I read a book called the First National Bank of Dad when my wife was pregnant 11 years ago. The idea is that your kids will get the idea of handling money if you just give them some and let them suffer the consequences of not saving. The only catch is that you need to offer them an interest rate that matches their sense of time.
When kids are 5 or so they get the concept of money, but time is hard for them to understand. Next month and next year are both in the distant, unknowable future for them. A five year old needs an interest rate that pays out a good return in a week, not a year.
The book suggests that you make a bank for your kids that pays out an interest rate that starts very high and tapers off as they get into their teens. It worked very well for my daughter. She likes to buy things, but she really thinks hard about it when she knows that she is spending from her own account in the Bank of Dad.
RE: Lessons I wish I had taught my kids - Installment 2