Recently, I was interviewed by CNA on the topic of making your child a millionaire.
The discussion focused heavily on the mechanics — the “how-to” of compounding and investing. But I left watching the televised recording wishing airtime had been given to showcase something even more crucial: preparing our children to actually handle that money when it eventually lands in their hands.
Because if a child is not equipped with the right values, knowledge, and discipline, giving them a million dollars could do more harm than good.
Passing Down Money Values
Consider the ice cream analogy. If a child cannot manage a single scoop of ice cream without making a mess, they would not be able to handle three.
The same applies to money.
Children who cannot manage small sums responsibly may not be able to handle larger ones wisely when they grow up. This is why financial education must start early, grounded in values.
One of the first lessons is understanding money as an exchange of value. Ever since my kids turned three, I have let them use physical cash at stores to pay for items such as buying waffles and services such as haircuts.
Though it may seem small, the very act of handing over money for something tangible allows children to learn that money is a tool for exchanging value. For this reason, whenever I am with my kids, I make a point of using physical cash instead of digital payments.
Another lifelong lesson is differentiating between needs and wants. While parents will always provide for their children’s needs, it is valuable to let the kids use their allowance for their wants.
When they weigh whether a toy is really worth their limited funds, they learn to prioritise, delay gratification, and sometimes decide the item is not worth the cost after all. It is about finding a balance, enjoying life while also making thoughtful choices.
Perhaps most importantly, children must understand that money is a resource, not a scorecard.
Our possessions do not define us. Money is simply a medium to be used prudently, whether it is for building security, pursuing ikigai goals, or helping others. When children understand and internalise this perspective as they get older, they are far less likely to view wealth as an end in itself.
Secure Your Base First
Before parents rush to invest for their children, it is important to put their own financial house in order. This is a non-negotiable step that is often forgotten in the excitement of “making your child a millionaire.”
The starting point is setting up an emergency fund, ideally having at least six months of living expenses stashed away somewhere safe. This provides a cushion against sudden job loss or unforeseen expenses.
Once this buffer is in place, the next step is having adequate insurance. This includes life, medical, and disability insurance. These are not “investments” for returns, but rather crucial safeguards that protect your family’s future should a major life event occur.
Only after these basics are addressed should long-term investing take place. And here, the golden rule applies: spend below your means and invest the surplus. True wealth is built sustainably on this discipline.
Understanding Risk
Too often, conversations about investing only revolve around returns. Equally important is understanding risk. Risk can be broken down into three dimensions:
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Need to take risk: Depends on the required return to meet a financial goal. If someone already has enough assets to support their lifestyle, they do not need to chase high returns to reach their goal.
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Ability to take risk: Factors like age, time horizon, physical health, and whether you have enough insurance coverage influence this. Generally, a young person with 30 years until retirement has a higher ability to take on market volatility than someone who only has five years.
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Willingness to take risk: This is purely personal — how much volatility and uncertainty someone can tolerate, shaped by past experiences. Some investors sleep soundly through market downturns; others lose sleep at the first dip. Self-awareness here is critical.
Smart investing requires clarity on all three, not just an appetite for upside.
The Real Legacy
I believe the true legacy we leave our children is not the size of the bank account we hand them.
It is the money wisdom, mindset, and perspective we instill along the way. With the right values, even modest resources can grow into abundance. But without them, even a billion dollars can disappear overnight.
While airtime during the CNA interview was limited, I am grateful we were able to share meaningful insights on investing for your child’s future. To build on that conversation, I have shared a deeper perspective in this article, and I hope you found it valuable.
This is an original article written by Sudhan Purushothuman, Associate Adviser at Providend, the first fee-only wealth advisory firm in Southeast Asia and a leading wealth advisory firm in Asia.
If you are interested in joining our Providend Associate Adviser Programme, kindly visit this link to find out more: https://providend.com/careers
For more related resources, check out:
1. A Letter to My Beautiful Children
2. Luxury with Limits: What I Learned About Money from My Parents
3. 9 Things to Teach Your Child About Finances
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