We all want our children to grow up and experience life in a grander, more profound way than we have. At least most parents do.
I think most of us can also agree that living grander often takes a little bit of moolah…which makes teaching your kids about money one of parenting’s most important tasts. And teaching our children to ‘think differently’ about money is very important in a changing economy.
There are many areas where we can teach kids to think about money differently than we do, but one of the most important is teaching them to think of financial choices in different time frames. Let me explain what I mean.
Let’s say that you find yourself going out for coffee every Friday and with your coffee you start buying a bagel so that the total cost each week is $5 (with cream cheese, of course).
At a glance, on a per week basis, spending just $5 seems trivial. But…if you look at that expense over the course of a year, you’ve spent $260.
Now even $260 won’t break the bank, normally, but it’s not just the actual cost that we need to consider. It’s the waste of growth potential over our lifetimes that we need to examine to get the whole picture.
Let’s say you started investing that $5 each week instead of spending it each Friday. At just 5% interest (return on your investment), in 25 years you’d have $12,969 instead of spending $6,500 on coffee and bagels. In essence, you would have doubled your money in 25 years. And that’s only getting a 5% return!