Barbara Corcoran's 5 Best Pieces of Money Advice (and 1 She Flubbed)

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Apply Barbara's business advice to your finances.

Let's talk about Barbara Corcoran -- the star of Shark Tank -- and money.

Barbara is a successful businesswoman, wife, and mom with an extremely likeable rags-to-riches story: She rose from a working-class upbringing to a net worth of $100 million today.

She tells people all the time that being labeled "dumb" early in life motivated her to succeed using nonacademic strategies. She also shares openly about her struggles (like the shame of being a late reader) and her successes (confidence and advocacy, not luck, landed her the Shark Tank job).

But Barbara hasn't made a name for herself telling people how to make a budget or get out of debt. When asked about money management, she occasionally gives canned answers that sound more like they are from her public relations agent than from the Corcoran School of Hard Knocks.

We combed through Barbara's life lessons and found the five most valuable ones that you can apply to many areas of your life, including your personal finances. We also found a piece of Barbara Corcoran advice that doesn't work well under every circumstance.

Barbara Corcoran's best money advice

1. Be great at failing

Barbara's mom told her that "jumping out the window will make you either an ass or a hero." You don't get to be the hero unless you jump, but be prepared for the chance that you might end up the ass.

Possibly the most critical skill you can acquire is to learn to bounce back from failure. When you flop, brush it off. If you don't, you'll never innovate or learn from your mistakes.

And while you're failing, remember to be human. Let the people around you see you fail. That gives them permission to fail, too, and without that freedom, they might not try new things or new ideas. After you fail, don't spend time feeling sorry for yourself. Move on. Pick yourself up and try the next thing.

Apply it to your money:

  • Start a business
  • Start another business
  • Invest in something you believe in, at an amount you can afford to lose

2. Know what you do well

Barbara's mom said, "If you want to be a cheerleader, you better know the cheers." Do you know the cheers? If not, don't try to be the cheerleader. Hire the cheerleader.

That means you need to know what you do well, focus on your strengths, and delegate the rest.

And those strengths? Speak up about them. Few people are handed opportunities on a platter. Advocate for yourself and let people know what you're good at. Push them to give you a shot.

Along the way, don't be deterred by people telling you you're not ready, and don't let other people's labels define you or prevent you from trying.

Apply it to your money:

  • Practice, practice, practice (budgeting and investing aren't innate human abilities)
  • Ask your partner to handle or share bookkeeping responsibilities
  • Take a class or go for that degree

3. Surround yourself with the right people

Ready to delegate? Choose carefully. Surround yourself with people who have the skills and personality that complement your own.

Apply it to your money:

  • Work with a financial advisor (and follow their advice)
  • Get a mentor
  • Build a team
  • Pick a good boss (or find a new one)

4. Try on different jobs

Barbara pointed out to a guest on The Ellen Degeneres Show that no one knows what dress they want to buy when they walk into a department store. They try on a whole bunch before they find what they're looking for.

Apply it to your money:

  • Change jobs
  • Change employers
  • Change careers

5. Dedicate mad money

Mad money. Fun money. She's not talking about your emergency fund (keep building that). Barbara is referring to discretionary income that you earmark for no other purpose other than having fun. No matter the size of your budget, set aside a portion to spend regularly on something that's going to make you feel like a million bucks (even if it only costs $20).

Apply it to your money:

  • Set aside 5% of your money for fun

What Barbara gets wrong: Her advice on how to buy a home

If you are hoping to buy a home in today's seller's market, you might have been keen to hear Barbara's advice on how to make a more competitive offer. After all, her specialty is buying and selling real estate.

As a guest on Good Morning America, Barbara suggested that you do two things:

  • Waive the home inspection contingency
  • Make an all-cash offer based on your mortgage pre-approval

She's definitely thinking like a real estate pro, but there's more you need to know.

Waiving the inspection contingency

Many buyers today are viewing multiple homes on Sunday and choosing one to make an offer on by Monday, with the winning bid selected by the end of the day. It's not feasible to hire your own contractor to make sure you aren't "getting stuck with a clunker" as Barbara suggested to GMA. The contractor would have to inspect multiple homes over the weekend and provide full reports to you Monday morning.

Waiving the home inspection could leave you with a home that needs repairs you can't afford.

Do this instead: Make the inspection contingency more friendly to the seller. Consider a clause that says you won't rescind the offer unless the inspector finds issues that will cost more than $10,000 to fix. (You pick the dollar amount.)

Making an all-cash offer (when you're getting a mortgage)

Barbara told GMA that once you're pre-approved for financing, you can make an all-cash offer. That's technically not true. Financing can fall through for many reasons, even after a buyer is pre-approved for a mortgage. And sellers know it. If you've received a fully underwritten pre-approval, the appraisal is the number one thing that can derail your loan.

The only way you can make a cash bid as a borrower is to secure funds with no contingencies. Some lenders refer to their mortgage pre-approval as "upfront underwriting," but a home loan is still contingent on the appraisal. The appraisal represents a delay and potential obstacle that an all-cash buyer can remove from the process. No mortgage lenders waive the appraisal.

Barbara Corcoran has the right idea when it comes to being well prepared and flexible. But when it comes to advice on how to buy a home, she's not working with the same home-buying budget realities that most families face.

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