Oprah Winfrey's 8 secrets to building a fortune
Before she became a media maven with a magazine, talk show, production studio and cable channel all bearing her name, Oprah Winfrey was a working stiff like the rest of us.
How did a poor girl from Kosciusko, Mississippi, who started out babysitting for 50 cents an hour, become the first billionaire Black woman? In short: charisma, determination and raw financial savvy.
While you may not be able to learn the first two, Oprah’s story holds plenty of lessons for anyone looking to grow their wealth. Here are eight tips to help you inch a bit closer to Oprah’s $2.6 billion net worth.
Follow the towel theory
Though she’s a role model for many today, Oprah is open about her past financial failures.
“I’ve made every salary, so I know what it’s like to be making $12,000 and think, ‘If I only made $100,000, all my problems would be solved,’” she said on The Oprah Winfrey Show in 2001. But what actually happens is “you carry the debt with you.”
She calls it the towel theory. As Oprah became more successful, she would continue to splurge on ever more luxurious towels — first from Target, later from Saks Fifth Avenue. The problem gets worse when you graduate from towels to cars and other pricey possessions.
Oprah’s rising wealth meant nothing for her pocketbook if she spent even more along the way. If you’ve run into debt for any reason, it’s time to clear it fast and start following the towel theory: live within your means and keep your earning, spending, saving and investing in balance.
Invest in companies you know
Before she purchased a big stake in Weight Watchers, Oprah was an avid follower of the company’s Freestyle program. The program assigns points to various foods and gives users a certain number of points to spend based on their weight-loss goals.
“I believe in the program so much I decided to invest in the company and partner in its evolution,” Oprah said in a 2015 press release announcing the deal.
Her 10% stake cost her about $6.79 per share, according to USA Today. By June 2018, Weight Watchers was worth over $100 per share. Even though the stock has fallen sharply since, sitting around $26 in July 2020, she’s still made a tidy sum on her investment.
When you’re investing, make sure you know what will make a company or product successful in the future before you put your money down. Start small (like $5 small) with a micro-investing app. Or, you might prefer a robo-advisor that selects stocks based on advanced algorithms.
The important thing is to capitalize on what you know and recognize what you don’t.
Stop before you spend
Oprah’s so rich that if she ever ran out of space for her treasures, she could just buy another home to store them in. Even so, the media tycoon says she tries not to be wasteful.
“I still think twice before I buy anything,” Oprah writes in her 2014 book What I Know for Sure.
“How will this fit into what I already have? Am I just caught up in the moment? Can it be of real use to me or is it just something beautiful to have?”
By following this advice, you can recognize and eliminate wasteful luxuries in your life — the kind that don’t bring you real satisfaction. A budgeting app can automatically track your spending, so you always know exactly where your money is going and how much you have to play with.
Diversify your income
After 25 years of ratings dominance, you would think the talk-show host wouldn’t dare mess with a winning formula. Not so.
“I became pretty comfortable with that level of success,” Oprah said at a 2013 Harvard commencement speech.
“But a few years ago I decided, as you will at some point, that it was time to recalculate, find new territory, break new ground. So I ended the show and launched OWN, the Oprah Winfrey Network.”
By leaving her show behind, Oprah took a chance on building a media empire. She’s also found success acting, has written several books, published magazines and launched a radio channel.
A long-running stable job is a blessing, but it can keep you from discovering new money-making possibilities. Try picking up a side gig using one of today’s online freelance marketplaces. The income boost can be substantial, and these ventures will help support you if your main job ever goes belly up.
Keep some on the side
The rich and powerful don’t stay that way if they don’t plan ahead. Just think about all the broke sports stars out there.
Instead of spending or investing everything she has, Winfrey keeps some of her money aside in case her fortunes change. In a 2002 interview with Fortune, Oprah confessed that she had built up a rainy-day fund of $50 million cash.
You, too, need an emergency fund. It probably won’t be close to Oprah’s hoard, but it will cushion you against unexpected expenses, failed investments or a sudden job loss.
Experts suggest stashing away enough money for at least three to six months of expenses — ideally in a high-interest savings account, so your money can grow.
Learn from your losses
Winfrey seems to turn everything she touches to gold, a phenomenon dubbed “The Oprah Effect.” Her support has launched Dr. Phil, Dr. Oz and Rachael Ray to stardom.
But Winfrey’s first big break was deemed a failure. After a long publicity campaign, she started in 1976 as a news anchor in Baltimore alongside veteran host Jerry Turner. She was demoted to reading morning headlines after a few months.
“When you’re humiliated that way, you never forget,” Oprah said, reflecting on her early career in a 2011 Baltimore Sun interview.
But instead of fading away, Oprah brought her tenacity to a new program, People Are Talking, which ran for five years. As she told the Harvard class of 2013, “Every experience, encounter and particularly your mistakes are there to teach you.”
So don’t just try to forget your losses. For example, if you’ve ever missed a credit card payment, you probably remember the hit to your wallet and your credit score. Learn from those money mistakes by downloading an app that will manage your debt for you. You’ll end up in better shape than you were before.
You can do good and do well
For Oprah, philanthropy and investment go hand in hand.
In May 2020, Oprah and pop star Katy Perry joined a number of investors who put $250 million toward Apeel Sciences, a company that creates a natural coating for fruits and vegetables to extend their shelf life.
“I hate to see food wasted,” Winfrey said in a news release from Apeel, “when there are so many people going without.”
Combined with her investments in Weight Watchers and True Food Kitchen — a healthier restaurant chain — Oprah has secured a stake in the future of nutritious, sustainable eating.
You also can make smart financial choices that support the welfare of people around the world. For example, your bank might use your deposits to invest in companies that cut down rainforests. Consider switching to a financial institution that uses your money to plant trees — while giving you big cash-back bonuses.
A home belongs in your portfolio
Oprah Winfrey obviously knows the benefit of a strong real estate portfolio. Judging from media reports, she’s spent at least $140 million on her homes in California, Hawaii, Washington and Colorado — and that doesn’t even count the properties she previously owned in Illinois, Georgia and Florida.
Unlike most things that plummet in value once you buy them — cars are a notable example — homes tend to appreciate. That's doubly true if you improve them, like Oprah did when she completely transformed her Hawaiian homestead.
Sure, renting can make financial sense, so long as you're investing aggressively, but homeownership brings many benefits. For example, once you’ve built up equity, you can borrow against it and turn your home into a souped-up credit card.
Always make sure you shop around for the best possible interest rate on your mortgage, to hold down your monthly payments and interest costs. You can find 30-year rates as low as 2.5% right now.
