Just like me, my eldest son loves shopping. Whenever we go to the mall, we always end up buying something for him. He never demands for more than one toy (thank God!), but apart from accumulating a roomful of toys (which is a challenge to clean), if you add everything up, the money that we spent for toys alone is already in the thousands mark. So, in order to teach him the value of money, my husband gave my son his old wallet. That is where he keeps the money (mostly coins) that we give him.
He is starting to understand the concept of money, but with his young age, of course not entirely.
I found this interesting article in BBC, on how to teach your child the value of money. We have already started teaching him 1 & 2 (value of money and talking shop), as for 3, he hasn’t really asked us if we’re rich or not, but he always assumes that his grandpa (my dad) will always be there is he needs money (sorry dad!). As for 4 & 5 (power of pocket money and what to give), apart from the loose change that we give him, we haven’t really settled on giving him an allowance since he’s only 4. We’ll probably start giving him an allowance when he starts grade school. As for the last 2, I think this is a very good incentive when he grows up as well as keeping everything fair between my two sons.