Kevin O'Leary Has Strong Words for Anyone Making This Common Money Mistake

Kevin O'Leary is widely regarded as one of the world's best businessmen, having become a self-made millionaire. "Mr. Wonderful" doesn't hold back when giving out investment advice to ordinary people, either. O'Leary built his empire through calculated risks and shrewd investment strategies, which can be applied to anyone with the financial discipline to avoid money-wasting habits.

Here's what O'Leary says is the stupidest thing you can ever do with your money and how to fix it.

The worst financial habit

O'Leary believes middle-class Americans make a significant financial mistake every time they go out to eat. He recently told Steven Bartlett on "The Diary of a CEO" podcast: "I can't stand it when I see kids that are making 70 grand a year spending $28 for lunch. I mean, that's just stupid."

For Mr. Wonderful, saving as much money as possible is the key to building an impressive investment portfolio.

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How does this impact your financial health?

O'Leary is speaking to Americans who earn around the national median of $66,622 per year and really don't have the income to justify spending hundreds of dollars a month on restaurant meals. He warns that most people who take on massive debt in middle age don't get there from a single big financial mistake. Instead, it's years of small ones compounded by lifestyle creep and a lack of investment discipline.

How small splurges add up quickly

You might not think that splurging on a nice lunch can have an impact, but over a year or many years, it does. Spending $28 per day on lunch totals $10,220 per year. Invested in an S&P 500 index fund at a historical 10% annual return, that same $10,220 grows to roughly $68,755 in 20 years, just from a single year of skipped lunches.

Do it every year from age 25 to 65, and you're looking at well over $4.5 million by retirement thanks to the wonders of compound interest.

Solution: Invest 15% of your income in index funds

O'Leary offers a simple solution for investing: putting away 15% of every paycheck into the market, either through index funds or dividend-paying stocks. This is the simplest way to build wealth because you're investing in companies that have had market success over many decades, so you know they're stable investments.

O'Leary's mother, Georgette, saved 20% of her income every week and invested it in dividend-paying stocks for 55 years, never touching any of her investments. Her results were extraordinary and outperformed those of every other financial professional. Time in the market is the best way to win at investing, he says.

Solution: Never put more than 5% in any single stock

One of Georgette's other rules was to never have more than 5% of your portfolio in any one stock or bond. This spreads your risk and reduces the likelihood of being wiped out if one company fails. You want to put your money in the average of the entire American market, which has historically been the world's strongest stock market for over 120 years.

Too many investors make big bets on companies that fail, eroding their portfolios.

Keep your mortgage or rent a third of your income

Housing costs are astronomical now, and that's a surefire way to eat away at your income and ruin your investment opportunities. O'Leary says you should not let your mortgage exceed 33% of your income, and you can extrapolate that to renting as well. Since housing is a fixed cost, you're going to be paying rent or a mortgage every month; you literally cannot afford to go above that 33% threshold without compromising your investment strategy.

Unless you can significantly cut down on other expenses and reach the 15% investment goal, you'll be giving your money to someone else in the form of rent or mortgage instead of putting it into the market.

Choose your partner as carefully as you choose your investments

O'Leary has said repeatedly that who you marry is the most important financial decision you'll ever make. In his mind, getting married to the wrong partner sets you up for some punishing financial realities in divorce.

Not only do you have to divide your assets, but you also have to liquidate and sell investments, property, and other shared assets, triggering massive capital gains bills. So, you really do have to be careful when choosing who you will end up marrying.

Bottom line

Kevin O'Leary's core message: wealth isn't destroyed by one big mistake, but eroded by everyday spending habits that never get invested. Make the right move by avoiding routine splurges and consistently investing a portion of your income matters far more than chasing high-risk investments — especially in retirement, when those habits can drain your savings.

That advice aligns with broader consumer data. According to the U.S. Bureau of Labor Statistics' Consumer Expenditure Survey, the average U.S. household spent $3,933 on food away from home in 2023, showing how routine restaurant spending can quietly eat into a household budget over time.

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