5 Best Money Basics Mark Cuban Thinks Every Young Adult Should Know
In many ways, schools don’t teach students about personal finance. However, that shouldn’t stop young adults from learning how to handle their money. The earlier a young person begins taking their personal finances seriously, the better prepared they are to become financially independent.
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Many turn to Mark Cuban, a successful entrepreneur and “Shark Tank” investor, for business and financial advice. In an interview with JEC NYC president Eileen Ye and vice president Mahmoud Abdellatif, Cuban provided some financial insights for young adults looking to improve their financial skills.
1. Have the Basics
Teens who want to improve their finance skills need to begin with the right tools and foundation. Cuban explains that learning business skills, becoming an entrepreneur or just having good finances starts with the basics, like a checking account.
Cuban recommends physically going to the bank to open an account. By visiting the brick-and-mortar building, you’ll get a sense of how banks operate and the processes at work. He also recommends learning the digital side of banking and connecting to a free peer-to-peer payment app like Venmo or Cash App.
Along with these basics, you’ll need a knowledge base to use as a starting point. Learning the language of business and finance will pave the way for better communication and understanding for future endeavors. Taking an introduction to accounting class, getting tutored online or even watching finance experts on YouTube can help young people get a sense of what they should know.
Being able to grasp the concept behind financial documents, such as balance sheets and cash flow statements, can really catapult a teen’s personal economics and finances. Familiarity with investment terms such as rate of return can also prepare them for wealth building.
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2. Become Financially Responsible
When he was young, Cuban would buy and sell trading cards. He recalled that this process helped him understand several valuable insights at an early age. He understood his costs versus profits and how to find gross margin. It also helped him realize the sales process and how to understand customers.
As a father, Cuban has taken it upon himself to instill financial responsibility in his children. For example, his daughter gets an allowance and makes a budget. If she doesn’t stick to the budget, she is responsible for generating additional income. Cuban notes that his daughter has taken on internships and summer jobs to do so.
Becoming financially responsible doesn’t happen overnight. Cuban emphasizes that it’s important to act independently and be responsible for your own finances. This requires real-life successes and failures with money, which builds confidence and new skill sets. As they grow up, teens and students who become financially independent at an early age will be in a much better position than those who depend on their parents to cover all of their expenses.
3. Do Your Homework
While students should attend class and do their homework in school, they should also do their homework when it comes to investing. For young people who want to invest, Cuban warns that they should be careful and know their stuff. Markets can be very volatile, and if you’re not doing research and analysis, you’re putting yourself in a position to lose money.
It’s essential to have an investment thesis and really understand why you’re going to buy something. He emphasizes that teens must realize no one sells a stock or investment that they think will increase in value. They’re selling it because, based on their research, they believe the price will drop.
This means you’ll need to put the time in to prepare and research your investments before you buy. By doing your due diligence and using online tools to learn about the companies and markets involved, you can get an edge over someone who isn’t making data-driven decisions.
4. Be a Lifelong Learner
Cuban’s advice to young people is to find something that interests them or is valuable to them and learn about it. Put in the time and effort to figure out how it works. This might involve taking classes, checking out books at the library or listening to podcasts on the topic. He explains that most people don’t put in the time to learn, which opens up some great opportunities for those who do.
Growing up, Cuban was fascinated with learning about technology, which led him to some of his most successful ventures. To this day, he still listens to podcasts about technology over business topics to satisfy his curiosity. For young adults interested in technology, Cuban suggests trying tasks like building a computer, coding an app or doing basic AI modeling.
Everything is constantly changing. Cuban points out that students today have lived through many enormous technological shifts, such as the creation of iPhones and self-driving cars. Being a lifelong learner has helped him adapt to these changes and take advantage of the opportunities they present. Young people who put their time toward learning about topics they care about can capitalize on some of these changes that others aren’t ready for.
5. Get Started
One of the biggest advantages young people have is time. The earlier you start learning and working toward your goals, the better your chances of success.
Cuban also explains that just because you’re young doesn’t mean you can’t achieve great things right away. To underline this point, he refers to Michael Dell, who started Dell computers, and Bill Gates, who started Microsoft. Both got the inspiration for their companies while they were in college and didn’t hesitate to get started.
Many young adults may feel like they lack the experience or knowledge to start a business or create a product. While it can be nerve-wracking to put yourself out there, Cuban encourages young people to begin as soon as possible. “The key, the one thing you have to do, you have to start,” he said. “You have to take that first step. Otherwise, it’s just a dream, and you can’t spend dreams. But if you take that first step and you put in the effort, anything is possible.”
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