Amid concerns about stock market volatility and the possibility of a recession, many American workers remain focused on managing their daily expenses — paying for mortgages or rent, keeping up with rising costs of groceries and fuel, and handling other financial obligations.
While these immediate financial pressures take priority, Americans also recognize the importance of planning for the future. By contributing to 401(k) plans and IRAs (Individual Retirement Accounts), they aim to secure their financial well-being during retirement and prepare for economic uncertainties.
Kevin O’Leary, a well-known entrepreneur and investor featured on ABC’s “Shark Tank,” highlights a strategy that can help workers reduce spending and allocate more funds toward their 401(k) and IRA contributions.
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Workers across the U.S. generally view 401(k) plans and IRAs as crucial components of long-term financial planning — but the struggle to find the extra funds to use for investing in them is real.
That said, enrolling in an employer-sponsored 401(k) plan remains a reliable method for growing retirement savings, particularly when employers offer matching contributions.
This approach, which includes automatic payroll deductions, allows workers to consistently invest in their future with minimal effort, making it both convenient and effective.
Related: Shark Tank’s Kevin O’Leary sends strong message on Social Security
For 2025, the maximum contribution limit for 401(k) plans has risen to $23,500, an increase from the $23,000 limit in 2024. Employees aged 60 to 63 can take advantage of higher catch-up contribution limits of $11,250, while those aged 50 to 59 have a limit of $7,500.
IRAs provide a broader range of investment choices that may not be available through 401(k) plans. However, managing an IRA requires greater involvement, as individuals must establish the account and arrange automatic contributions on their own.
In 2025, the IRA contribution limit remains at $7,000, with an additional $1,000 catch-up contribution available for those aged 50 and older.
O’Leary shares valuable insight on one way people can save money and boost their contributions to retirement investments, which for most Americans include 401(k)s.
Shark Tank’s Kevin O’Leary talks with TheStreet about entrepreneurship. The notable finance television personality explains how getting a handle on spending can help people save more for investing using tools such as 401(k) plans.
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Shark Tank’s Kevin O’Leary explains changing money habits to boost 401(k)s
In his book Cold Hard Truth On Men, Women, and Money, O’Leary emphasizes that transforming financial habits to boost investments in accounts such as 401(k)s begins with a clear, honest assessment of income and expenses.
Before shifting funds toward savings and investments, it’s crucial to first stop unnecessary spending. This requires gaining control over financial outflows and being intentional about where money goes.
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“Here’s what I want you to do,” O’Leary wrote. “I want you to boil your money matters down to one simple number. It’s going to be either a positive or a negative number, because money is black and white. There is no gray. You either have it or you don’t.”
To gain a clear understanding of spending and saving patterns, O’Leary recommends calculating one’s total earnings over a three-month period, a figure he refers to as a 90-Day Number.
He advises starting with input. If pay stubs aren’t readily available, reviewing bank statements can help track all incoming funds. This includes automatically deposited paychecks, side income, and any additional money — regardless of the source.
“Don’t include your assets, just the liquid stuff — the flow, the cash coming in,” O’Leary wrote. “Write it all down.”
Then, O’Leary suggests, a person should add up all that they spend on a separate page. That includes small items such as lattes, pairs of shoes, bags of chips — and large expenses such as debut payments, bills and utilities, car payments and mortgages or rent.
Related: Shark Tank’s Kevin O’Leary makes bold prediction on U.S. economy
Kevin O’Leary explains how one’s 90-Day Number can help with 401(k) contributions
O’Leary explains that the final step in determining a person’s 90-Day Number is to subtract their input number from their output number.
The question that will determine whether one has the financial balance to begin investing more in a 401(k) plan is simple: Is that number a positive one or a negative one?
A positive number means a person is already on the right track and can start contributing more to their 401(k) right away.
If the number is negative, one has some work to do. How much changing of habits a person needs depends on the degree to which they are spending more than their income.
“Now, if you’ve done the math and your 90-Day Number is in the heavy negatives, then, like a majorty of men and women out there, you simply spend more than you make. You’re constantly operating in the red,” O’Leary wrote.
“If this is you, you must admit it to yourself now and take every necessary step to correct it.”
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