No action taken yet on letting the kids make a withdrawal on their savings account . . . they seemed to have forgotten for now.
To answer a question, I started the kids' allowance when they were 5 and 3 years old. Since the 5 year old lost out on a couple years, I seeded her account with some extra money. At 3 years old, the money was often misplaced or lost in the house. The same to some extent at 5.
We have wallets for each kid and we ask that they keep them in the same spot each time they use them (typically near their backpacks). They've cycled through a few wallets per year as they are lost or lose interest in the design.
The can count money and understand the concept of delayed gratification. They can read dollar and cents and are just starting to grasp the concept of tax.