Mark Cuban, the renowned entrepreneur, investor and star of ‘Shark Tank’ is known for his straightforward financial advice. A self-made billionaire, Mark Cuban’s business ventures and investments have made him one of the wealthiest and most influential figures in the business world.
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Despite his success, Cuban’s principles are down-to-earth and center around practicality and hard work. Here are seven of his best money lessons to help improve your finances.
1. Save Six Months of Income
Cuban advocates for an emergency fund large enough to cover six months’ worth of living expenses. This advice is a pillar of financial security, ensuring that you’ve prepared for unforeseen circumstances like a job loss or medical emergencies without having to rely on credit or high-interest loans.
“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 in a ‘Vanity Fair’ interview.
2. Live Below Your Means
For Cuban, the concept is simple — spend less than you earn. No matter how much you make, you’re spending it all, you’re not building wealth or avoiding living paycheck to paycheck.
“Your biggest enemies are your bills,” Cuban said on Blog Maverick. “The more you owe, the more you stress. The more you stress over bills, the more difficult it is to focus on your goals.”
3. Pay Off Credit Cards Each Month or Don’t Use Them
Credit cards offer convenience and rewards, but if not managed properly, they can lead to a spiral of debt due to their high interest rates. Cuban recommends that if you can’t pay off your credit card balance in full each month, you should stick to using cash or a debit card.
“Using a credit card is OK if you pay it off at the end of the month,” Cuban said in an interview. “Just recognize that the 18% or 20% or 30% you’re paying in credit card debt is going to cost you a lot more than you ever could earn anywhere else.”
4. Don’t Quit Your Day Job With No Plan
Entrepreneurship is highly romanticized, but Cuban cautions against quitting your job on a whim.
“Before you quit, be prepared, know what you’re doing, save your money, have at least six months to live off, if you can. And, then, maybe you’re ready to start your business.” Cuban said in a 2023 Wired Q&A.
5. Limit Risky Investments to 10%
Cuban is vocal about the need to be cautious with investments. He suggests that no more than 10% of your portfolio should be in high-risk assets. Diversification can protect your overall investment, as it lessens the impact of potential losses from any one investment.
“If you’re a true adventurer and you really 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. “I’d limit (risky investments) to 10%.”
6. Weigh Your Options With Affordable Colleges
In the debate between Ivy League and state schools, Cuban’s stance is that the name of the college doesn’t matter as much as the value you receive for the price you pay. Student loans can be a significant financial burden, so it’s important to consider the cost of education in relation to your expected income post-graduation.
“The most important criteria when choosing a college is affordability, ” he tweeted on X, formerly known as Twitter, in May 2019. “A community college that offers transferable credits is always smart. There isn’t a lot of value in big-name schools for freshman or sophomore classes, particularly when a motivated student can augment their studies with free online courses from the big names.”
7. Books Are a Great Investment
Cuban’s advocacy for reading as a means of personal and professional development reflects his belief that continued learning is a key factor in success.
“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, make my businesses better — it was a bargain,” he told ‘Vanity Fair.’
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Mark Cuban’s rise from humble beginnings to being one of the wealthiest individuals in the world is a testament to the soundness of the money management practices he advocates. Implementing some of these lessons and adapting them to meet your individual goals and preferences can set you on a path to a more secure financial future.
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