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!

Your money or the house?

Your money or the house?

Let’s look at a personal example that floored me when my boyfriend pointed it out (and I’m the financial literacy lady).

I live in a three bedroom home in Santa Barbara, CA. It’s expensive to live here so I have rented out one of my spare bedrooms since I moved into this wonderful home 6.5 years ago. I ‘choose’ to put my office in the third bedroom because I wanted to have a dining room and not have a third body in the house.

Well, I did this for 6 years and it just go to the point where I was tired of paying out so much to live in the house. I moved the office into the dining room, which I only used about 6 times a year except to store papers on the table:-), I painted the office room, put furniture in it and now rent it out for $900 a month.

Rather than looking at it by the month as money I was paying out in rent as an expense, I added it up and saw that if I had done this for the past 6 years and had the room rented only 80% of the time, I would have over $51,000!!!!! that I hadn’t spent in rent.

This is the sort of things we teach kids who attend my Camp Millionaire programs. They really begin to see how seemingly small change money choices add up to large financial impacts over time.

I was sick to my stomach. Why hadn’t I been able to choose this option before? Little things…like I wanted more privacy…I wanted to have a dining room…I didn’t want the office space to intrude into the house (I love working out of the house by the way)…and I’m sure there’s other reasons that have to do with my inherent stubborn nature:-).

So,when you’re teaching your children about money, make it really mean something by expanding the savings, investing, expenses, choices, etc., out over a longer period of time. It’s amazing how thinking a little differently can influence your choices, and theirs, when it’s their turn to make financial decisions that will affect their entire lives.

To learn more about how to teach YOUR children about money, check out The Ultimate Allowance…it’s the only financial parenting book you’ll ever need to make sure your kids grow up with the skills they need to move out and stay out.

Just something to think about…