Should You Teach Your Kids About Money? Here's What Kevin O'Leary Says
- Shark Tank personality Kevin O'Leary is a firm believer that kids should be schooled in personal finance.
- He thinks that age 6 is when kids are old enough to understand key concepts.
It pays to listen to someone who's loaded with financial knowledge.
For many families, money is a taboo subject, especially early on. But it doesn't have to be. And if you ask Shark Tank personality Kevin O'Leary, he thinks money is something all parents should teach their kids about -- and at an earlier age than you might expect.
"Having discussions about money and how it’s made at the dinner table is really, really important,” O’Leary said in a CNBC Make It interview in 2021. “The concept of money saving and how the world works is something even a child can grasp at an early age.”
When's the right time to talk money?
Kevin O'Leary says that age 6 is a good time to start reviewing basic financial concepts with children. Or at least that's the approach he took with his own kids.
Of course, it may be difficult for younger children to grasp certain concepts, like investing money in stocks or calculating interest on credit card balances. But there are some aspects of personal finance you can easily share with your kids at a young age.
First, you can talk about savings. You can explain what a bank is on a basic level (a place to keep the money you're not using right away), and then, when your kids get a little older, you can review the concept of earning interest on money you keep in a savings account.
Next, you can talk about how much various things cost. Your kids, at age 6, may be too young to follow a detailed budget. But if you explain that it costs $2,000 a month to pay for your house, $800 to pay for food, and $500 to pay for your car, they might start to recognize that a) living expenses cost money and aren't free, and b) certain expenses cost a lot more than others.
If the financial side of that message isn't getting through because your kids are too young (and, say, they don't really get the difference between $500 and $1,000), you can explain your bills another way -- in terms of time.
Imagine your family is going on vacation to Disney World. You might explain that it takes you two weeks of working at your job to pay for that trip. You might also explain that a trip like that isn't something you can take often, because you need most of your money to pay your bills. Rather, that trip is something you specifically have to save for, and that means not buying other things.
It's good to start them young
Many young adults get into trouble with credit card debt because they were simply never taught how to manage their money and avoid it. If you want to raise financially savvy kids, it pays to start those lessons at a young age.
Now ultimately, as a parent, it's you who knows your children best. And so if you think age 6 is too young to start those money talks, feel free to wait until age 7, 8, or whatever age you deem appropriate.
The key, though, is to teach your children about money ahead of when they're old enough to earn and spend it. That way, you can set them on a solid path and, ideally, help them avoid some of the financial mistakes so many people make when they get older.
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