How Spending Can Make You Rich, According to Barbara Corcoran
Financial advisors and gurus often emphasize the importance of budgeting and saving money to reach financial freedom. However, Barbara Corcoran believes the opposite.
The American businesswoman, investor, syndicated columnist and television personality actually thinks that saving money is unnecessary and that spending money is what truly makes you rich. Find out more below.
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Why Corcoran Believes You Should Spend and Not Save
Corcoran said her best advice for making more money is to just spend it and stop obsessing over saving every dollar. “I’m just not a believer in saving money,” Corcoran said, per CNBC Make It. “I’ve never saved a dime my whole life.”
Her advice might sound pretty controversial and reckless to some people, but she believes there’s a psychological advantage to not operating from a scarcity mindset.
“When I sold my business for $66 million, I immediately thought of what I could spend it on,” she said. “I gave half of it away to family, friends, education funds, charities, because I really believe if you spend, money comes back to you.”
In a recent appearance on "The Burnouts" podcast, Corcoran explained that her carefree money mindset was influenced by her mom, who raised her and her nine siblings on a shoestring budget. She said her mom taught her that "Money is meant to be spent,” and that she should never worry about money, because that’s a waste of time.
That said, Corcoran admitted that this mindset hasn’t always worked out perfectly for her since she has been on the verge of bankruptcy several times. But she believes that taking risks, investing in experiences and spending freely has helped her build confidence and create more opportunities for herself.
How To Apply Corcoran’s Philosophy to Your Finances
A survey by the Harris Poll for the American Institute of CPAs (AICPA) found that 22% of Americans have no emergency funds. So even though Corcoran’s spend-to-earn belief has worked for her, most Americans who are earning an average salary can’t afford to adopt the same carefree philosophy.
So if you’re struggling to make ends meet already, don’t take Corcoran’s advice literally and spend every dime you have. Make sure you have at least three to six months' worth of expenses saved up first.
Once you have a financial safety net, you can then spend intentionally on things that can improve your life, income potential or relationships. Here are a few ways to apply her mindset in a healthier and more practical way:
Invest in skills that can increase your earning potential. Don’t be afraid to invest in courses, certifications or networking events that could open doors to higher-paying jobs or opportunities.
Spend money on experiences. Research from San Francisco State University found that people who spent money on experiences rather than material items were happier and felt the money was better spent.
Avoid operating from a scarcity mindset. Constantly worrying about money can be really stressful and make you scared to take calculated risks that could actually benefit you. Money should ultimately be a tool to help you create opportunities and enjoy your life, not something to hoard or stress over.
Take calculated risks. For example, instead of keeping all your money in a savings account, diversify and consider investing some of it into stocks, real estate or a business.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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