Mark Cuban's 5 Steps To Riches

Mack Cuban is a billionaire investor, personality and tech enthusiast. In under a minute he shares 5 steps to get rich on this Youtube clip. I will break them down and share my thoughts on why these steps are effective and why some are controversial.

Why start a budget?

29% of Americans spend more than they earn. You will never become rich with spending habits like this. There is a reason 78% of NFL players become financially stressed 2 years after retirement. It's because they didn't learn to budget.

Spending less than you earn isn't rocket science. It's all about habits. All habits can be broke and you can break the bad ones and become more effective at managing your money. The wonderful part is there are so many resources to learn how manage your spending.

One of the best tools I used was Dave Ramsey's Total Money Makeover. Let's face it, Dave Ramsey has a simple to follow guide on becoming debt free and has so many free tools you can use to create the habits you need to break your spending cycles and gain control of your finances.

I used his plan to pay off my debts and now that I'm debt free, I've kept many of the habits I created while on the plan. The great part is instead of throwing my money towards debt, now I invest that money and have been watching it grow. I can't tell you how much better I sleep at night knowing I'm on track to having a comfortable retirement.

This point leads us to the most controversial subject

Do Not Use Credit Cards

54% of Americans hold credit card balance that isn't paid off by the end of the month. The average credit card balance is over $5,500. Credit card debt is one of the worst kinds of debt to carry. The interest rate on credit cards is crippling and makes them very difficult to pay off.

The controversial point of credit cards is that credit cards are an okay way to build credit. Numbers don't lie, most people shouldn't have credit cards because they aren't being paid off. So where is the happy middle ground?

Me personally I can control my spending since I figured it out on step one of maintaining a budget. If you have control of your finances you should activate a credit card and pay it off end of every month.
If you do not handle money well, be honest with yourself, do not get a credit card.

If you have a credit card that you'd like to use as a rotating spending card where you plan to pay it off every month, set the credit limit to $500. I have a Chase card that allows me to forward payments, by this I mean I can put a payment on a card that has a $0 balance. Some cards don't allow you to do this. The benefit of this is you can pay off the card on your phone right there at the register when you buy something. This helps you pay it off instantly and use the rewards of the card.

Here is a link to the Chase card if you're interested in using the Chase Freedom Unlimited.

Save 3 to 6 months of expenses

Now look this step may take a while but is totally possible. 25% of Americans have 6 months saved up for an emergency. This step becomes very possible if you are spending less than you make. 

I don't think I'll go too deep into this one. But having an emergency fund will allow you to sleep better at night knowing you can cover unexpected situations. Losing your job, flat tire, medical emergency are all situations that add a new layer of stress into your life that is not necessary.

Save up and give yourself a pillow to land on when you fall.

Invest into S&P 500 index.

The average return from the S&P 500 since inception has returned 10-11%. Most financial institutions use the S&P 500 as a benchmark when making plans for your investments. Extremely good investors aim to beat the S&P 500 and are very proud when they do.

investing into the S&P 500 is a solid plan when it comes to putting your money to work. If you're following all the previous steps mentions you will be earning 10-11% interest instead of paying interest. Index fund investing is very simple and you can eliminate the stress of picking stocks and running the fairly high risk of not beating the S&P 500.

Educate yourself

Pay Scale vs Education Level

The higher your level of education the higher your pay. Here is a scale that shows on average how much you can earn based off your education.

I know there are always exceptions to this rule. Also vocational certificates and experience go a very long way that isn't shown on this chart. The traditional college route doesn't work for everyone but you can still educate yourself and earn much more than you would.

  1. Live on a budget
  2. Use credit wisely
  3. Keep savings account
  4. Invest in the S&P 500
  5. Educate yourself

Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content on the Site before making any decisions based on such information or other Content.

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