In his newest book Kevin O'Leary gives us the Cold Hard Truth on Family, Kids & Money. Here the entrepreneur, Dragons' Den cast member and cohost of The Lang & O'Leary Exchange shares some of the biggest money mistakes people make and how to fix them.
Money Mistake 1: You've met Mr. or Mrs. Wonderful... time to get married!
Money Fix: Follow the three year rule.
Kevin’s mother had a simple rule: wait three years before marrying someone.
- Year one: fall head over heels, don't move in together, don't make major purchases together and don't start planning a wedding.
- Year two: see the imperfections in your partner; this year is when all the potential problems will start to surface.
- Year three: decide whether those problems are deal breakers or if they're things you can work through.
Money Mistake 2: You've bought into traditional wisdom about who works and who stays home.
Money Fix: Follow the dollar signs.
Whoever can make money and wants to work should do it! Figure out who has the higher earning potential. That's the person who should be going to work. When it comes to working moms, Kevin thinks if you want to work, go for it! If you want to be a working mother, do it! At no previous point in history have so many women enjoyed both motherhood and successful careers. Find a balance that's right for you.
Money Mistake 3: You want to have a bunch of kids.
Money Fix: Have only as many as you can afford.
Most people ask themselves "how many children should we have?" Nobody wants to be told how many kids they should or shouldn't have. However, the reality is you should only have as many as you can support. You must balance the joys of having multiple children with the fact that those children could be living close to the poverty line as a result of your decisions.
Money Mistake 4: Your kids think they don't have to work.
Money Fix: Help your teenager find a job.
The bottom line is that a spoiled and pampered kid isn't helping anyone, including him or herself.Your children need a job as soon as they're old enough to work. Every job will give your kid a new experience and perspective, both the good and the bad. Kevin’s own jobs as a teen gave him a very clear sense of the kind of work he found fulfilling- and the kind he didn't, a very valuable learning experience for any teenager.
Money Mistake 5: You're still funding your teenagers’ lifestyle.
Money Fix: No free tickets!
One sure-fire way to nudge your teenagers into the workforce is by setting firm boundaries on what you will and will not pay for. Agree to pay for room, board and education - and then draw a line in the sand. By earning their own money they'll gain financial literacy. It's about recognizing and respecting money for its true value: the personal freedom it allows you to enjoy.
This last one is a money mistake many young adults make...
Money Mistake 6: You buy things to feel good.
Money Fix: Feel good without buying.
You don't need five pairs of jeans. You don't need 40 blouses. Instead, dress like the French. The French treat their clothes like they treat their wine: they know how to select a few classic items that will pair well with anything. One of the most common large money traps is the home makeover. Remember there is no shame in buying things second hand and accepting hand-me-downs. Your bank account will thank you!