“Shark Tank’s” Kevin O’Leary takes on Financial Literacy

In an appearance on ABC’s “Good Morning America earlier this year, “Shark Tank” star and Chairman of O’Shares ETF Investments, Kevin O’Leary offered a “jawsome” example of the power of compound interest.

“The average salary in America is $52,000, if you save 10 percent when you start in your 20s, by the time you are 65, you will have $1.2 million dollars in the bank.”

kevin200x400“You can do it,” he said looking directly into the camera, and then shifting his gaze to the live studio audience he repeated, “You can do it…you can do it.”

But in America, we have a significant obstacle – study after study confirms that many people in their 20s may not understand the concept of compound interest and other basic money management principles. One recent survey released in June of this year by Massachusetts Mutual Life Insurance Company (MassMutual), asked Americans aged 25-40 five basic financial literacy questions – and just 17 percent of participants answered them all correctly.

O’Leary has long been an advocate for financial literacy. His two best-selling books, “Cold Hard Truth: On Men, Women & Money” (2013), and “Cold Hard Truth: On Family, Kids & Money” (2015) serve as guides on “making, saving, and growing money.”

What he finds frustrating is that American schools “essentially ignore financial literacy” he told Advisors Magazine during a recent interview.

“My kids grew up in a suburb of Boston and were taught everything – math, reading, geography, sex education, but they [the school system] never once gave them any help in explaining what debt was, or how a credit card works, or how to invest, or how you should think about spending money,” he said. “It's not in any school curriculum in a way that's meaningful and it's got to change, it’s a huge problem.”

O'Leary suggests that U.S. educational systems should add financial literacy to the core curriculum for students beginning at age 7 to help them understand what money is and “how it fits in a family.” Further, he wants the federal government to mandate that states put in place that at least ten percent of the educational day is spent on financial literacy. “Otherwise we're just setting up people to fail in life,” he said.

ol200x300Born in Montreal, Canada, and having lived in Cambodia, Tunisia, and Cyprus while growing up, combined with his experiences as a global investor years later, it’s easy to conclude that O’Leary’s worldview is significant. So, how does financial literacy in America compare to that of other countries?

In Europe, they build financial literacy into their educational programs, particularly the Nordic countries, he explained. Debt and spending habits are discussed at an early age, and in Switzerland part of marriage counseling includes discussion of such topics as “how you take on debt and how you understand your partner's affinity towards saving money,” explained O’Leary.

“They have very successful marriages – because the number one reason for divorce in America is not infidelity, it's financial stress.”

For over three years, O'Leary has spent many Saturday mornings teaching a program on financial literacy at campuses all over the country including, MIT, Harvard, Notre Dame, and Temple University.

“I do quite a large cohort of engineers usually, they're the ones that tend to want to be entrepreneurs, so I'm spending a fair amount of time with them. It’s amazing, you see class of MIT engineers, the smartest people on earth, and they don't know how to buy a stock,” he said adding, “There's nothing more exciting than the energy from a class of 22-year-olds about to go into the market and start a company.”

In further efforts to improve financial literacy for young adults, O’Leary, inspired by his own 24-year-old daughter’s desire to start an investment portfolio, developed a fintech app called Beanstox. Users can put in any amount of money as low as a dollar and can buy shares in companies to learn about investing firsthand.

In countless interviews, O’Leary often mentions that his mother instilled sound financial concepts and values in him when he was very young – he was exposed to key business and financial insof books hero1ights at an age much earlier than most. Advisor’s Magazine asked him, “What’s the first thing that comes to mind that she taught you?”

“She told me at the age of 5-years-old, ‘Never spend the principal, only the interest.’” he said. “It's the concept of saving money and making it work for you, it was engrained in my head very early.”

Evidently, his mother had a plan for her son for which she was preparing him. When he finished college, she told him she wasn't going to support him financially any more.

“That was pretty scary for a couple of years, but it all worked out. And I'm applying that same philosophy to my own kids now, having learned it from her,” said O’Leary adding that his children are now 24 and 21 years old.


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