Why Kevin O’Leary doesn’t plan to leave any money to his kids

The Dragons’ Den star gives the cold hard truth on why fear is a healthy motivator and why he doesn’t believe in marriage for couples that don’t have kids.

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Dragons' Den star Kevin O'Leary; Photo by Greg Paupst

Dragons’ Den star Kevin O’Leary; Photo by Greg Paupst

Kevin O’Leary has built his media persona on telling people the cold, hard truth about business – if their ideas are bad, he tells it like it is. When I interviewed him last year, the Dragons’ Den star shared his ideas about what people need to know about the business world. Now he’s back with a new book full of advice on how to foster a healthier relationship with money. In Cold Hard Truth on Men, Women & Money, O’Leary writes about spending addictions, debt control and teaching kids about money. I interviewed him and he shared his thoughts on why fear is a great motivator in life, why it’s a bad idea to get married if you don’t want kids, and why he doesn’t plan to leave his kids any of his money.

Q: In your book you write about attending Debtor’s Anonymous meetings. What did you learn from the meetings and what can others learn?

A: I learned that sometimes peoples’ emotional state drives an unhealthy relationship with money. In most of those cases, when people at these meetings were emotionally unhappy they’d use spending to treat that state. So if they had a bad day they’d go buy a new dress or new shoes or a car. In some cases they’d find themselves in a million or half a million dollars’ worth of debt as a constant. Some were spending to give themselves a certain social status among their friends and buying gifts they couldn’t afford for people. The root cause is always the same: an unhealthy relationship that started in their youth and went ungoverned. The belief they could constantly go out and spend on credit cards which, in adulthood, manifests itself in catastrophic situations. Imagine a 60 year old man without a cent who can’t provide for his family – that is where you end up. I talk about Debtor’s Anonymous in the book to wake people up. Alcoholism is one form of addiction – spending is another. They are very similar and in both cases the outcome is catastrophe.

Q: Canadians are face record high debt levels. Do you think we’re addicted to debt?

A: I think Canadians are becoming aware of the problem. They are working at getting out of debt and the government is constantly warning about coming interest rate hikes. People aren’t prepared for it. For example, I would never have a variable rate mortgage – I think that’s insanity. But there is a move afoot to start thinking about financial literacy and I endorse this starting at five years old. Children need to understand that money is a finite resource. It’s not free.  And it can help you immensely or hurt you badly.

Q: What have you taught your kids about money?

A: I am not planning on giving my kids any of my wealth. They know that when their education is over, I’m pushing them out of the nest. The bird you see dead under the nest is the one who didn’t think about the future: at some point its parents stopped feeding it. That’s a hard analogy but it’s true. You want to prepare your children for launching their own lives. I tell wealthy parents that if they don’t kick their kids out of the house and put them under the stresses of the real world they will fail to launch – they will become unsuccessful adults. I really believe that. I am setting up generational skipping trusts so I can provide education for their children and their kids. They will always be taken care of. The message is that once school is over, you’re out and good luck to you.

Q: So you won’t be buying your kids a house with your money?

A: I think that sends the wrong message. If you don’t start out your life with the fear of not being able to feed yourself and your family, then what motivates you to go get a job? I don’t want my kids to be worse off than me. Fear motivated me, and it will motivate them. There’s nothing wrong with that: it’s how everyone does it and it’s extremely healthy.

Q: So what tips do you have for teaching kids about money?

A: Start at five years old and explain where money comes from and where it fits in the family. As children are given allowances and gifts, go to a bank and set up a trust account for them in your name. You force them to put 10 percent of it inside that account – and it never comes out. You invest it for them in conservative interest-bearing securities and over time they begin to realize that is their precious money. Most kids get it by 11 years old: they covet their money, they see it grow every month and it teaches them something very important. My kids both have that – and believe me, just try and get them to spend it. Not a chance. They get that this account will be there for them in their 60s and 70s. It will be what saves their rear end.

Q: But what should parents do when their kids start whining about needing to own the latest stuff?

A: If you constantly give in to their whining and crying you are setting them up for a very bad place in adulthood. It’s hard to see them upset or sad but you have to be tough. It’s part of the DNA of discipline you are giving them down the road. It’s an important topic. I get more questions than any other about how to teach kids about money.

Q: In your book you explain how banks are always trying to get between Canadians and their money. What should people’s relationship with banks be and how can we take back control?

