Consumers are often urged to save money at every opportunity. And it's important to have money in your savings account for unplanned bills or personal emergencies, like a period of unemployment. But if you ask real estate entrepreneur and Shark Tank personality Barbara Corcoran what to do with your money, she'll probably tell you to just spend it.
A unique financial philosophy
In an interview with CNBC, Corcoran said, “I'm just not a believer in saving money…I've never saved a dime my whole life.” Rather, Corcoran's philosophy is that it's best to put your money to good use. And you can achieve that in a couple of different ways.
First, you can invest that money so it generates a solid return. Corcoran regularly puts money into new businesses as part of her Shark Tank role. Now you may not have that same opportunity. But you could always put money into a brokerage account and invest in assets like stocks that have the potential to generate strong returns over time.
Corcoran also believes in spending money on the things that are most important to her. She has a $5,000 monthly food budget, for example. You, too, may opt to spend extra on the things that matter to you the most, whether it's food, entertainment, travel, or education.
Should you follow Corcoran's approach to money?
Corcoran's view on money is certainly interesting. But should you follow in her lead? Probably not 100%.
The reality is that while Corcoran may not necessarily have piles of money in a bank account, she owns many investments that pay her regularly. Those investments can serve as her safety net.
But for the everyday consumer, it's important to have a safety net in the form of an emergency fund. And it's important to prioritize that emergency fund until it has enough money to cover at least three months of living expenses.
There are also other goals and milestones you might need to actively save for, like retirement. Corcoran may not need a nest egg in the conventional sense because, again, she has investments that likely generate very profitable returns year after year. But unless you're in the same boat, you'll probably need to plan on bringing a nice IRA or 401(k) balance with you into retirement so you'll be able to cover your expenses at that stage of life.
Now this isn't to say that you shouldn't invest the money in your IRA — you absolutely should. Whether you consider that “spending money” or not is up to you.
One good piece of advice to take away from Corcoran, however, is to spend your money mindfully and prioritize the things that mean the most to you. You might stretch your budget to buy a house in a certain neighborhood. But if furthering your education is important to you, that expensive mortgage loan might impede that goal.
Ultimately, Corcoran clearly feels like she's putting her money to good use. Your goal should probably be to feel the same — and to also have a solid safety net in the form of money in the bank.
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