What is the right way to teach kids about money? Should we start in the elementary school when they get a spending money? Or should teach them how to go to the bank, open an account, etc?

An allowance is a vital tool for teaching kids how to budget, save make their own decisions. Children learn and remember from mistakes when their own moneys are lost or spent foolishly. Add some extra money to make savings possible. It seems hard but avoid bailing out your children when their allowance falls short. If you give extra, try to teach them to pay back the amount.

As the child grows older, open a savings account and help him or her understand how to operate it. Explain the proper use of credit and let them know that borrowing in any form costs money. Remember there was some wisdom in the saying, ‘neither a borrower nor a lender be’, in real life. It is truly said, the best way to lose a friend is to lend him or her money. That is the most important money lesson.

My mother's a smart woman and taught us not only about money but how delayed gratification can be the wiser choice. Being able to delay gratification is, say some psychologists, a sign of maturity. I remember reading M. Scott Peck's The Road Less Traveled where it was mentioned (and I'm paraphrasing here) as something some adults never learn. Instead they're always wanting everything right here and right now in many areas of life.

But I digress! The way Mom did it was to give us an allowance each week in return for us doing small chores. The deal was this. Any of it we'd managed to save between New Year and summer vacation time, she'd match penny for penny. It was our choice whether we saved it or spent it and how much. 

My younger sister and I were in completely opposite camps on this the first year the plan came up. She just spent hers and enjoyed it, while I'd part with a little but save the rest. I didn't have an account or anything, just a pink piggybank.

The first year we did it I must have been around 9, which means she was 8. When summer rolled around, I gleefully counted my money and my parents, true to their word, matched it. My sister got nothing.

She was horrified! Somewhere deep down she'd thought she'd get it anyway since they never ever played favorites with us. Mom and Dad however stuck to their guns. She'd been told the same as I and had chosen to spend all hers, they said, so that was why she didn't have anything extra. She sulked almost all summer LOL but the next year, saved it just like me. :) 

I don't think it matters how you teach them, as long as you teach them the value of money in some way. The sooner they realize you need to save if you really want something and work for that stuff that magically comes out the machine in the wall, the better.