I agree 5 seems to be a good age to start introducing the concept. They typically have a genuine interest in money at this age, and start to understand a basic concept of how to save, and the value of a dollar. Being in school helps the comprehension of how an allowance works as well. Before they know a penny is significantly less then a dollar an allowance really isn't important to them.
at 1:24 AM on Feb. 12, 2011