10 Personal Finance Lessons for Your Kids
by Efren Ll. Cruz, RFP®
Look at the following formula for the future value of money that is invested:
Future Value = Principal x (1 + annual rate of return)Time
One of the easier ways to grow money and reach financial freedom is to have time on your side. This is why personal finance should be learned as early as childhood.
Here then are ten steps that I developed to help you impart personal finance lessons to your children.
1) Set a goal. Children think in pictures and not complex concepts. A Peso bill is really but a tool to acquire goods and services. So skip the tool first and let your kids focus on their simple goals. And because they are kids, they would probably have mostly short-term goals at first. Show them a picture of what they can have if they save the right way.
2) Give first. Goal setting can get out of hand and be reduced to materialism. To avoid this, tell your kids that before they save, they should also give a little bit away to the church, the poor, their siblings or to whomsoever they want. Tell them that giving has the immediate benefit of allowing them to fly higher as they are not weighed down by an earthly object such as money. Giving not only liberates the giver but also enriches his heart as he sees the good he does for others.
3) Collect loose change. Tell your kids to take the Php3.50 challenge. By saving even just a weird amount of Php3.50 a day for 5 days in a week, 4 weeks in a month and 12 months in a year, your kids will be able to save Php840. That’s a lot more than the Php300 that Php100,000 will earn when left in a savings account in a bank for a year. Your kids can earn a lot more than one who has a huge amount to begin with. All that they have to do is save even a small amount a day.
4) Turbo-charge savings. Provide an incentive to save. Tell your children that if they stick to their savings plan, you will add twice as much as what they saved.
5) Compound money. Grow your kids’ savings faster by putting them in a savings account or, when the amount gets large enough, in a time deposit. And from time to time, show them their savings passbook or TD certificate to let them see how much their money has grown.
6) Give reward tidbits. To keep your kids interested in saving and investing, allow them to taste a bit of their hard work. At a specified time every year, create an anniversary when they can dip a little into their money and realize their short-term goal. If all their goals are long-term, let them buy within budget anything their little heart desires.
7) Explain debt and risk. As with teaching sex to children, it would be better if you would be the first who they will hear from with respect to debt and investment risk. The hordes of people who are wallowing in debt or suffering from investment scams should be reason enough for you to counsel them that: 1) debt is financial death to those who abuse it; and 2) the higher the potential return, the higher the risk of loss. And don’t forget to mention that guarantees of excessive returns are nothing more than scams.
8) Introduce entrepreneurship. There are a million and one small entrepreneurship projects you can immerse your kids in. Not only will such projects foster creativity, it will also let your kids realize the value of hard and quality work. Your kids can be entrepreneurial, whether as future employees or business owners.
9) Teach them the value of insurance. Insurance is a must for managing risks to life, property and business in an affordable way. Indoctrinate your kids that life and non-life insurance are necessary expenses. Teach them the proper way of buying insurance so that they will be the ones looking for insurance agents and brokers instead of running away from them like how many people still do.
10) Be a shining example. You must practice what you preach for your personal finance lessons to have a deep impact on your children. So be a shining example to them. Otherwise, your kids will just end up confused.
So here’s to the next generation’s financial wellness.
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Efren Ll. Cruz is a Registered Financial Planner and Director of RFP® Philippines, seasoned investment adviser, bestselling author of personal finance books in the Philippines and a YAMAN Coach™. He also writes for the Philippine Daily Inquirer’s Money Matters column HERE.
or more money advice in marriage, you can check out the column For Richer Or Poorer on Inspirations.ph every Friday (publication date may change without prior notice) or send questions directly to yaman@personalfinance.ph.
Copyright 2025 Efren Ll. Cruz, RFP®. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without the prior written consent of the author.
