Smart About Money: Saving & Spending

By Nick Maffeo

Recently there was an uproar about something Shark Tank’s “Mr. Wonderful,” Kevin O’Leary, said about the amount young professionals spend on takeout lunches.

Nick Maffeo

On The Diary of a CEO podcast, O’Leary said he couldn’t stand seeing young people making $70,000 a year spending $28 a day for lunch. O’Leary also said that money should be “more wisely” invested in an index fund, potentially yielding an 8 to 10 percent return for the next 50 years.

There’s a lot to unpack here.

First and of course, there was the reaction/counter-reaction media storm. There always is. In this case, an actual good point got lost in the crossfire.

While everyone sensible wants to encourage people to save — for rainy days and for sunny days — it’s probably unproductive to criticize people in their 20s for not wanting to put every nickel toward their retirement 50 years from now. For many at that age, retirement is just not a priority.

Did O’Leary make that comment to get attention? Who knows? But that’s his TV persona — opinionated and outspoken. If attention was what he wanted, he got it.

There were many who said O’Leary was like Grampa Simpson “shouting at a cloud.” They miss the point too. It’s all too easy to say someone is “too old” to understand. That particular reaction to O’Leary made me think of the Mike + The Mechanics song “The Living Years,” which observed that, “Every generation blames the one before.” Which is also not helpful.

Anthony Pompliano, an investor and entrepreneur, criticized O’Leary for not offering an “abundance mindset” of trying to grow the pot. In a video he posted to Instagram, Pompliano said, “Don’t try to spend less. Make more.”

The reality? Long before retirement, most people are on a “fixed” income — specifically, their salary. Some might earn more with a side hustle or as they progress in their careers. But given that there are 24 hours in a day, there can be practical limits to “making more.”

Most people come to see that what they earn matters and what they spend matters too.

If someone earning $70,000 a year is spending $28 a day for lunches five days a week over, say, 50 weeks, that’s $7,000. That’s a lot.

Even if someone is not at all focused on saving for retirement in their 20s, it’s 100 percent fair to wonder if there are other things they’d rather be spending that money on right now, today.

Because that’s the real bottom line: Is there something other than buying lunch that could be done with that money? Is there something that money needs to be available for, like car repairs or student loans?

Some commenters said O’Leary was talking more about being careful about getting into habits that add up to be expensive.

Everyone gets into habits like that and it’s common to drift along until one day you realize what you’re spending on a habit just isn’t getting you value for the money. Because it’s not about lunch. Without an infinitely expandable income, it’s about tradeoffs.

It’s also common to feel like it’s “only” $28 a day and it will “never” add up to $7,000. For someone actually spending $28 a day on lunch (or any other elective), arranging an automatic transfer of, say, $140 a week into a savings account will give you more than $3,500 in six months and $7,280 after a year. It does add up. You can make choices that make a difference for yourself.

Nick Maffeo is the president & CEO of Canton Co-operative Bank in Canton. Have a question? Email to submissions@thecantoncitizen.com.

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