Welcome to The Money Coach, a Times of Malta column where readers can ask questions about life's money issues. Send your questions about personal finances, inheritance, gifting or other personal finance topics to moneycoach@timesofmalta.com
Dear Luca,
I am an accountant and an avid follower of all things related to financial literacy, so I handle personal finances at home.
Recently, my 14-year-old asked me if I could teach him about personal finances. I got excited and showed him the excel sheet I have for our finances. I am all for total transparency with children when it comes to finances. I don’t want my children to make the same financial mistakes I was guilty of at a young age.
To my dismay, he got immediately bored. Then he asked whether I knew anything about crypto and trading. Apart from not knowing much about trading, I ended up feeling more disappointed since I don’t really condone such volatile investments.
How can I get my son more interested in personal finances, but not through high-risk investments only?
Mummy Money Guru
Luca Responds
Well done for being so open about your personal finances with your son. I believe that the more approachable we are, the more our children can learn from real-life experiences instead of just what they see from the so-called FinInfluencers on TikTok, Instagram etc.
Nothing, and I repeat, nothing beats personal experience when it comes to dealing with personal finances.
You might be the best accountant or investment advisor in the world, but if there is no why - if there is no story behind your financial decisions - it will be difficult to ingrain your teachings.
When explaining to your son, don’t just go into the practical stuff of saving, emergency fund building and so on. Tell him why you made those decisions. Tell him your own story about saving and money management. As human beings, we are inspired by the stories of others.
For instance:
- Instead of telling your son to save an amount per month to reach a saving goal, give him a personal example and what led you to it. You could just say ‘I saved €50 a month to make my wedding dream possible’ or you can take it up a notch and say ‘Having a wedding was always a dream of mine, and I knew it was expensive, but I started small and built up slowly. I never used to save, but having that goal in mind made it all possible and real.’
- Having an emergency fund is one of the top things that I believe should be taught and should be part of any personal finance plan. When I introduce it to my listeners, I don’t just say ‘save for six months’ worth of expenses, it’ll put your mind at rest’. Instead, I tell them the story of when my daughter was born, and the doctor diagnosed her with sensory issues, leading to my wife not working for a year. That meant one less income – if I didn’t have an emergency fund what would that year have looked like? As you can imagine, people are more captivated by such things – your son will be as well.
Regarding his interest in wanting to learn about crypto and trading: this is not necessarily a bad thing. but it would be wise for you as a parent to also tell him stories of people who lost money in volatile investments – in fact, according to several statistics many do. Perhaps you have a personal story (you mentioned early mistakes) which could help him. But at the end of the day, the reality is that a number of people make money from trading, so we have to keep an open mind about it, even though you may have reservations.
Another thing I’d say is to involve your son as much as possible in your everyday expenditure - this will help him learn the real value of money. Remember: In 2023, an OECD survey revealed that only 38% of adults in developed countries understood key financial concepts like inflation, compound interest, and managing risk. These are essential to knowing how money grows and holds its value over time.
If your son is practically involved in things like doing the grocery shopping and setting a budget for your next holiday, it’ll go a long way in your quest to teach him personal finances.
I also suggest setting saving goals together – like saving for the next gaming console or whatever your son is passionate about. The more involved he is, the more he will learn.
Avoid formal eExcel sheets, as teenagers are easily bored. It might also be a good idea to play a board game related to money with him. In my foreign workshops where I teach financial well-being to teenagers across Europe, one of the most popular sessions is when they are practicing what they learnt through a board game similar to Monopoly, but more adapted to personal finances.
Continue encouraging open discussions – but make it as interesting as possible.
Luca is the founder of the Money Coaching Hub. Email him your financial questions or your response to today's question for a chance to be featured in a future column.
Disclaimer: This column is intended to provide general information on various topics related to personal finance. The information provided is for educational purposes only and should not be construed as personalised financial advice for your specific situation. Financial decisions are highly individual and can vary greatly based on your unique circumstances, goals, and risk tolerance. The author of this column is not authorised to provide financial advice. Before making any financial decisions, it is recommended to seek professional financial advice from an authorised financial advisor.