Experience has taught me that teaching kids financial literacy is not easy. This is especially true with younger ones because they really have no concept of the value of a dollar — to test this out just ask any 5-year-old how much they think the house they are living in costs. lol

One extremely effective method I have been successfully using to teach my own young kids financial literacy is money management via a ledger book. By teaching them how to use a ledger, my kids (now ages 12 and 9) have become very adept at how to manage their income (from their allowance and birthday/holiday gifts).

Because they keep accurate ledgers, I now am able to issue them credit if they so desire. Of course, they are charged interest after a grace period, if they don't pay the money back promptly. This has proved to be invaluable in teaching them about the pitfalls of accepting credit.

I also give them monthly bonuses on what they save. If you are interested in the full details on what I did and how I implemented it, check out the following article I wrote on teaching kids how to use a ledger to learn money management skills:

http://lenpenzo.com/blog/id506-use-a-ledger-to-teach-kids-money-management-skills.html

My $0.02 (after taxes)

Len
Len Penzo dot Com

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