Recently I was talking with a mom of 4 about how she and her husband were teaching their children the value of money. She had commented that her kids were fairly "money savvy", and I wondered what they did to foster that. Among simply talking to them about money (which still can be vague), each child received an allowance contingent upon chores, behavior, etc for the week. They were given one quarter per age (5 years = 5 quarters), and are allowed to spend it or save it however they wish.
Sounds basic enough. I have never been sure about where I stand with getting an allowance. I see pros and cons to it, and sometimes the thought of my child "earning" money for doing things that I think he/she should do simply because they are a member of this family does bother me a bit.
However, this mom said that one great reward for giving your kids an allowance AND the freedom to spend it is that it reveals the inclinations of each child with money. One of her kids is a major saver...he's been saving for years now for something BIG. Another one likes to buy a treat at the snack bar at the pool, or doesn't hesitate to buy a pack of gum for $1 at the store. Seeing these tendencies allows her and her husband to know what areas to focus in on for each child with money.
While the saver of the family can be praised for acting wisely with looking long-term and demonstrating self-control, they can also talk to him about the temptation to hoard money or become ungenerous with it. The spenders in the family, while enjoying instant gratification for that can of pop or pack of gum, might struggle with never having enough money to buy something bigger than just that, which is a result of their compulsive spending behavior.
Giving your kids a little money to work can actually give you more insight than what you might have once thought. Some people have their kids set up 3 jars - save, spend, tithe - and the kids divide their money up appropriately in the jars. There are all sorts of ideas out there on how to teach kids about the value of money, and in the process, parents will see great value in it as well.