In his book “Cold, Hard Truth on Men, Women and Money,” media personality and entrepreneur Kevin O’Leary offered a short quiz for readers to test their self-knowledge about investing.
The quiz included 10 questions, including inquiries such as, “Do you have a clear understanding of your retirement goals?” and “Do you understand retirement vehicles — IRAs, 401(k)s — and their attendant tax benefits?”
In my years of reporting on personal finance issues for TheStreet, I’ve found these two questions to be a good place for readers to start. Self-evaluation can be a revealing exercise.
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O’Leary wrote that if a person answered yes to most of the questions, he hopes that his book reinforces good saving, spending and investment habits.
If one answered yes to about half of them, then O’Leary believes the book will offer valuable advice to move toward financial help.
“If you answered no to most of these questions, then you are heading for financial trouble,” he wrote.
“But it’s not too late to change; in fact, when it comes to money, it’s never too late to change.”
Kevin O’Leary explains one 401(k) savings method
O’Leary, who is perhaps most notably an investor on ABC’s “Shark Tank,” urges people to position their expenses carefully in a well-thought-out budget, and then add a 10% cushion to the total expenses to equal the total amount of one’s monthly income.
“The cushion is on top of the 10% you invest and save,” he wrote. “You’re saving, investing and putting away that cushion — because your goal is to live on 10% less than you normally do, even after you’ve factored in money set aside for savings and investing.’
“At first, that 10% will become your Catastrophe Cash Fund,” O’Leary continued. “When it reaches the amount you decided to set aside, stop putting that money toward your Catastrophe Cash and start funneling that cushion back into your investments.”
This money can be used to contribute to retirement vehicles such as 401(k)s and Individual Retirement Accounts (IRAs).
“To continue to live within your means, that’s how you’ll ease that percentage up ever so slightly, from 10% to 12 to 15, so that by the time you retire, you’re already well adjusted to your new expectations, your new means, below which you will continue to live in relative financial bliss,” O’Leary wrote.
“If you’re on a fixed income in retirement, whether you start tapping into your 401(k), pension, or annuity, you’ll already be mentally and financially adjust to your new reality.”
Kevin O’Leary warns Americans on credit card spending
The business leader singles out credit card balances as a driving force behind many households’ money problems.
O’Leary is blunt about it.
“Spending too much is a disease. And credit card debt is a cancer,” he wrote.
Data from the Federal Reserve Bank of New York’s 2025 fourth‑quarter Household Debt and Credit Report shows total U.S. household debt at $18.8 trillion. Credit card balances rose by $44 billion from the third quarter and hit $1.28 trillion in the fourth quarter.
In O’Leary’s view, this debt burden directly weakens Americans’ capacity to put meaningful amounts into their wealth-building tools such as 401(k)s and IRAs. With interest charges eating up cash flow, there’s far less left to invest for the future.
“You can’t build wealth if you’re bleeding money every month,” he warns.
More on personal finance:
- Zillow forecasts big mortgage change for U.S. housing market
- AARP sounds alarm on major Social Security problem
- Dave Ramsey bluntly warns Americans on 401(k)s
O’Leary goes beyond dollars and percentages, taking aim at the attitudes that keep people stuck.
He contends that many Americans hold themselves back by clinging to overly optimistic assumptions and waiting for a lucky break, postponing real steps that would actually move their finances forward.
“Too many people are steeped in magical thinking about money,” O’Leary wrote, singling out dreams such as winning the lottery or suddenly getting an inheritance.
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O’Leary outlines his 90-Day Number plan
In his book, O’Leary suggests first getting a firm handle on one’s cash flow by totaling all income received over a three‑month span — what he calls a person’s 90‑Day Number.
- He recommends beginning with the money coming in. If pay stubs aren’t handy, bank statements can reveal every deposit, including paycheck direct deposits, freelance or side‑gig earnings, and any other incoming cash.
- He stresses not to factor in assets — only liquid income that actually flows into your accounts.
- Next, he advises listing every dollar spent on a separate sheet. That means everyday purchases like coffee, snacks, clothing, and other small buys, as well as major obligations such as debt payments, utilities, insurance, car notes, rent, or mortgage costs.
- Once both lists are complete, the 90‑Day Number is calculated by subtracting total spending from total income.
- The key question for determining whether someone is ready to increase 401(k) contributions is whether that result is positive or negative.
- A positive figure indicates someone is already living within their means and can boost retirement contributions immediately.
- A negative figure signals a need for change. The size of the shortfall shows how much adjustment is required to bring spending back in line with income.
- If the calculation shows a deeply negative number, it means spending consistently exceeds earnings — a pattern many people fall into. Recognizing this and committing to correcting it is essential before moving forward.
(Source:Kevin O’Leary)
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