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Financial advisors always recommend saving money for emergencies and goals. However, Barbara Corcoran, real estate entrepreneur and star of ABC's Shark Tank, believes in a different philosophy.
Appearing on The Burnouts podcast, hosted by Phoebe Gates and Sophia Kianni, the Shark Tank investor and Corcoran Group founder said, "I don't believe in saving money. I've never saved a dime in my life."
Coming from someone with an estimated net worth of about $100 million, the statement grabbed headlines. But Corcoran, who made her fortune the hard way through a New York City real estate brokerage, says saving money was never part of the formula.
Find out more about Corcoran's philosophy and why her approach may be risky advice if you're trying to get ahead financially.
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Where the philosophy comes from
Corcoran attributes her relationship with money to her childhood. Her mom, who raised 10 kids on a shoestring budget, always said, "Money is meant to be spent." That philosophy stuck with her even after she was successful.
When she sold The Corcoran Group in 2001 for $66 million, her first thought wasn't how much she should save. It was what she could spend it on. "I gave half of it away to family, friends, education funds, and charities, because I really believe if you spend, money comes back to you," Corcoran said.
What Corcoran does with her money
It would be easy to interpret Corcoran's comments as an endorsement of reckless spending. However, that's not what she's describing.
The money she gave away and put to work went to people, relationships, and business opportunities. That's very different from spending on depreciating assets or luxury purchases with no future return.
Economists usually distinguish between consumption expenditure, spending on things that do not generate a return, and investment expenditure, putting money into ventures, people, or ideas that may grow over time. Corcoran built her fortune on the latter.
It's possible that giving money away to build goodwill, fund relationships, and back new opportunities could potentially open doors that a stacked savings account wouldn't.
Why most people shouldn't follow Corcoran's money philosophy
Corcoran's philosophy stems from childhood, decades of building businesses, taking calculated risks, and ultimately amassing considerable wealth.
Even with that, her career wasn't a straight line to $100 million net worth. She almost went bankrupt five times, and at one point, she considered shutting down her business and laying off her entire staff.
This kind of resilience is achievable if you have a business that brings in a considerable amount of revenue, have a network of rich contacts, and have decades of runway to bounce back if things go south. For someone living paycheck to paycheck, it's a much harder bet.
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Why savings should come first for most people
The only time it makes sense to skip savings is if you have a large safety net to fall back on if the unexpected happens. Most American households don't have that cushion. An unexpected medical bill, car repair, or sudden job loss could almost always lead to credit card debt.
Roughly two in five Americans say they couldn't afford an emergency expense above $400, according to Empower research. If you fall in this group, the notion of "money spent comes back to you" is not a growth strategy.
Finance experts usually recommend building an emergency fund that covers at least three to six months of essential expenses before you begin taking on larger investment risks. At the same time, consistently contributing to retirement accounts allows you to take advantage of compound growth.
Bottom line
Corcoran's philosophy of not saving money but reinvesting in relationships, people, and opportunities can pay returns a savings account never will. However, this strategy may not work for everyone.
If you don't have a nine-figure net worth and decades of business wins under your belt, financial fundamentals still apply. Having a fully funded emergency fund covering at least three to six months' worth of living expenses and saving money for retirement consistently remains the foundation of financial fitness.
Her philosophy might be a useful reminder to think about how money is put to work, not a signal to ignore the basics that protect against an urgent car repair bill, a lost job, or any other unexpected expense.
In other words, admire the confidence and the reinvestment mindset, but don't mistake Corcoran's playbook for a starting point. It's more of a lesson for people who do have massive savings and are looking for ways to deploy capital.
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