Millionaires often stress the importance of saving money along your journey to financial freedom. Not Barbara Corcoran.
The real estate entrepreneur and star of ABC’s “Shark Tank” says her best advice for making money is to just “spend it.”
“I’m just not a believer in saving money,” Corcoran tells CNBC Make It. “I’ve never saved a dime my whole life.”
Corcoran picked up the philosophy from her mother, she says: “I had a mom who raised 10 kids on a shoestring budget, and she always said money is meant to be spent. And she didn’t have much to spend.”
Now, whenever Corcoran obtains money, she thinks about the best potential ways to use it, she says.
“When I sold my business for $66 million, I immediately thought of what I could spend it on,” she says. “I gave half of it away to family, friends, education funds, charities, because I really believe if you spend, 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 boasts a $5,000-per-month food budget, she shared in a recent Instagram video posted by chef Dan Churchill.
“I think the carefree attitude of believing that money makes money, if you’re willing to share it and spend it, really works, or at least it has certainly worked for me,” Corcoran now says. “And I don’t believe in hoarding money, saving money, everything like that. Because for me … it would take my spirit away.”
The difference between savers and spenders like Corcoran is psychological, experts say.
Savers tend to get stressed out by the physical act of spending money, and are often frugal because “they think it’s the right thing to do,” Scott Rick, associate professor at the Michigan Ross School of Business, told CNBC Make It in 2020.
Spenders don’t experience that visceral hesitance when making a purchase, allowing them to be looser with their shopping decisions, Rick said. One isn’t necessarily better than the other, added Brad Klontz, a psychologist and founder of the Financial Psychology Institute: As with most things, moderation is key.
That means success can come from either approach. Corcoran’s “Shark Tank” co-star Mark Cuban, for example, is a saver.
“Save your money. Save as much money as you possibly can,” 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 a credit card, you don’t want to be rich. The first step to getting rich requires discipline. If you really want to be rich, you need to find the discipline.”
In contrast, when Corcoran nearly went bankrupt “for the fifth time” during the 1990-1991 recession, she says her mom advised her, “Don’t worry about the money. It’s a waste of time.”
“I thought of an idea that made me a million dollars the next week,” Corcoran added.
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”
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