How to Build Wealth
By: Mike Earl
Every one of our clients has heard us say that cash flow is the foundation of financial planning and wealth accumulation. Cash flow = income minus expenses.
Pay off debt, spend less than you earn, and invest the rest.
But it's got to be more sophisticated than that, right?
Money Magazine recently featured a fascinating interview with Mark Cuban and Sara Blakely. The topic was "How to get to $1 million". You probably know Mark Cuban by now: he is the billionaire (three times over) owner of the Dallas Mavericks, and one of the hosts of the ABC show Shark Tank.
Sara Blakely is the billionaire founder of the undergarment company Spanx. In 2012, she became the youngest female self-made billionaire (at the age of 41).
Knowing that Cuban and Blakely are both phenomenally successful entrepreneurs, you might expect their wealth-building advice to center around taking big risks on entrepreneurial endeavors. I was surprised to learn their words of wisdom sound very similar to the words we share with our clients at The Wealth Group. What follows are some of my favorite quotes from the article:
Blakely & Cuban
Cuban: "You've got to have discipline in how you spend your money, first of all."
Blakely: "I didn't ever get ahead of myself on spending. I only spent what I absolutely needed to. The Spanx headquarters was my 1,100-square-foot apartment. I used my roommate's bedroom."
Cuban: "I was determined to save money. I was determined to be able to retire. I valued time more than anything."
Blakely: "I've always just spent what I could afford. I've never really had debt -- if I can't afford it, I don't buy it. The idea of owing people money caused me great stress. So I just didn't."
Cuban: In my businesses, once we got started, we had no debt. I learned very quickly that debt was not my friend."
Blakely: When you do spend money, think about what you're spending it on and what the return is. We spend a lot of money in our culture on entertainment, but we spend very little money on the inner work of our self."
Cuban: "The key is living within your means. Saving money and putting some into a low-cost mutual fund and living as inexpensively as you possibly can, will pay off dividends."
Blakely: "My main thing is I just spend below my means. If I'm spending well below my means, I'm going to be in good shape."
Cuban: "I've lived in the same house for 18 years and still have the same cars."
Source: Money Magazine, August 14, 2017