Power Players

Kevin O'Leary's favorite savings tip for when you have kids

VIDEO1:4401:44
Kevin O’Leary: This is how much it costs to raise a kid

It's no secret that having children is a big financial undertaking — even mega-rich financier and star or ABC's "Shark Tank" Kevin O'Leary says so.

"Of course it's wonderful to have a family, and I endorse the idea forever," O'Leary tells CNBC Make It. "It's wonderful to have children grow up with you, watch them age, become part of a family. It's fantastic. But they're not free. They're very expensive."

Indeed, according to the most recent available data from the U.S. Department of Agriculture, it can cost around $233,610 to raise a child from birth through age 17, CNBC Make It previously reported. However, that figure can vary greatly, and higher-income families can expect to spend around $372,210 while lower income-families spend around $174,690.

O'Leary, who believes the cost of having kids is more likely to be about $700,000 overall, has two children: Savannah, 25, and Trevor, 22. He recalls when he had his first child how surprised he was, in particular, at just the cost of children's clothing.

Kevin O'Leary and his children when they were young
Courtesy of Kevin O'Leary

"They grow out of them every 90 days," O'Leary says of kids clothes. "What a stupid way to waste money. There's got to be a better strategy.

"I said this to my wife on the second child — because we didn't have any money when we had our second kid — I said, 'Look, we're unlucky. Our first one was a girl our second is a boy. We can't put the boy in the girls clothing.'"

So save money wherever you can, O'Leary says, like buying unisex clothing so they can easily serve as hand-me-downs.

"Start to think about t-shirts and pants that go for both sexes when they're young," O'Leary advises. "The kids don't care. And that's one way to save money."

Another saving tip O'Leary recommends is that anytime you pick something up that you're going to buy (for yourself or your child) say to yourself, "Do I really need this?" Often it's just "crap" and a waste of money, he says.

Of course, it's ideal to plan for big life events. In general, when it comes to saving, experts recommend that in your 20s, you should aim to save 25 percent of your overall gross pay, and by age 30, have the equivalent of your annual salary saved.

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Don't miss: Kevin O'Leary shares his best advice about paying off your mortgage

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

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