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Cut the Coffee, Save for Retirement: O’Leary’s Bold Advice

by Jessica

In the book Cold Hard Truth on Men, Women & Money, entrepreneur and investor Kevin O’Leary highlights the financial pitfalls of everyday indulgences, warning that seemingly harmless purchases can significantly impact long-term savings and retirement plans. O’Leary, who is known for his straightforward advice as a panelist on Shark Tank, emphasizes the concept of “Ghost Money”—funds squandered on trivial expenses that could have been invested instead.

O’Leary illustrates this point with a striking calculation: an individual who spends $10 daily on cigarettes, $12 weekly on coffee, $8 weekly on magazines, and $200 monthly on lunches over two decades could end up wasting approximately $276,000. This figure assumes a 6% compounded annual return that could have been earned on those funds instead. “If you spend a wad of cash on cappuccinos and magazines in your twenties, there’s a good chance you’ll be serving coffee or working in a magazine stall in your seventies to pay for your retirement,” he warns.

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Although fewer people may be purchasing magazines today, O’Leary suggests that these expenses can easily be replaced with modern indulgences like streaming subscriptions or food delivery services. He advocates for eliminating impulse buys and directing those savings into a dedicated investment account, emphasizing that watching one’s savings grow can motivate individuals to break bad financial habits.

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O’Leary’s candid advice extends to a broader audience. In a recent appearance on the Erika Taught Me podcast, he criticized common spending habits, urging listeners to reconsider their daily purchases. “Stop buying coffee for $5.50,” he said, noting that many people allocate 15% to 20% of their daily spending to what he calls “stupid stuff.”

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He further lamented the cost of convenience, pointing out that spending $15 on a sandwich at work is unnecessary when a homemade version costs only about 99 cents. “When you start adding that up every day, it’s a ton of money,” he noted. O’Leary estimates that young professionals just starting their careers in urban areas can waste around $15,000 annually, a habit that could lead to significant financial difficulties later in life.

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Over the years, O’Leary has shared various personal finance strategies, including treating purchases as investments, avoiding lending money to family, and encouraging couples to maintain separate finances. He has also suggested that younger marriages and larger families can lead to a more stable financial future. Through his candid commentary, O’Leary aims to educate individuals on the importance of mindful spending and the long-term benefits of investing.

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