyzing how much you spend over a year and then suggests taking advantage of cash, quantity, and discounts to get a better return on your money. In other words, it’s best to buy in bulk.
“Saving 15% on $1,000 worth of items you know you will spend money on is a better return on your money than making 15% in a year on a $1,000 investment because you don’t pay taxes on it,” said Cuban.
Rarely Take Third-Party Advice on Investments
Cuban isn’t afraid to march to the beat of his own drum, particularly regarding his money and investing. In an interview with Forbes, Cuban stated he rarely takes third-party advice on his investments, thus underscoring an important point: Don’t put all your trust in someone else.
This doesn’t mean you shouldn’t seek guidance from financial advisors. Their insight is invaluable when you’re just starting and have limited investment knowledge. At the same time, don’t give someone complete control over where your money goes. Learn the ins and outs of investing for yourself so you can have a say in how you invest your money. If you’re just starting, pick up a book to start learning.
Have disciplined spending
Cuban knows a thing or two about being disciplined and living frugally — after college, he moved into a house with five roommates, lived off macaroni and cheese, and drove an older vehicle. Rather than invest in expensive belongings, he invested in himself and his future goals. Likewise, a frugal mindset can propel you toward your goals. If you make money and build a nest egg, you’ll have the resources to make intelligent investments.
Live below your means and reduce spending to help build your savings. Consider driving an older car, buying secondhand goods, living with your parents a little longer, or getting a roommate to lower housing expenses.
Pay off credit cards after 30 days— or don’t use them at all.
Credit cards serve a useful purpose, but they can also lead to debt if you don’t manage them responsibly, which is why Cuban gave this advice to consumers. He doesn’t discourage using a credit card, but he does encourage paying off balances in full every month to avoid wasting money on interest.
“Using a credit card is OK if you pay it off at the end of the month,” Cuban said in an interview with Money. “Just recognize that the 18% or 20% or 30% you’re paying in credit card debt will cost you much more than you ever could earn anywhere else.”
If you have credit card debt— or any debt—pay it off before making other investments.
“The best investment you can make is paying off your credit cards and whatever debt you have,” Cuban told MarketWatch. “If you have a student loan with a 7% interest rate, if you pay off that loan, you’re making 7%; that’s your immediate return, which is a lot safer than picking a stock or trying to pick real estate, or whatever it may be.”
Negotiate using cash
Cuban has long preached that cash is king, and he told Vanity Fair that having cash available can ultimately save you money. “I tell people all the time that if you’re out and you’re going to take a yoga class, and they want to charge you $30, say, ‘Look, I got $20.’ You know what? They’re going to take it,” he told Vanity Fair. “Negotiating with cash is a far better way to get a return on investment.”
Books are always a good investment.
Although Cuban advocates living cheaply and saving as much as possible, he believes that a good book is the one thing that’s always worth the money. “I used to love to walk through bookstores when there were bookstores everywhere, and if there was something that caught my eye and I thought it could give me one idea, to spend $30 to get one idea that could help propel me and make my businesses better — it was a bargain,” he told Vanity Fair.
One book that got Cubans “all fired up” is “The Only Investment Guide You’ll Ever Need” by Andrew Tobias, he said. “I’ll read for hours every day because all it takes is one little thing to propel you to the next level.”
Keep Your Money to Yourself
The proverb “Sharing is caring” doesn’t seem to hold any meaning for Cuban. He cautioned potential lottery winners to think twice before lending money to anyone in an interview with The Dallas Morning News. He offers sound counsel to everybody who receives a financial windfall.
Inform all of your friends and family to say “no.” Castro said. “They’ll enquire. Give them a “no.” You already know who needs assistance and what they require if you are close to them. Please be free to assist a little, but before you do anything, consult your accountant. And keep in mind that nobody requires $1,000,000 for anything. $100,000 is not required for anything. Anybody asks is not one of your friends.”
Don’t act hastily with your money depending on market swings.
Cuban said that now is not the time to worry despite the damage the coronavirus outbreak has done to the markets. Remember, he wrote on LinkedIn, “the market is where it was less than a year ago. “Nobody panicked when it rose too quickly. When it goes down swiftly, there’s no need to panic. In investment, the first guideline is to do nothing if you are unsure about what to do.”
Don’t make rash money moves based on market fluctuations.
Cuban is concerned about avoiding debt, including bank loans and credit card debt. He advises starting a firm without utilizing bank financing if you desire to do so. He informed Dave Ramsey, “Once you take a loan, you are no longer the boss. “Furthermore, your clients are no longer in charge.
Your banker is in charge. And if you have any difficulties, as every startup does, taking care of your banker becomes the top priority. You’re no longer able to act in a way that will ensure your survival.”
Use your cash to buy time.
Cuban stated on Barbara Corcoran’s podcast, “888-Barbara,” “I value my time a lot more than my next paycheck.” He doesn’t mind spending his money on “things that buy time” because of this, which included purchasing a private plane.
The average individual may still have to pay more for small luxuries like pre-cut veggies or a cleaning service so they can spend more time with their families.