A: Banks play a very important role in our lives: they are the lender of first resort. When you’re young and starting out, you use the banks to borrow money. You plunge yourselves into debt and pay interest to banks to pay for education, to buy a car and a home. I want people to get out of debt early so that by their late 40s the banks are paying them interest. Pay off your debt and start using banks to save and invest in securities that will pay you interest in your 40s, 50s, 60s and beyond. This is a healthy relationship with banks. But if you plunge yourself into debt and start paying 16 or 20 per cent in interest you will never survive. What I’m asking is that people stop and understand what their relationship with banks should be. It can be a healthy one or it can be a disaster.

Q: You don’t believe in marriage for couples that don’t plan to have kids. Why not?

A: The truth is, if you don’t plan on having kids, there is no reason to get married. I tell people who are not planning to have kids never to get married. [As individuals, you’ve already] established your credit ratings early in life. I did this with my daughter. As soon as she turned 18, I got her a credit card with the understanding that every single month she would pay off the entire amount. She learned two things: first, she established a credit rating for herself. She has an account in her own name – no matter who she marries that account will never merge with her spouse’s. It’s not like I don’t want her to fall in love and have kids; the point is I want her to have her own credit rating in case (and 60 percent of the time this happens) she separates from her husband. At that point, she won’t skip a beat: she’ll have her own credit rating. So many women set themselves up for disaster. Everyone should have a bank account and a credit rating regardless of their age. When you get married, you are forming a business relationship not just an emotional one.

Cold Hard Truth on Men, Women and Money, Doubleday Canada, $22.95.

9 comments on “Why Kevin O’Leary doesn’t plan to leave any money to his kids

  1. Kevil O’Leary appears to have a lot of unresolved hostility towards his wife and kids. His arguments seem overly convoluted in an attempt to justify his anti-family views. I sincerely hope he seeks the help of a good psychiatrist to work out his deep-seated resentments. I’m certainly not buying his book on this topic!

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  2. I agree wholeheartedly with Kevin’s philosophy. This generation of kids are very selfish. So yes go out and work for your own money. Good advice

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  3. Good stuff. Great ideas, give your kids a good education, and I like the idea of a trust for the grand childrens’ education and taking care of them. Where’s the “hoVestility”..or the “anti-family”.? He’s helping his kids a huge amount with an expensive education and paying for their kids’ (grandkids)edu, which frees up his kids from that expense. I think his kids are at expensive US universities. Another gift is teaching your kids about money, totally agree with that. Educate them, teach them, be a role model, and teach that your money should work for you before you spend it, then you get to keep the principal which can earn more money over. Tell it as it is, and give your kids the tools (education) to get a good job. I also like O’Leary’s advice (not here, but elsewhere) to basically only invest in dividend bearing insrturments.

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  4. I agree with Kevin, I have seen my nephew and niece, both around 30 abuse their parents when it comes to money, both kids have been in and out of jobs, don’t care about being late for work etc. Mom and dad will pay for their mistakes in life and never learn from mistakes. I even seen them take advantage of friends. I have no respect at all for these kids!

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  5. What a joke , Olleary wont help his kids but took a ten thousand loan from his mom in the seventys wich is like 150,000 in todays money to strat his business , typical doublestanderd rich mans view . Wonder what goodold kevin would be today without mamas loan , could have been a reg joe or rich we will never know. There is nothing wrong with taking advantage of your advanyages like kevin did , but to then say its wrong after he did is is very stupid.

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  6. btw on another note investors in his Oleary funds are walking due to bad performance by the comoany , check the web and you will see that over 500 million has been taken out , maybe his kids should help him manage the funds lol couldnt be worse then what he is doing

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  7. He is helping his kids!! He’s paying for their education for as long as they are studying and will do the same for his grandchildren. Who paid for your education? Are you fully funding your children’s and grandchildren’s education for as long as they want to study, wherever they want to study?

    If people will listen to him, he has lots of great investment tips.

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  8. How incredibly sad this man appears.

    Money?

    That’s it??

    Wow…………….is he ever in for a surprise.

    And guess what, Kev? GOD wants men and women to be married, kids or no kids.

    And marriage is sacred between ONLY a man and a woman.

    Lots of brokenness around, huh?

    And to not leave anything to his children? How unconscionable!

    Poor kids.

    Could have had a leg up in life but instead old Kevin cuts them off at the knees.

    It’s hard enough to make it in life without feeling unloved!!

    Where’s this asinine man leaving his money?!

    The dogs?!

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  9. Kevin is right on the money!!! I love it! Kids need to feel the fear and propel themselves to get out there and suck it up and work!! How else are they going to figure out what they are made of?

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