It's important for them to understand the value of a dollar, so they start to think about the concept of money at a young age. So how do you go about this in a way that your child will stay engaged and understand?
Consider allowance
NPR explains that by doing this, you are sending a message to your children that nothing in the world comes free. Kids can learn to budget the money they earn from doing chores and spend it however they please. There is a problem with this plan though. If your child decides they aren't driven by money or don't feel they don't need money, then are they allowed to sit out of basic chores [1]?
Play the grocery game
Investopedia suggests that you allow your kids to understand financial basics by giving them an allotted amount of money, say $5. Then, give them a list of food items that the local food pantry needs and challenge them to get as much food as they can [2]. This can teach them the value of prices and giving back.
Avoid Allowance
NPR also proposes the idea that you don't give your kids an allowance, but instead give them the basic necessities and have them sell you on other purchases [1]. For example, you will buy your daughter new jeans for school once she outgrows her other pants-but if she wants a new skirt, maybe she will have to make a larger argument for the practicality of buying said skirt. This can teach your children how to make sales pitches and help them develop debating skills.
Let them help you
There is also the option of letting your children help you make decisions about vacations or other budgeting decisions. About.com suggests that you narrow your vacation choices down to two options, then ask your kids to do some research and see which one is the most cost effective option for what you want to do [3]. This is a great way to not only get your kids experience comparing prices, but also lets them be involved in the vacation process and feel like they have some control.
Sources:
[1] Five Ways To Teach Your Kids The Value Of A Dollar
[2] Your Kids And Money: Teaching The Value Of A Dollar
[3] How to Teach Your Kids the Value of a Dollar
NMLS #407985