Shark Tank‘s Mr. Wonderful, the acid-tongued humorist and investor Kevin O’Leary, has a lot of ventures cooking — from his investment business to his weddings and wine enterprises. But the multimillionaire investor doesn’t just think big picture all the time. In fact, O’Leary likes to offer homespun wisdom to help people tackle their financial goals, no matter which income bracket they’re in. Recently O’Leary made plain and simple what every other investment guru will also tell a willing student. Do the math. (Note: Investment gurus primarily concerned with bitcoin speculation may be an exception!)
What does O’Leary mean by do the math? On CNBC Make It, O’Leary broke it down. Here’s the formula for success: Have more money coming in than money going out. Sounds like a no-brainer, but it’s not the case for many American households, which tend to keep the overflow on credit card balance sheets which charges them punishing interest. O’Leary instructs non-millionaires to keep it simple by doing simple bookkeeping. He advises to take a 3-month period and measure all income vs. expenditure, right down to the coffee you drink. You’ll know you’re doing it right, O’Leary says, if during that 3 months (a long enough sample to be representative) you spend only 90% of what you bring in. If you put away that 10%, you’re golden. “Only spend 90 percent of what you bring in, and invest the other 10 percent.” That’s the secret. It’s math you learn in first grade. Shark Tank airs Sundays at 9pm on ABC. [related: 27 Favorite Shark Tank Products]
