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Raising Money-Savvy Teens: a Fast-Track Guide

money savvy teens

What does it take to raise money-savvy teens? It helps to start with money-savvy tweens and before that, money-savvy toddlers, but those are hard to come by.

My father introduced me to the Rule of 72 when I was a “tween” and it stuck. I was a saver from the time I started mowing lawns as a kid until the time I retired from a career in medicine in my early forties.

Besides introducing your kids to the concept of compound interest, what can you do to get your kids on the right path as they transition from childhood to adulthood?

Leif Kristjansen of  Five Year FIRE Escape, the author of today’s guest post, has some ideas.



How many adults do you know who have feelings like anxiety, desperation, and shame over money? It doesn’t have to be that way! If you’re like me, you absolutely do not want your kids to have stress, confusion, and an all-around bad relationship with money and will do anything to fight it off.

Unfortunately, too many people never learn the money lessons they need to be responsible and positive about money before they reach their “earning age” so I’ve put a lot of thought into how I will help my kids avoid this fate.

If you have teens and haven’t taught them about money, Intervene now! I promise that teaching them how to handle money today means they won’t be hounding you for it indefinitely as young adults. They will understand how to do things like not get buried under student loans and build their own wealth as adults.

Don’t worry if you fear you’ve raised a bunch of piggy-bank raiders because you didn’t think to start money lessons earlier. I aimed to make 2 quick financial lessons for teens as a teaching easy-street cheat sheet for parents who want money-smart kids.

At this point, your focus should be on padding your own nest instead of being a bank-account life-line in the future!


Important: Take the Long View


Savvy money management for teens isn’t something you cover in one session. It has to be an ongoing conversation where you discuss and demonstrate what it means to be “money smart.”

No, you don’t have to be a rich parent to teach your kids how to be financially savvy. You do have to be willing to stop to have the important conversations whenever you see opportunities pop up!



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Lesson 1: The Fast Track to Raising Non-Impulsive Spenders


The best money lesson you can give your kids is to show them that good things don’t come quickly! I can promise you that teaching your kids the art of delayed gratification will increase their life-long earning potential better than almost anything.

That means letting them watch the “funding” for the things they love, want and desire accumulate over time instead of just giving them the “Buy Now” privilege like on your Amazon Prime account.


Bring in the Delayed Gratification

What does a lesson in delayed gratification look like in real life? Pay attention here if your teen has an “impulse buy” problem because it’s about to get solved! The best part is that we’re going to lump a teen-friendly lesson on compound interest at the same time! Congratulations, you’re about to raise a super saver.

Let’s say your teen has a certain monthly allowance or chore payment for buying things they like. You can propose a deal where you’ll double that amount the next month if your teen can put off spending anything until the next payday.

You don’t have to be a Wall Street banker to see that that’s 100 percent interest…monthly! I do the same thing with my toddlers but it compounds 100% daily and it still doesn’t always sink in.

As an adult, you’d be a fool not to jump on an offer like this if it’s presented in real life, but kids are incredibly impulsive. Would your teen be smart enough to see the value? They will learn after enacting the doubling clause just once!

You don’t have to do this every month if it’s too crazy for your budget. But it’s worth it to create a little millionaire. However, peppering it in here and there is a very powerful, real-life lesson. Or lowering the allowance such that, 1 month’s payments are less but a saved month’s payments are more is my go-to path.

What’s that you have more than one kid? It works even better if you’re a family with two kids! One chooses to delay and one gives into impulses. Then seeing a sibling reap those sweet rewards may be motivation enough for the impulse spender to get the picture!

OK, that’s a huge life lesson but let’s talk about moving toward the advanced track for creating money-savvy high schoolers. The stakes are a little bit higher in this round, but it’s also more fun.



Lesson 2: Real Investments!


This is something my parents did for me when I was a kid and I think it’s genius! I have a finance blog now, for better or worse.

You know how teens tend to be pretty confident that they’d manage just fine on their own? You know how teens like to impress their friends? Let them have a stab at both through investing their own money. After all, nothing humbles the proud quite like a trial with some errors. Here’s how it should go down:


1 – Determine an amount of money your teen should take from their own savings/allowance to invest.

(If they protest the idea, incentivize it).

What if your kid doesn’t have even a penny saved? Get them saving some amount every week until they have the number you’ve agreed to ready and waiting for its Wall Street debut!


2 – You have a little bit of freedom with how you want to let your teen dabble in investing but you’ll be dealing with the logistics of it all so you get some say.

I would limit the # of purchases (Max 1/month) and incentivize long-term investing (doubling gains and doubling transaction fees) because that’s what I believe in, but fundamentally you just want them to think about investing to get those gears turning.

The actual performance is kind of irrelevant.


3 – Now, there’s a chance your kid may stumble upon the next big startup in their investing endeavors to walk away with Zuckerberg-level dividends. However, having them lose all their money is fine or even better, it’s a well controlled life lesson that might stop them from joining r/WallStreetBets in the future.

I promise your teen will look at money differently than they do today within a matter of just a few months if you give them these two very simple lessons.


Extra Quick Tips for Raising Teens With Healthy Attitudes Toward Money:


  1. Make it fun. There’s no need to sit your kids down and lecture them about money. Use my tactics to make being “money conscious” just a part of your teen’s life. Let them try it out and brag to their friends. Embrace that part.
  2. Don’t turn this into something you argue over. Remember what I said about too many people having negative and uncomfortable emotions tied up with money? Make this an adventure you can bond over instead of a stress maker. You can just regroup and restart if your kid makes a money flub. Mistakes are great teachers.
  3. Lastly, don’t make this more complicated than it needs to be. You’re too busy managing your own wealth-building strategy and planning your next income-generation stage to become your kid’s full-time finance 101 instructor.


Make this streamlined enough that you’re not spending more than a couple hours per month managing your kid’s “money education.” If you follow my rules, you won’t need to!



Leif Kristjansen is the co-founder of FiveYearFIREescape.com where he and his wife write about finances and early retirement for busy people. They have a funny take on retirement that involves working…but differently! They have kids and a house in a high cost of living city but managed to succeed via saving skills and rental houses.



Have you started teaching your kids about money? Do you agree with these ideas? What is your best piece of advice you have received about money?

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