Millionaires often stress the importance of saving money during your journey to financial freedom. Not Barbara Corcoran.
The real estate entrepreneur and star of ABC’s “Shark Tank” says his best advice for making money is just to “spend it.”
“I’m not a believer in just saving money,” Corcoran tells CNBC’s Make It. “I haven’t saved a penny in my entire life.”
Corcoran picked up the philosophy from her mother, she says: “I had a mother who raised 10 kids on a shoestring budget, and she always said that money is meant to be spent. And she had money to spend.” There wasn’t much.”
Now, whenever Corcoran receives money, she thinks about the best possible ways to use it, she says.
“When I sold my business for $66 million, I immediately thought about what I could spend it on,” she says. “I gave half of it to family, friends, education funds, charities, because I truly believe that if you spend, the money comes back to you.”
The lesson here, according to Corcoran, is that you don’t need to be so rigid with your budget if you’re spending on the right things.
She spends regularly as a startup investor, betting that her portfolio will return profits. And she doesn’t skimp on the personal items that matter to her: Corcoran claims a $5,000-a-month food budget, she shared in a recent Instagram video posted by chef Dan Churchill.
“I think that carefree attitude of believing that money makes money, if you’re willing to share it and spend it, really works, or at least it certainly worked for me.” ,’” Corcoran says now. “And I don’t believe in hoarding money, saving money, everything like that. Because to me … it would take away my soul.”
Experts say the difference between savers and spenders like Corcoran is psychological.
The physical act of spending money stresses savers, and are often frugal because “they feel it’s the right thing to do,” Scott Rick, associate professor at the University of Michigan Ross School of Business, told CNBC Make It in 2020.
Rick said that spenders don’t experience visceral hesitations when making a purchase, allowing them to be looser in their purchasing decisions. One isn’t necessarily better than the other, says Brad Klontz, a psychologist and founder of the Financial Psychology Institute: As with most things, moderation is key.
That is, success can be achieved from any point of view. For example, Corcoran’s “Shark Tank” co-star Mark Cuban is a saver.
“Save your money. Save as much money as possible,” Cuban wrote in a 2008 blog post. “Every penny you can. Instead of coffee, drink water. Instead of going to McDonald’s, eat mac and cheese. Cut up your credit cards. If you use credit cards, you don’t want to get rich. FIRST STEP TO RICH Getting rich takes discipline. If you really want to get rich, you need to find discipline.”
In contrast, when Corcoran nearly went bankrupt “for the fifth time” during the 1990–1991 recession, she says her mother advised her, “Don’t worry about money. It’s a waste of time.”
“I thought of an idea that made me a million dollars the next week,” Corcoran said.
Disclosure: CNBC holds the exclusive off-network cable rights to “Shark Tank.”
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