Divide and Conquer
Encourage children to divide their income into three parts: spending, and short- and long-term savings. Keep funds separate to make sure that savings are not spent. Keep long-term savings in an investment fund; short-term savings in a bank; and spending in a jar, piggy bank or wallet. You may also encourage children to save part of their spending money for charity.

  Teach Them What to Do with an Allowance
Have your children list expenses and income. Under expenses, include what they spend for movies, bus tokens, lunches, etc. Have them subtract expenses from income. Help them think of ways to reduce their spending. If their income is more than expenses, talk about a savings plan.

  Bank on Knowledge
Bring your children to the bank and show them how transactions work. Ask the manager for a tour — be sure to ask to see the vault! Ask for an explanation of some bank operations, such as making deposits and account opening procedures.

  Plan for a Future Vacation
With school out for at least a couple of months, children might want to do a few special things, like take a day-trip to an amusement park or get a special treat during your family's trip to the beach. Have your child make a list of things he or she wants to save for this summer and help him find ways to make extra money, like mowing the lawn, helping clean out the attic, babysitting a younger sibling or helping a neighbor. Keep the list handy so you can both keep sight of the goals.

  Calculation and Estimation Skills
Often, there are times when you are on a budget, and you have a specific amount of money set aside for a purchase. Ask your children how much they think you should spend on their friend's birthday gift. $10, $15, $25? Talk about how much you spend on birthday gifts for your friends or how many birthday gifts you have to buy in one year. If you spend $25 and have 4 birthday parties to go to in the next two months, how much will you spend? Tell your child how much you budget for groceries or entertainment to give him or her a frame of reference. Will you have to skip a family movie night and dinner out in order to buy your child's friends birthday gifts? Explain how much you have budgeted and why. This can not only teach them about priorities and budgeting, but it will help him or her to better understand sacrifices.

  The World Is Your Classroom
Take a trip to a store chosen by your children. If you find similar items with varying costs, explain the differences (quantity of product, added features, etc.) and explain why you're selecting one over the other. When you visit a banking machine, explain what you're doing and show him the receipt with the debit or credited amount posted.