Money-Making (And Saving) Advice From Barbara Corcoran
Having turned $1,000 into a $6 million global business empire, Barbara Corcoran—famously a judge on Shark Tank and one of the greatest female entrepreneurs of the modern era—shares her advice on how to turn small change into a small (or large) fortune.
Spend Your Money On What Matters Most To You
While Corcoran is definitely a proponent of saving, life is about more than money. And while money can't buy happiness, she acknowledges that it is okay to spend extra money on the things that matter most to you. Whether that's a weekly fun-day shopping splurge with the kids or shelling out for a new piece of clothing you've wanted for a while.
Be Flexible With Your Budget To Build Wealth
Having a budget is critical. But Corcoran says you shouldn't pass up opportunities to build wealth because they aren't within your budget. For example, attending a networking event with a small entry fee might not be within your budget, but if it nets you a conversation with a potential investor for your business idea, it may be worth splurging on.
Don't Stress Over Every Penny
In the budgeting vein: don't stress over every single penny. But that doesn't mean you shouldn't keep track of your expenses. Create a budget and try your best to stick to it, but don't think it's crisis mode if you accidentally overspend by a few dollars, just course-correct next month.
Put Aside Money For Enjoyable Activities
Your mental health may go down the drain if you're not doing things you enjoy because you're too busy penny-pinching. Set aside "fun money" every month and spend it on the things you enjoy as this is critical to good mental health, which encourages good money habits.
Skip High-Cost, Low-Value Items
When spending money, place an emphasis on high-value items that justify their price tag. For example, first class airline tickets might sound like a great idea, but you'll arrive at your destination in the same amount of time, just in slightly more comfortable conditions. Decide what has high value to you and concentrate your spending on those items.
Set Aside 30% Of Your Monthly Income For Housing, If Possible
The unfortunate reality is that many people spend more than 50% of their monthly income on housing, as costs continue to increase. If you're fortunate enough to be in the category of people that spend less, Corcoran suggests putting 30% of your monthly income toward your mortgage or rent payment.
Don't Wait For Market Conditions, Buy Sooner Rather Later
Perhaps you're waiting for market conditions to improve before you buy a home. Corcoran says this is a mistake. The longer you wait to buy a home, the less time you'll have to build equity. She recommends letting a property sit for at least five years before you sell.
Buy A Fixer-Upper In The Off-Season To Save Money
If you've got the skills to fix up a home yourself, or at least mostly yourself, then it might be worth spending less money overall to buy the "fixer-upper" and put in the extra work when you have the time. Also, Corcoran suggests buying in the off-season: wintertime or early spring.
Target Potential Property Purchases Carefully
Spend some time studying the properties in your desired area. Look for those that have been on the market for several months or years. People who are eager to sell their home, but haven't been able to find a buyer, may be willing to settle for a lower price than their asking price online.
Don't Overestimate Your Wealth
Here's another reason why it's important to know your financial figures: so that you don't overestimate your wealth. This involves adopting a realistic approach to your finances and subsequent budgeting.
Spend Money On One Good Trip Before You're 30
Before you hit your thirties and life starts to get a little more serious, spend some money on a good trip. Whether that's a month-long backpacking trip through Asia, or a road trip across America, doing that while you're still relatively young will create memories that will last a lifetime.
Buy Experiences, Not Things
Corcoran drives home an old adage here, but it's true. Spend your money wisely on experiences that you'll never forget, rather than material possessions that will depreciate in value.
Photo By: Kaboompics.com, Pexels
Money Isn't Meant To Languish In A Savings Account
While Corcoran isn't averse to saving money, she also doesn't believe that your savings account should be the holy grail of where you put all your extra pennies. Use your money to buy things that have value to you, or will have value to you in the future, or invest your money to let it grow slowly—but don't keep it in a low-interest savings account, earning pennies on the dollar every year.
If You Receive Free Money, Think About How To Use It Wisely Before You Spend It All
By "free money" we mean an inheritance of some sort. While, of course, the pain you may feel from losing the relative that you received the inheritance from will never go away, Corcoran suggests thinking about how to use the money you receive before you go out and blow it all.
Don't Mix Your Friendships With Investments
We aren't necessarily talking about small change here, like a friend borrowing $100 to pay for a repair on their car enabling them to get to and from work. No, we're talking about making large-scale investments ($1,000+) in your friend's businesses. Supporting them is all well and good, but making financial contributions may end badly and could cost the both of you a friendship. Don't mix your investments with friendship.
Photo By: Kaboompics.com, Pexels
Losing Money Is Part Of The Business Journey
As a senior investor on Shark Tank, Barbara Corcoran is no stranger to businesses losing money. She tells business owners all the time that losing money is part of the business journey. Staying the course when times get tough is important and could lead to even greater opportunities down the road.
Don't Be Afraid To Ask For A Higher Salary Than You're Offered
Salaries aren't supposed to be zero-sum games where you take what you're given. They're negotiable. Don't be afraid to negotiate for more than what you're offered, says Corcoran. Aim for 10 to 15% higher than you're offered.
