Lead by example. Children tend to mimic the behavior of their parents, so practice sound financial behavior yourself. If you take money out of an ATM, explain to them that the money didn't just appear in the machine and that you had to put it there. If you use a credit card, explain to them that you will have to pay the money back and that you have to work for it. Don't spend frivolously on expensive toys while saying no to all your children's wants or they may begin to view you as hypocritical.
Provide a small age-appropriate allowance and require kids to purchase some of their toys and goods from their allowance. Don't bail them out when the allowance money is gone or they will learn that there is always more money around the corner. If they've spent their cash, the new toy or the new outfit will have to wait.
Give children the opportunity to earn more money for expensive gifts only by working for it. In the real world, your monetary reward is connected to the amount of work you do. If children learn this early, you can instill a strong work ethic and help them understand that money comes from hard work.
Encourage saving. Open a savings account in your child's name and show your child how important it is to save. Decide with your child how much is appropriate to save. Instead of forcing saving on them, it should be a team effort in which your children realize why saving is important and how compound interest can help their money to grow.
Discuss family finances with children. Instead of just saying you can't afford something, explain to them how the family budget works and why you won't be buying that new toy. To a limited extent, you can share money problems or worries with older children so they can begin to understand what they will face in the real world (just don't worry them too much, or this can make them feel as if they are lacking in security). Discuss things such as the cost of rent, mortgage payments, food or utilities so your child can understand all of the costs that grownups face and how much money it takes to provide the necessities that they may take for granted.