And since he’s been in the game for such a long time, he’s also learned what not to do. After all, you can’t become a top investor without learning some tough lessons along the way.
Lucky for you, we compiled his advice on what to avoid on your climb to the top. Here are seven of Kevin O’Leary’s top tips to help you avoid financial trouble.
This is an oldie but a goodie: You’ve got to keep your emergency fund , well, funded.
O’Leary specifically recommends saving three months’ worth of your salary for emergencies. This gives you a safety net without tying up too much money in low-interest savings accounts. That way, you’re set for emergencies, but the majority of your money is hopefully doing the work in investments.
Invest 15% of Your Income
O’Leary’s formula for retirement success is simple: “Take 15% of your salary each week, or every two weeks when you get paid, and put it into an investment account, and never touch it until you turn 65.”
According to him, this strategy can help you retire as a multimillionaire.
As is the case with many of us, credit card debt is a major concern for O’Leary. In the past, he’s advised, “Pay off [your] credit cards immediately, that’s what [you] should do.”
His reasoning revolves around high interest rates on credit cards and how they can quickly derail your financial plans. Aim to get that taken care of ASAP so you can begin building your financial reserves up.
Cut Unnecessary Spending
O’Leary has been quoted as saying, “People don’t need a lot of the crap they buy,” and he’s not wrong. According to a 2019 survey by OnePoll for Ladder Life , Americans spend an average of $18,000 per year on nonessential items.
Of course, not all nonessential spending is “crap.” In fact, some of it is essential to our mental health and wellbeing. But the point is to take a good, long look at your spending habits and cut out as many unnecessary purchases as possible.
Discuss Finances Early in Relationships
This one might not be common sense, but that’s what makes it great advice. By the third date, O’Leary suggested you should discuss financial matters with a potential partner.
He recommended asking questions like, “Do you have any debt? Has your family been bankrupt?” He said these conversations are important before a relationship gets serious. That way, you can make sure you and your potential long-term partner are on the same page when it comes to money.
Teach Kids About Money Early
Speaking of family, O’Leary thinks children should understand basic money concepts by age 6. He encourages parents to have discussions with their kids about money and how it’s made at the dinner table. This will not only help them better understand money, but also teach them to take it seriously.
After all, many experts recommend you start saving for retirement ASAP. What could be more ASAP than starting while they’re young?
Use Luxury Purchases as Motivation
While O’Leary isn’t against treating yourself, he suggested using luxury items as rewards for achieving financial goals. Instead of impulse buying, make expensive purchases a celebration of your financial successes.
So, hey, if you made your sales goals for the quarter or graduated from your master’s program, go ahead and reward yourself with a little something. (But then get right back to saving!)
Remember, while O’Leary’s advice can be helpful, it’s important to consider your own financial situation. If you’re unsure about major financial decisions, it’s always a good idea to consult with a financial advisor.
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