He's known as Mr. Wonderful on CBC's Dragons' Den, but he's doling out the cold hard truth when it comes to money mistakes we all make. Here Kevin O'Leary shares his advice on how to fix some of our money blunders, from his book Cold Hard Truth: On Business, Money and Life.
Money Mistake: Your kids don't understand the value of work.
The Fix: Teach them time is money
Kevin says you should start teaching children as young as five about money, why it's important and how you earn it. "I even started rolling the change out of the change bowl with my son at a very early age," he says. "And I explained to him 'That was a dollar we just made. Here's how long it takes to make that dollar. Here's where it came from.'"
Money Mistake: You're in love, so you're shacking up.
The Fix: Know your common-law rights
When you're in a serious relationship, you have to understand you're also merging into a business relationship, Kevin says. That means getting acquainted with your common law rights, which vary from province to province.
Money Mistake: Prenup is a dirty word.
The Fix: Practice saying it out loud
If you're thinking about spending the rest of your life with someone, Kevin says you need to know their past with money. Are they in debt? Have they ever been bankrupt? Do they owe somebody in their family a lot of money? A prenup can help answer these questions, he says.
For those who feel uncomfortable bringing up money or a prenup with their partner, consider Kevin's reasoning: "If you're not willing to talk about money before marriage, it's going to take you down after marriage." If you're willing to ask important questions about money, then it shows you're serious about your partner, and you can start to discuss long-term saving goals.
Money Mistake: You think home ownership is the only solution.
The Fix: Rent, don't buy
Kevin points out you pay from seven to 11 percent in land transfer taxes, brokerage fees, and other expenses when you buy a house, which could plunge you into debt. Therefore, if the house may not increase 11 percent in value in the period you own it, renting instead of buying is perfectly acceptable.