Oprah Winfrey's towel theory and other precious lessons for financial success
No American woman has managed to achieve what Oprah Winfrey has in her life. Growing up in poverty, Winfrey became the first billionaire Black woman in history. Her charisma, determination, and financial savvy have set a strong example for millions across the globe. Her journey to success has been an inspiration for the world. Here are some lessons to learn from Oprah Winfrey’s humongous success.
1. Evaluate Your Expenses
Winfrey has a mighty net worth of about $3 billion, according to Forbes. Despite her riches, she has mentioned time and again how careful she is with her money. “I still think twice before I buy anything,” she said in her 2014 book “What I Know for Sure”.
She asks herself how the item will fit in with the things she already has, how will the item be useful, and if is she just caught up in the moment. Some would say that is too much thinking for a billionaire. But such careful evaluation has helped Winfrey shine through her initial tough years and such practice can help the common man a long way as well.
2. Invest Wisely
Winfrey made a fortune by sizing up a big stake in Weight Watchers. However, it wasn’t just an impulsive investment as Oprah was an avid follower of the company’s Freestyle program. “I believe in the program so much I decided to invest in the company and partner in its evolution,” Oprah stated in a 2015 press release announcing the deal.
She bought her 10% stake at about $6.79 per share, according to USA Today and by 2018, the share’s worth soared up to $100. You can follow Winfrey’s footsteps by making smart investments in companies that you know well.
3. Apply The Towel Theory
The towel theory coined by Winfrey encourages people to live within their means and keep a balance between earning, spending, saving, and investing. The theory is named so because Winfrey made the observation that she was splurging more and more on luxurious towels as she got richer. For others, the towel may be a car or other pricey item that can create a financial issue in the future. Thus, earning more doesn’t necessarily mean that people should spend more.
4. Diversify Income
After dominating the television ratings for 25 years, Oprah left her world-famous show to build a media empire of her own. She felt that she had become comfortable at that level of success, so it was time to find new territory and break new ground. “So I ended the show and launched OWN, the Oprah Winfrey Network,” she said at a Harvard address. While she took a huge chance, she went on to find success in acting, she wrote several books, published magazines, and launched a radio channel.
For the common man, the lesson to take away from this would be to similarly diversify income. In today’s digital age, there are plenty of side gigs that help people create an extra source of income.
5. Learn from Setbacks
When Winfrey got her first big break, it was deemed a failure. In 1976, she worked as a news anchor in Baltimore, hosting a show alongside veteran Jerry Turner. However, she was eventually demoted to reading morning headlines. This, however, didn’t stop, and she continued to work towards success until she found it, with the show “People Are Talking”, which ran for five years. Thus, it teaches the lesson of learning from setbacks and developing a never-give-up attitude.
6. Learn to Make a Good Deal
Winfrey's success can be attributed to both her charisma and deal-making prowess. Early in her television career, she realized her potential to carve a space in the industry. Thus, when she was offered a lucrative contract and salary, she refused it and negotiated a deal to get herself ownership of her program, “The Oprah Winfrey Show.”
This bold move turned out to be the first significant step towards building her media empire and achieving billionaire status. Thus, learning the art of striking a deal can come in handy for everyone in life.
7. Build an Emergency Fund
While it may seem pointless for billionaires to build an emergency fund, Winfrey is no regular billionaire. Instead of spending or investing everything she has, the media mogul always keeps some money aside. In a 2002 interview with Fortune, Oprah stated that she had a rainy-day fund of about $50 million in cash.
Thus, if Winfrey feels the need to build an emergency fund, it is probably best for every commoner to have one. Most common people are more vulnerable to unexpected changes, failed investments, job loss, and more. Experts suggest that stashing away at least three to six months of expenses ideally in a high-interest savings account, could be great for an emergency fund.