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How to effectively manage money: tips from an American billionaire

An American entrepreneur, Shark Tank investor and owner of the Dallas Mavericks basketball team, sold his first startup CompuServe in 1990 for $ 6 million. Nine years later he sold Yahoo for $ 5,9 million. Cuban has since invested in dozens of other companies. And now his fortune is estimated at $ 4,2 billion. Inc.com compiled 4 of the best entrepreneurial tips on how to effectively manage personal finances.

Photo: Shutterstock

1. Pay off all debts

“The best investment you can make is to pay off your credit cards and pay off the debts you have,” Cuban said in an interview with MarketWatch.

For example, if you have a student loan with a rate of 7%, then by repaying the loan, you will immediately receive the same 7%. And such "immediate income" will be much safer than investing in stocks or trying to buy real estate at any cost, says the entrepreneur.

Credit card rates are generally much higher, so the sooner you pay off your loans, the more benefits you get.

“It's okay to use a credit card as long as you redeem it at the end of the month,” Cuban said in an interview with Money. "Just admit that the 18%, 20% or 30% you pay on credit card debt will cost you much more than you could earn anywhere else."

In the case of debts that cannot be repaid in a short time (for example, a mortgage or student loan), Cuban suggests taking advantage of the opportunity to refinance debt in times of economic hardship and choosing lower interest rates.

On the subject: 6 reckless financial habits of Americans that surprise our

2. Save up money for at least six months

According to Cuban, the "airbag" should include funds that you can live on for at least six months.

“You should try to save six months of money and keep those funds available,” the entrepreneur told Vanity Fair. - In this case, you will not experience serious difficulties if you lose your job or decide yourself to change something in your life.

Photo: video frame YouTube / ESPN

3. It is possible to make risky investments, but they should make up only 10% of the total volume

Cuban admits that billionaires were able to make their fortune, in part, by taking risks. However, he advises that you limit the amount of investment you are going to spend on a risky venture to 10%.

“If you are a true adventurer, you can set aside 10% of your funds and invest it in bitcoins. But if you do this, it will be better to think that you have already parted with this money forever, ”he said in an interview with Vanity Fair. The entrepreneur advises placing the remaining 90% of the funds that you are willing to invest in the cheapest index fund you can find.

On the subject: 7 US cities where it is most profitable to refinance a mortgage

4. Don't pass by discount stores

“Saving 15% on goods worth $ 1, which you will definitely spend money on, is a better return on your money than 15% per year, which you will get by investing the same $ 1,” the entrepreneur noted in his blog.

This certainly doesn't mean stocking your home with only cheap mass-market goods. However, the parallels between wise consumption and investing do help in some cases to choose the right strategy for managing personal finances, Cuban said.

Miscellaneous money Educational program personal finances home finances

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