There are many things children learn in school and one is how to count money. However, there are so many other things they need to know.
1. Save for a rainy day
From the time children are old enough to want to buy toys, books, clothes, they should be learning how to save for them. An allowance is a good tool to help with this. They may want something that costs $50.00 and they get $5.00 a week. It then becomes a choice whether they will spend on less expensive items or will save for that big ticket item in the future. Your child may find that immediate desires pass but the satisfaction that comes from saving money last indefinitely.

2. Work hard for your money
Help your child make the connection that money isn't something freely given, but it is earned through hard work. If you choose to give an allowance each week, it may be tied to chores they do around the house so they can learn that if work is not done, there is no financial reward. Age appropriate chores and rewards are key. Younger kids can help with simple things like setting the table, where doing the job well is not as important as seeing the job through. Older kids can take on harder jobs, such as cleaning their room, doing the dishes, or mowing the lawn, in exchange for greater compensation. You may even encourage them to begin offering their services around the neighborhood.

3. Understand a budget
Young children don't realize that Mom and Dad have a limited amount of money to spend each month. But learning what a budget is and why you need one is a very important lesson for them to learn. You can even use Monopoly money to help them see how much money is spent each month on food, bills, the house, savings, charitable organizations, etc. It is important for them to have a broad sense of how adults divide up their money each month. Encourage your child to start a budget of their own. Part of their allowance could go to savings, charity, and some for fun. Help your child identify what he/she values and budget his money accordingly.

4.The Power of Compound Interest
An easy way to teach compound interest is to put a penny on one side of a table, to represent an account bearing compound interest, and a dime on the other side of the table to represent an account bearing simple interest. Ask your child which will grow to a dollar in fewer steps: the penny, if you double it at each step, or the dime, if you add an additional ten cents at each step. The penny, presenting compound interest, will have grown to $1.28 by the eighth step. The dime has become only 80 cents and the difference will continue to widen. What starts out as a little bit of interest will, given enough time, eventually become an enormous amount. The earlier you start saving, the better.

5. Beware of Credit
Children need to learn at an early age that credit cards are not free money. You can give age appropriate lessons in how credit works.
If they want an item that costs $20, agree to lend them the money under the following terms:
*There is a grace period of one week, after which the interest will start to accrue
*The interest rate is 20% each week
*The minimum payment is $5 (or whatever his/her allowance is)
If your child only pays the minimum, she will end up paying $10.13 more for the $20.00 item over a seven week time period and sap their allowance each week. This is sad but not much different than what happens from credit card companies.

Adjust any of these lessons to suit your child's age and circumstances. Teaching your child about money and how it works will pay off now and later!

Taken in part from FamilyEducation.com