If you’re a serial shopper and have so many monthly charges on your credit card that you can’t even remember what you bought or why, Shark Tank’s Kevin O’Leary may be able to help.
“Most people are shocked, shocked, at how much they’re spending on any given day, and I’m talking about very wealthy people, too,” says the business entrepreneur and co-star of the ABC reality show, Shark Tank, on which potential entrepreneurs try to get funding for their projects.
“Look at almost anybody walking around Manhattan or Boston right now,” says O’Leary. “I’ll bet you 8 out of 10 of them are overspending – buying stuff they don’t need.”
O’Leary believes a lot of consumers are overspending as a “crutch for other unresolved issues” in their lives.
To fix the problem, O’Leary says, “Take two simple sheets of paper. For 90 days, write down on the first sheet every single bit of inflow you have – every dime you’re bringing in. Then, on the other sheet of paper, put down everything you’re spending. And I mean every single dollar of outlay – including that $2.50 you spend on a cup of coffee on the way to work every morning. No one does this, but it’s critical to write it all down.”
You very quickly find out whether your net-net is positive or negative. “If you’re actually spending more than you take in over a three-month period, you’re screwed,” he says bluntly.
It’s time to make some changes to your spending habits. You want to be at the point where you’re saving 10 percent a month, O’Leary says.
“Ask yourself: Do I really need to buy that? Is it worth taking money out of an account – money that will no longer work for you, once you withdraw it – to buy that new phone, that new device, that new item of clothing, or whatever it is?” he asks. “Most people are stunned at the useless crap they actually buy.”
Discipline is the answer when it comes to managing money – that is O’Leary’s larger point and something he drills into his audiences as well as readers of his new book, The Cold Hard Truth On Men, Women & Money. Carefully managing money when you’re younger “will give you the ability to buy your freedom later – when you can afford it,” he says.
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