No. Just, No. Bad, bad advice, Barbara Corcoran. No.
Buzzfeed recently interviewed Corcoran while she was promoting a “woman’s empowerment initiative*”. Most of the article was generic, forgettable advice, until this section:
What are the biggest mistakes women make with their money?
BC: They don’t spend it. And I know that’s counterintuitive. I am not a believer in saving money. I am a believer in spending money as fast as you can, and believing that more money will come.
That has happened to me my whole life. And I even get that from my mother because even though she could barely make ends meet, she had a firm belief that it would all work out, and it always did. She really taught us to believe that it will all be fine.
Dear lord, that is horrible advice! You might as well use that old book “The Secret” as a financial plan.
Barbara, you are suffering from a severe case of survivorship bias. When most people spend all their money, the only result is that they’re out of money with nothing to show for it. It often doesn’t work out fine. Usually, it results in overdraft charges, late fees, usurious loans from payday lenders, and a bad credit rating. I’d be willing to bet that in a vast majority of time, money does not suddenly appear just because you believe it will.
There’s an XKCD cartoon that I swear was written as a direct rebuttal to this woman:
You won’t have a life full of missed opportunities if you refrain from spending all your money, I promise. A good budget will plan for fun activities just as much as it plans for bills. If anything, saving money means that you get to experience more in life. If you throw your cash at every little event or item that comes your way out of fear of missing out, you’ll never be able to afford the big ones that pop up less often. You’ll end up a slave to every paycheck, with no safety cushion there to protect you. Taken to the extreme, as I’m trying to do, saving lots of money now means I’ll eventually have a life where I have time to do whatever I want, whenever I want, because I won’t have to work 40+ hours a week for other people.
Please, don’t do what Barbara Corocan does. Save your money. Invest it wisely, Make it work for you. Your life will be so much more meaningful when you are in control of it.
*Also, while a “woman’s empowerment initiative” sounds great, I clicked on that link to see what it was about and it ended up being a quiz that had you choose mostly nonsensical pictures as answers to vague questions so that they can describe your uniqueness in terms so generic that I’ve seen horoscopes pin my personality down better. How exactly does that empower me?