The world's richest people are rich for one reason: they are shrewd, intelligent financial planners. They understand the concept of risk and reward, and they know the benefits of long-term investment. They plan, scrimp, save, invest, build interest, sell, buy, invest some more - they make money make money. They, however, are not born overnight. Most of them were rather taught from a very early age how to handle money and how to value it. From the moment they were old enough to count, their parents were teaching them how to save and make prudent financial decisions.

While it might not sound like fun, teaching your kids the value of a dollar doesn't have to be a drag. Children learn invaluable life lessons by analogy; that is, they learn how things work on a big scale by doing them on small scale. By giving them an allowance and making it their responsibility, they learn how to manage (or not manage) money on a larger scale.

Here are some tips to get your kid started with his or her first allowance:

1. Start early - Give your kids an allowance as soon as they're old enough to understand the concept of money. It doesn't have to be extravagant; a dollar should me more than enough. While there aren't many things that a dollar will buy in the real world, you can fix that. Buy a bunch of snacks and goodies that your little one loves. Put them in a cabinet, and decorate the cabinet as your kid's "general store." Whenever they get their dollar, they can use it to buy anything in the store. Remember, however, not to let them raid the store when they have no money. It may be hard, but giving them free access to the store even if they have no money undermines the lesson you're teaching them.
   
   
2. Don't tie allowances to family responsibilities - You and your wife do household chores not because you get paid for it, but because it's part of your familial responsibilities. Your kids should do them for the same reason. If you want to make your kids earn their money, tie their allowances to invented "extra" chores. This teaches them that a) household chores are a responsibility, b) getting paid requires extra work aside from normal family work and c) money is a reward for doing honest, hard work.
   
   Make sure you don't reward full pay for sloppy jobs, however. This may get across the wrong point, i.e. that they can do as little as possible and still get rewarded for it.
   
   
3. Teach them how to manage money - At first, your child will simply use the money to buy stuff from their general store. Later, however, they'll start asking for the cool toys they see on TV, the growing-hair dolls or the missile-firing, water-soaking race car. This is another prime opportunity to teach them the value of investment. Begin limiting the amount you buy for your little one to birthdays and other gift-giving holidays. Instead, encourage him to save by hanging a dry-erase board in his room. On it, both of you should keep track of how much he's made, how much he's saving every week and how much he's saved so far. At the bottom, write out what it is he wants to buy, and together you can count the days until he has enough money saved to do it. This will be a very rewarding day for your tyke, one that they won't soon forget.
   
   
4. Be the bank - Be a financial advisor for your little worker. Let them spend a portion of each allowance on whatever they want, but gently encourage them to put just a little of it away each time they get paid. Although they might be reluctant to, it would be more attractive if there was a light at the end of the tunnel, e.g., a brand-new toy they've desperately wanted for months. Explain the concept of interest to them, as well, if they're old enough, and pay that interest on their investment.

Earning an allowance is a big part of being a kid, and it's the first glimpse many kids get of the true, paycheck-to-paycheck grind of daily life. Although they're young and innocent now, they'll eventually be out in the world trying to make it on their own. If you don't want them coming to you every week looking for more money, you should probably teach them how to handle it now.