Celebrate your M Day! (How I taught my young sons to use simple financial statements)

Celebrate your M Day! (How I taught my young sons to use simple financial statements)

Mar 07, 2018

My article last week elicited quite a number of reactions. (Click link to read.)  While a few defended Kiyosaki’s definitions of assets and liabilities, most of the readers realized the importance of the three basic financial statements (Income Statement, Balance Sheet and Cashflow). Some shared how terrified they were with Accounting, while some shared they miss those financial statements. Still others informed me that they started making their own because of the article’s reminder. Those comments made my day.

Understanding the basics of accounting is very important because it is the language of business.


So maybe it’s also a good idea to make this part of the FQ upbringing of our kids.


Teaching young kids to prepare financial statements.

I did not set out to teach my kids about accounting in their tender age, but our dream to raise responsible individuals led us to include financial discipline, which consequently, made use of these financial statements in their simplest forms as tools. (These stories are detailed in Chapter 6 of Raising Pinoy Boys)


Income Statement

Back in grade school I gave my sons their respective “treasure box” (a giveaway that’s shaped like a treasure box) and tickler notebook where they kept and recorded the cash they handled. Every Sunday they would receive their allowance for the week. But before they got it, they showed me their list of expenses the previous week. (See sample below.) This system made them aware how much money they had in their boxes. It also served as their Income Statement because it was where they recorded their “income” (their allowance) and their expenses on a regular basis.

Taken from Raising Pinoy Boys, page 67. Anton’s Savings Ticker in 2003 when he was in Grade 1.
Taken from Raising Pinoy Boys, page 67. Anton’s Savings Ticker in 2003 when he was in Grade 1.



Cashflow Statement

Since their inflows and outflows were still very simple at that time, the above recording also doubled as their cashflow statement.

However, when they went on study term abroad while in college, they had to prepare more elaborate Cashflow Statements. This time there was a column for foreign exchange as they spent in the currencies of their host countries. There was also a running balance (i.e. the total budget for their study abroad less expenses incurred to date)

During their one semester stint abroad, they emailed to us their Monthly Cashflow Statement detailing the expenses they incurred during the period. This exercise was very helpful for them to stay within their budget, which was significantly lower than the budgets of their classmates/roomates. In fact, some of their classmates did not have budgets.

Again, nothing fancy and intimidating, just a simple listing of where money came from and where it went. The running balance in their excel file made them aware of their “fuel level” until the end of the semester.

What was interesting was that this awareness allowed them to adjust their spending behavior and made them creative on how to earn on the side, something they wouldn’t have done without the aid of the Cashflow Statement.


Balance Sheet

When the boys were born, we opened a savings account for them. We deposited their cash gifts from their ninongs, ninangs, uncles and aunties, grandparents, and others in their respective accounts allowing us to separate their money from ours, no commingling of funds from the very start.

Later on when we started investing their money in fixed income instruments and stocks, I needed to have a more orderly recording for each of them, instead of just a footnote in our Couple Balance Sheet. That’s when I started preparing their respective Balance Sheets.

Fortunately, they learned to use excel early on and that was my cue to make them prepare their own Balance Sheets. Some parents are a bit concerned about showing how much money their children have but this turnover of Balance Sheet was quite successful for the Fausto boys. Yes, they were wowed to see their money at the start, but somehow we impressed upon them that their money should really be invested to grow, “Since Papa and Mama are still the ones paying for your expenses, you don’t need to use any of this yet.” Of course, there were requests to use some, especially for certain “big ticket item purchases” (per children’s standards) but everything still had to undergo scrutiny and get a “Board approval” from Papa and Mama. 🙂 Fortunately, there were very few such requests.

We made an agreement for them to update their Balance Sheet at least every quarter, to be submitted to Mama. This made them more engaged in their saving and investing. They know where their money is invested. They know which ones give good returns, which ones are steady and volatile. Later on, they were calling the shots about where to put their money.

I tell you, these kids have gone through a few stock market cycles already making them “chill” about volatility similar to the current one we’re having right now.

But the greatest gift their Balance Sheet has given them is this: Early in life they understood the abstract concept of money in a more tangible way. The normal person (especially a kid) would probably think that one derives satisfaction from money only if it is spent to buy something to be enjoyed. However, their Balance Sheet showing their Net Asset Value grow gave them a substitute gratification. Competitive as they are, they derived pleasure seeing their assets grow and sometimes it was like a contest to them.

It was easier for them not to buy the latest gizmos even if they could afford them because they knew that buying shares of stocks in their favorite companies would allow them to grow their assets in their Balance Sheet while a gadget would only depreciate in value. There you go, the concept of Opportunity Cost (the cost of forgone alternative) clearly understood by them not through complicated explanations but through experience.

I highly recommend the Balance Sheet to parents with kids who seem to have a problem with delaying gratification. 🙂



The M Day!

To add more fun to the saving and investing of your children and your family, you may want to try out this tradition.

It is true, if you just make your children save and invest from the very start, it is possible for them to accumulate a million pesos even before they start working. And I am not talking about huge allowance here. My sons’ allowance levels were always on the low side. The Ilocana in me wanted to teach them how to be frugal and what better way to do that than to train them to budget a small amount from the very start. Click MoCFQMom to download a free excel file where you can show your kids how the magic of compounding can make them millionaires if only they save and invest regularly from their allowance.



Here’s the fun part. Kids are by nature competitive and playful. Why don’t you challenge them to make their first million? I tell you this game will make them more frugal and creative in earning extra cash during summer or other free time. And then once they hit the million mark, celebrate! That’s what we call the M Day! Every year we celebrate our M Day (the day they all hit the mark) by having a special meal together.

If you think the M Day is too long to wait for, lower the threshold to five or six figures and call it something else. Then go on as you all accumulate wealth. The family that invests together celebrates their M Day together! 🙂


If this is inculcated in your children in a fun way, they will keep the tradition and who knows, in a few years they would be inviting you to celebrate their B Day!


Cheers to using simple financial statements in your FQ journey. Here’s wishing you all a happy M Day with your family! Insert wallet w heart.



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Rose Fres Fausto is a speaker and author of bestselling books Raising Pinoy Boys and The Retelling of The Richest Man in Babylon (English and Filipino versions). Click this link to read samples – Books of FQ Mom. She is a Behavioral Economist, Certified Gallup Strengths Coach and the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards. Follow her on Facebook & YouTube as FQ Mom, and Twitter & Instagram as theFQMom.

ATTRIBUTIONS: Savings Tickler from Raising Pinoy Boys and other images generated by FQMom.com used to help deliver the message of the article. Smiley image from weclipart.com.