A Billionaire Tells How to Get Rich

Mark Cuban certainly has an unorthodox style and reputation, but no one can argue with the fact that he knows how to make money. In a recent blog post, Cuban shared his thoughts on how to get rich. He lists three steps required -- here's the first:

Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water. Instead of going to McDonalds, 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 can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. Yeah you have to give things up and that doesn’t work for everyone, particularly if you have a family. That is reality. But whatever you can save, save it. As much as you possibly can. Then put it in 6 month CDs in the bank.

So you create a cash cushion. Then you start to educate yourself:

The 2nd rule for getting rich is getting smart. Investing your time in yourself and becoming knowledgeable about the business of something you really love to do.

This is not a short term project. We aren’t talking days. We aren’t talking months. We are talking years. Lots of years and maybe decades. I didn’t say this was a get rich quick scheme. This is a get rich path.

Finally, you wait for the right moment and you pounce:

Now you wait for times of uncertainty and change in your business. The time will come. It may  come quickly, it may take years and years. But it will come. The nature of our country’s business infrastructure  is that it is destined to be boom and bust. Booms are when the smart people sell. Busts are when rich people started on their path to wealth.

You will know when that time is here for you because you will know your business inside and out. You will be ready because you will have been saving up for this moment in time.

I know, it's a bit vague on details, but I think most of us can see where he's coming from, and it does make sense. Then again, if you simply do step #1 and keep doing it for a long, long time, you'll get rich as well -- and probably have a better chance of doing so. Interesting ideas for consideration, though.

His list is different than my three-step method of getting rich, but we do at least agree on the first step. ;-)

Comments

[Caleb Nelson]

I am currently and will always be in learning mode when it comes to my finances. I think these three very basic rules are pertinent to the anyone who is passionate about their finances. I outlined in a recent blog how much money I saved, by completely eliminating fast food from my diet. It is amazing how your spending habits changed when you start to focus on your finances.

Caleb

[F. Morana]

Oh, and not a word about leverage? Come on!

[rwh]

I was invited to an NBA game by a relative a few years ago. While I enjoyed myself and was properly appreciative, I couldn't help but notice the ticket price was $108 per ticket!

So I guess you can look at Cuban two ways: one, he has taken a lot of money from fools the last decade or so as the owner of the Dallas Mavericks (a perennially underachieving, overpaid team) or two, he has reached the point in his own life where he no longer takes his own advice about spending.

[Chris]

It is a truth, that money can work harder for you than any kind of job you can ever get or create for yourself.

[Mr. Budget Wise]

Wow! I'm impressed with his 3 rules. I think it's brilliant. For those of you who thought it was a little vague I would look up his biography on Wikipedia and all that you thought unclear will become clear. His strategy has been the same. Start a business and make it successful and then sell it for an insane amount of money. Easier said than done. I'm currently working on starting my own business, but I guess it will take time. I have product but the issue is having money to promote and what not no to mention start-up costs of registering your business. I guess I need to save more and again I guess it will take time.

[Todd]

rwh -

I want to challenge your comment cause I think there is no basis for it.

Here are the mavs stats from wikipedia:

"In the 20 years before Cuban bought the team, the Mavs had a winning percentage of 40%, and playoff record of 21-32. In the six years following, the team won 69% of their regular season games and reached the playoffs in each of those seasons. The Mavs playoff record with Cuban is 39 wins and 40 losses, including their first trip to the NBA Finals in 2006, where they lost to the Miami Heat."

It appears to me the Cuban had a dramatic positive impact on the team. Going to the playoffs every year and once to finals would not be underachieving to me.

In addition, when cuban sold broadcast.com in 1999 his net worth was estimated at 1.1 billion. Today it is estimated at 2.8 billion. He must be taking some of this spending advice.

http://en.wikipedia.org/wiki/Mark_Cuban

What is the support for your comment other than dislike of the mavs and/or cuban?

Just GETTING to the playoffs is a huge incremental advance.

And moving up to the seventh or eighth playoff spot, while representing a substantial advance, is guaranteed to lead to an unfavorable playoff matchup (e.g. against #1 or #2 seed in the first round), which sets you up for a below-.500 playoff record.

It's only when you get up to the #4 seed (and home-court advantage) that you can realistically expect a team to have a winning playoff record.

So a 39-40 recent playoff record probably represents greater improvement and performance than it first appears,

[Miss Thrifty]

I think his advice is great. I'm just sad that we're heading into a bust BEFORE I have my cash cushion!

[Bernz]

Everytime I thought about Mark Cuban, I couldn't help but remember the days of broadcast.com that he sold for $5.7bn to Yahoo. One of the worst investments Yahoo have made while Mark Cuban became an instant billionaire