On YouTube yesterday I stumbled on a quick little video from Mark Cuban with 9 quick tips to “getting rich” (embedded below). Now I, like most people, hate the hell out of clickbait headlines and yet, they still inevitably work on me from time to time; so I watched it. Much of my curiosity came from the fact that lists like this either contain basic, common wisdom that is so bland as to be irrelevant, or ridiculous claims that will never apply to your average person. Despite that, my impression of Mr. Cuban has always been one of a highly competent entrepreneur, who is successful, not by chance, but because he’s really earned it. So, all that said, I wanted to see what ideas he was putting out and whether or not I agreed with them.
The 9 tips and my thoughts on them:
1. Live Like a Student
Mark references the feeling when you get out of school and finally have some income and there’s a temptation to buy something extravagant like a cool car. He says he’s glad he kept his clunker.
I couldn’t agree more with this sentiment. It’s a lot harder to give up luxuries that you’re used to, than it is to never get used to them in the first place. If you can maintain a student lifestyle while you’re earning money- by doing things like driving an old car, living with roommates, and eating inexpensively- you’re going to be able to sock away loads of money early on and reap the benefits of compound interest. If you can maintain that cost of living through promotions and raises, you’ll end up quickly with more money than you know what to do with!
2. You Shouldn’t Use Credit Cards
This was probably the only one I disagreed with, but I understand why he said it and I think it comes down to your personality. For many people, they get in trouble with credit cards because it feels like free money and they let the balances pile up without paying them off. This leads to thousands of dollars lost to interest payments over the years and a mound of debt to dig out from under. If you’re likely to end up in that trap, you’re better off skipping out on credit cards all together. On the other hand, if you can live by the hard rule that you pay off your balance completely every month, credit cards can be great for building up credit (helpful in the future when buying a home) and for earning points for things like travel hacking.
3. Save Six Months Income
The common advice to have an emergency fund of 3 to 6 months income is common because it’s just straight up excellent advice. This is something you should do before almost any other use of your money (with some exceptions like 401k employer matches). Mark gives four quick situations: you don’t like your job, you get fired, you have to move, or something goes wrong. In any of those situations you will be immensely grateful to your younger self for putting that money away ahead of time because it gives you options and saves you the stress of trying to figure out how you’re going to pay for things.
4. Put Savings Into SPX Mutual Fund
I love this and I was a little surprised to see this one make the list. An S&P index fund is going to be low fee and passively managed, meaning your money isn’t going to some advisor who is unlikely to beat the market. I put almost all of my investments in VTSAX from Vanguard, which is also what Jim Collins recommends in The Simple Path to Wealth. Check out the book for a much more in depth explanation of why this is a winning strategy.
5. Invest up to 10% of Savings in High Risk Investments
This one’s a bit misleading because I don’t think he’s actually suggesting that you go look for a risky investment. At least that’s the impression I got from the video. Rather, I think he’s saying that since you’re going to be tempted to want to chase some headline grabbing investment like Bitcoin, you should limit it to a maximum of 10% of your investments. I think that’s a pretty fair way to look at it and if it helps you feel comfortable throwing the other 90% in passive, diverse options like VTSAX, then it’s probably worth it.
He goes on to give a couple extra gems: Pretend that you’ve already lost the money (because there’s a decent chance you will once all is said and done) and that it’s like any collectible: an investment only has value based on what someone else is willing to pay for it.
6. Buy Consumables in Bulk & On Sale
This probably isn’t going to change your life, but it’s a solid point nonetheless. There are certain things that you’re going to use every day- he gives the example of toothpaste- and you’re better off just stocking up with a few years supply (depending on expiration dates) when you can get it in bulk at a discount. Nothing revolutionary there, but a good practice for sure.
7. Negotiate Using Cash
I liked this one because it’s something that no one really thinks about. If you can pay for something in cash, especially if you’re paying for it in-full up-front, you’ll often find that people will come down a little in the price. Vendors don’t want to pay the fee to credit card companies and the old saying “Cash is King” is still true. Liz from Frugalwoods.com has a great story about saving significantly on the hospital fees for the birth of their daughter by paying in-full, up-front.
It’s also just great advice in general to not be afraid to negotiate. Many of us, by default, don’t like confrontation or haggling, but there’s essentially zero downside to asking if someone will accept a different price for something and it feels incredible when it works in your favor.
8. Read Books
Mark says, “To spend 30 dollars to give one idea that could help propel me and make my businesses better…it was a bargain.” I’ve also heard Tom Bilyeu expound a number of times on how incredible it is that great thinkers and successful people through history have condensed their thoughts and stories into books that we can so easily learn from. I don’t want to generalize about how many people these days are taking advantage of the wealth of knowledge out there, but I feel like you really can’t go wrong by trying to add more reading to your life.
The only thing I’d change about Mark’s recommendation is that there’s no need to go spend $30 on a book. Sure, it can be nice to have a copy permanently and to give back to the authors, and I of course would love it if you bought books through my affiliate links, but it’s totally unnecessary. Possibly the greatest creation of civilized society is the library (okay maybe plumbing comes first…) and with the ability now to get ebooks and audiobooks over the internet without even GOING to the library…I mean come on, you can’t beat that.
This is a departure from the purely financial advice (as is 9), but I think his point is that you’re more likely to succeed in life, and success was really the implied meaning of “Rich” from his title.
9. “Nice Works”
I feel like the quotes should have just been around the word “Nice”, but whatever…
He’s got two points here:
- Being caring and empathetic actually works to your benefit.
- “The one thing that you can control in life is your effort. Work hard.”
Nothing revolutionary here and, again, these are more in the realms of general success than financial advice, but once more I think Mr. Cuban has great points. It’s easy to take the road of being selfish and it’s easy to look for complicated reasons why people succeed or fail, but easy is often wrong. The truly successful people in this world are often those that genuinely care about others and seek to improve the world in some way and they are people that just PUT. IN. THE. WORK. You do those things and the success/riches will come.
So hopefully you enjoyed that quick rundown. Ultimately, I was pretty impressed with this list from Mark Cuban and that’s why I wanted to share and dig into it. I think the main takeaway for me, as is it usually is, is that it pays to get the simple things right by making a few basic choices and then you’re free to dedicate your time and your energy to the goals in your life that you’re really passionate about. By getting the easy wins, you’re freeing yourself from the stress and worry of wondering how you’ll pay your bills and then you can look big picture, get to work, and conquer!