Saving is at the core of a solid financial eduction. Learning to save is not something that is easy to do in our consumer-oriented culture, however. Leading by example — and talking about how saving is helping you reach your family’s financial goals — is important. Creating an environment where kids participate in and ask questions about the saving process is even better. In honor of Financial Literacy Month, here are some “building blocks” to keep in mind when teaching your kid to S.A.V.E., courtesy TD Bank.
Show them ways to earn money. Talk to your child about your job and what you do to earn your paycheck. Discuss what they can do to start earning money on their own. Consider offering an allowance for household chores. In your neighborhood, there may be opportunities for them to earn money doing yard work or shoveling. As they get older, encourage them to research babysitting positions or to look for a part time job after school and on the weekends.
Advise them about earning interest on savings. Let them know that the bank will actually PAY them to keep their money in a savings account by depositing interest every month. They may want to keep their money close, but knowing that their balance will get bigger in a savings account, without too much effort from them, may change their mind. While interest rates may change, it’s always zero percent for their piggy banks!
Verify their understanding of Needs vs. Wants. This may be the toughest part of the discussion. They may feel that they need that toy to play with or have to have those new jeans to wear to school. In order to help them recognize when to spend and when to save, it is vital to teach them the difference between needs and wants. Consider sitting down with them to make a list of items they want to buy and discuss which category each item would fall under. This is also a good time to talk to them about helping others and donating some of their money to charity. Encourage them to designate their funds into separate categories: saving, spending and donating.
Explain the cost of borrowing money. With the growing number of advertisements focused on the ease of applying for home and auto loans, your child may get the impression that borrowing money is an easy solution when they want something. Discuss responsible borrowing and make sure they understand the cost of borrowing money. Use an example from your own borrowing history to show them how much an item cost and how much you actually paid for it. Talk to them about why you made that decision to borrow and if it was worth it. These are decisions they will have to make at some point and, as we know, children are likely to copy the financial habits of their parents. 
The editorial staff of THE FATHER LIFE can be reached at editor@thefatherlife.com.