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Who doesn’t want to be a little richer today than they were yesterday? However, even though he may suffer from money bias, self-made entrepreneur, money expert and “Shark Tank” star Mark Cuban said getting rich is all relative. He said there are a few things you need to do to put yourself in a position to become rich.
If you’re curious, here are Cuba’s nine rules for getting rich.
1. Live like a student
When you get your first good job that pays well, it’s not unusual to want to spend more money. In the early years of his career, Cuban remembered seeing nice cars that he wanted but “fortunately” he continued to drive his old car.
People who live like students can avoid living beyond their means. They avoid lifestyle creep, which is defined as expenses that increase as your income increases. Instead of spending all your money buying a new car, make a money-making move like Cuban did by driving a reliable used vehicle. Living like a student allows you to use your money to reach your short-term and long-term financial goals.
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2. Don’t use credit cards
Cuban personally recalled using a credit card to the point where he was being called by debt collectors. If you can’t use cash, it’s better to use a debit card to avoid any credit card debt.
3. Save 6 months’ income
Generally, the rule of thumb for an emergency fund is to set aside three to six months of savings. However, Cuban advises to err on the side of saving more money rather than less.
No matter what happens with your current employment — whether you experience a layoff or decide to leave your job — Cuban said you’ll need at least six months’ worth of income in savings.
4. Invest your savings in SPX mutual fund
SPX, if you don’t know what that means, refers to the S&P 500 index. If you’ve made every money transfer listed so far, Cuban recommends putting some of your savings into the cheapest SPX mutual fund you can find.
5. Invest up to 10% in high-risk investments
If you’re truly adventurous, Cuban said you can take 10% of your money and put it into higher-risk investments.
However, Cuban said that people who invest in high-risk investments need to pretend that they have already lost their money. This is why Cuba has limited the amount to 10%.
“It’s like collecting art or baseball cards… someone else will pay for something,” Cuban said.
6. Buy consumables in bulk and on sale
If you see sales on everyday items, stock up. Cuban gave the example of the sale of toothpaste, which we all use regularly every day. If you see a 50% sale on toothpaste, Cuban said you’re better off buying two years’ worth of toothpaste because it’s an immediate return on your money.
“Whatever consumables you have, buy them when they’re on huge sales at Amazon,” Cuban said. “Chances are their prices are going to go up but that’s a real savings you can put in your pocket.”
7. Negotiate the use of cash
Negotiating with cash is a better way to get a return on your investment, Cuban said.
8. Read books
Cuban, who loves visiting and browsing bookstores, said he reads for hours every day. By doing this he gets a small idea that can take him to the next level.
He also believes in spending money on books. “If there was something that caught my attention and I thought it could give me an idea, spending $30 to get an idea that could help me move forward, make my business better, it was a deal.”
9. ‘Good works’
Ultimately, Cuban’s final rule to becoming rich is to be really good. When you show that you care and are empathetic towards the people around you, you will get more results.
Cuban said, “The one thing in life you can control is your effort.” “Work hard.”
Caitlin Moorehead contributed reporting to this article.