Kevin O'Leary: Teach your children about money early on to do them 'the greatest favor ever in their lives'
If you ask investor Kevin O'Leary, it's never too early to start teaching your children about money. In fact, the O'Shares ETFs chairman and "Money Court" judge believes that by the age of six, parents should already be talking to their kids about finances.
"Having discussions about money and how it's made at the dinner table is really, really important," O'Leary tells CNBC Make It. "The concept of money saving and how the world works is something even a child can grasp at an early age."
Parents don't need to dive into the nitty gritty of personal finance with their children, O'Leary says, but they should explain "what money is and the concept that you work for it, that you actually do something to solve other people's problems and they reward you with money."
The goal should be to help children have a "positive connection" with money and understand how it can be helpful to them when they want to have their own families one day, he says. By teaching children about money from an early age, "you're doing them the greatest favor ever in their lives."
Having a positive relationship with money is important, as is having a basic understanding of concepts like debt and interest. O'Leary says that his own children were well-acquainted with the concept of debt when they were little.
"When my son was 6 and my daughter was 6, they knew what debt meant," he says. "These really simple concepts are important because it helps fend off the damage done by credit cards in young people's hands who don't understand what happens when they don't pay back their debts."
O'Leary's advice is in line with other experts, such as Warren Buffett, who previously said that the biggest mistake parents make when teaching their kids about money is waiting too long. One study from the University of Cambridge found that kids are already able to grasp basic money concepts between the ages of 3 and 4. By age 7, basic concepts relating to future financial behaviors will typically have developed.
And according to O'Leary, parents can't sit back and expect their children's teachers to give them the necessary information to be successful. He says that children don't learn enough about debt in school, calling it a "travesty."
"It's your responsibility as a parent to do it," O'Leary says. "It lies on your shoulders."
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