It pays to listen to someone who is full of financial knowledge.
- Shark Tank personality Kevin O’Leary strongly believes that children should be educated in personal finance.
- He thinks that age 6 is when children are old enough to understand key concepts.
For many families, money is a taboo subject, especially at first. It does not have to be like that. and if you ask shark tank Kevin O’Leary, he thinks money is something all parents should teach their children, and at a younger age than you might expect.
“Having conversations about money and how it’s made at the table is very, very important,” O’Leary said in a 2021 CNBC Make It interview. “The concept of saving money and how the world works is something that even a child can understand at an early age.”
When is the right time to talk about money?
Kevin O’Leary says that age 6 is a good time to start reviewing financial basics with kids. Or at least that’s the approach he took with his own children.
Of course, it can be difficult for younger children to understand certain concepts, such as investing money in stocks or calculating interest on credit card balances. But there are some aspects of personal finance that you can easily share with your children at a young age.
First of all, you can talk about savings. You can explain what a bank is on a basic level (a place to keep 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 the money you keep. in a savings account.
Next, you can talk about how much various things cost. Your children, at age 6, may be too young to follow a detailed budget. But if you explain to them 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 may begin to recognize that a) living expenses cost money and are not free, and b) certain expenses They cost much more than others.
If the financial side of that message doesn’t get through because your kids are too young (and, say, don’t really understand the difference between $500 and $1,000), you can explain your bills another way: in terms of time.
Imagine that your family is going on vacation to Disney World. You can explain that it takes you two weeks of work at your job to pay for that trip. You could also explain that a trip like that isn’t something you get to do often, because you need most of your money to pay your bills. Rather, that trip is something you have to save specifically for, and that means not buying other things.
It is good to start them young.
Many young adults struggle with credit card debt simply because they were never taught how to manage their money and how to 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, you know your children best. So if you think age 6 is too young to start those money conversations, feel free to wait until age 7, 8, or whatever age you feel is appropriate.
The key, however, is to teach your children about money before they are old enough to earn and spend it. That way, you can put them on a solid path and, ideally, help them avoid some of the financial mistakes so many people make as they get older.