You might have heard this billionaire’s name, but who is Mark Cuban, and how did he make his money? You may know him as one of the sharks on the hit show “Shark Tank,” but Cuban is more than just a TV personality —
He’s also the owner of the Dallas Mavericks and a successful investor. Cuban’s companies are so successful that he made his first million in 1990 after selling his business to CompuServe and then earned a $5.9 billion paycheck after he sold his online streaming audio service to Yahoo in 1999.
Cuban knows how to be wealthy and prosperous and isn’t afraid to share his insight. Check out Mark Cuban’s advice to learn how to budget 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 future — 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, Cuban encourages keeping some money in 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 6 Months of Income
Aim to have six months’ worth of income saved in that bank account, Cuban told Vanity Fair. “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
If you want to dabble in the market, Cuban advises doing so safely to minimize 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, and 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 toward financial freedom, there’s no guarantee that an investment strategy will pay off.
Before investing, make sure you know the risks and prepare 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 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 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 beneath 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, paying off 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, if you’re out, 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, make my businesses better — it was a bargain,” he told Vanity Fair.
One book that got Cuban “all fired up” is “The Only Investment Guide You’ll Ever Need” by Andrew Tobias, he said. “I’ll read hours every day because all it takes is one little thing to propel you to the next level.”
Keep Your Money to Yourself
Cuban doesn’t seem to believe the adage, “Sharing is caring.” In an interview with The Dallas Morning News, he advised potential lottery winners to think twice before lending money to anyone. His advice applies to anyone who comes across a financial windfall.
“Tell all your friends and relatives ‘no,’” Cuban said. “They will ask. Tell them ‘no.’ If you are close to them, you already know who needs help and what they need. Feel free to help some, but talk to your accountant before you do anything. And remember this: No one needs 1 million dollars for anything. No one needs $100,000 for anything. Anyone who asks is not your friend.”
Don’t Make Rash Money Moves Based on Market Fluctuations
The coronavirus pandemic has wreaked havoc on the markets — but Cuban said that this is not a time to panic. “Remember, the market is where it was less than a year ago,” he shared on LinkedIn. “No one freaked out when it went up too fast. No reason to freak out when it goes down quickly. Remember, I follow the No. 1 rule of investing: When you don’t know what to do, do nothing.”
Avoid Taking Out Bank Loans
Cuban is passionate about avoiding debt, whether credit card debt or a loan from the bank. If you want to start your own business, he recommends doing it without relying on bank loans. “If you take a loan, you are no longer the boss,” he told Dave Ramsey. “And your customers are no longer the bosses. Your banker is the boss. And if you hit any adversity, as every startup does, the priority becomes taking care of your banker… You’re no longer in a position to do whatever it takes to survive.”
Use Your Money To Buy Time
“I value my time a lot more than my next dollar,” Cuban told Barbara Corcoran on her podcast, “888-Barbara.” That’s why he doesn’t mind spending his money on “things that buy time” — which meant buying a private jet. Still, for the average person, this can mean paying extra for little conveniences such as pre-chopped vegetables or hiring a cleaning service so you have more time to spend with family.