Focus On Your Strengths, Delegate Your Weaknesses
In the business world, it's important that you focus on your strengths. You know what you're good at and how to make it work for you. If you find yourself in a leadership role, play to those strengths while delegating tasks you're not good at to those who are.
Do Your Research Before Taking Your Side Hustle Full-Time
Corcoran is certainly not against side hustles—she's invested in thousands of them on Shark Tank—but she does stress the importance of doing your customer base research before taking your side hustle to a full-time gig. Ensure you'll have enough customers to cover the basics once you go full-time.
Grit & Perseverance Are More Important Than Formal Education
This coming from one who knows. While Barbara Corcoran is a business professional, she also grew up in a time where women weren't viewed as equals in the business world. So, she had to draw on grit and determination when surrounded by naysayers.
Take A Job For What It Can Teach, Not What It Pays
Obviously, earning money is important, but your primary motivation for taking a job should be what you can learn from it, rather than how much it pays. A high-salary position that leaves you without learning isn't worth it, says Corcoran.
Build A Team Of Competent Businesspeople Around You
Even if you're not the most savvy businessperson in the world, it's important that you build a team around you composed of folks who are. Network with other business professionals in your area and build relationships that will last and provide you with sound advice in times of need.
Want A Higher Salary? Invest In Yourself
One of the best things you can do if you feel as though you deserve a higher salary is to invest in yourself. This generally means obtaining higher education or taking work-sponsored courses to learn how to do different things within the company you work for.
Every Mistake Is A Lesson
Every money mistake you make is a lesson to be learned. That investment you put too much into last year that fell through? Learn from it. Don't invest large sums of money in anything you're not confident about. That item you really wanted six months ago and overpaid for is now on sale at a third of the price? Learn from it—wait for the sales.
Don't Wait On Properties That Have Many Interested Parties
You're not the only one who sees potential in a property. If a property has drawn the interest of many different people, it's likely a good investment and/or has potential: the wisdom of the crowd, as it were. Despite this, it's a good idea to get a second opinion.
Invest In Real Estate
If you're wondering what to invest your money in, Barbara Corcoran recommends you invest in real estate. She says it's a "slow way to get very rich". As real estate values tend to appreciate over time, you're almost guaranteed to make a profit on your investment.
Take Calculated Risks
Taking risks is all part of obtaining the reward of long-term wealth. But you have to ensure that your risks are calculated properly. Speak to friends or your financial planner to ensure you're taking on the right amount of risk with any investments.
Prioritize Investments That Build Generational Wealth
While saving up for a short-term goal is fine, if you're going to invest money in something, Corcoran says to ensure it's a long-term investment like stocks, real estate, or multi-generational businesses to ensure the long-term growth of your investments over time.
Buy A Home Rather Than Rent
The sooner you can get on the property ladder, the better off you'll be, says Corcoran. She advises to invest shrewdly in real estate as soon as you're able. "Why would you pay someone else's mortgage?", she asks. Good point. Buy ASAP.
Invest In Tangible Things That Resonate With People
If you're going to invest in a business, it's better to invest in tangible objects that people can use every day, rather than intangible products such as bitcoin or cryptocurrency. Corcoran practices what she preaches—she invested $50,000 into a wearable blanket that ballooned to a $468 million profit in just three years.
Try To Break Even ASAP
Even if you have to overpay to get the property you want, try to break even as soon as you can. The sooner you're able to pay off your mortgage, the more money you'll have to invest in yourself.
Ask Family For Help With A Down Payment If Necessary
While you obviously shouldn't ask your family for financial support unless you absolutely have to, it can be a useful way to acquire property. Barbara Corcoran should know—she turned a $1,000 loan into a multi-million dollar business. Don't be afraid to ask family for help with your down payment, but create a payback contract and stick to it.
Photo By: Kaboompics.com, Pexels
Use Doubt As Motivation To Push Through
Once you start doubting yourself, says Corcoran, you should use that as fuel to push through and succeed. Don't let anyone tell you that you can't or won't be able to do something. Set yourself a goal and meet it, then rinse and repeat your way to financial freedom.
Photo By: Kaboompics.com, Pexels
Barbara's Most Important Message
"You have to stand up for yourself," says the former Corcoran Group President. She sold the Corcoran Group for $66 million in 2001, but not before spending decades building her real estate portfolio, starting when she bought a studio apartment. But Corcoran says she'd never have gotten anywhere had she not stood up for herself, especially when male-dominated real estate businesses tried to tell her that she couldn't or shouldn't do something.
You May Also Like:
Daily Routines Of Successful People
Wasteful Expenses That Are Keeping You Poor, According To Warren Buffett
25 People Who Went From Extreme Poverty To Unbelievable Wealth
Jacqueline Zaccor, CC BY 2.0, Wikimedia Commons
Sources:
