Deal in 1p first. If you have lots of real 1p coins brilliant, if not make some from paper. You can begin with just tokens that have no numerical value on them.
Your child can ‘earn’ these coins or tokens by doing certain jobs or activities. You can discuss the value of these, for example; do they earn more for tidying their room or laying the table?
Dealing only in 1p or single tokens helps your child to understand why we have different values of coins. When they are trying to carry around and keep track of 20 ‘coins’ the ease of having just 2 coins each worth 10 becomes abundantly clear! We have even dealt in the hundreds at school, watching children trying to work with 200 ‘coins’!
Once this is understood you can begin to exchange these 1p coins for differing values, begin with 20p maximum at first. If you make your ‘coins’ you can draw dots on one side. This will make it easier for your child to calculate the value and total.
This may appear basic, but children must fully understand the mathematical concepts involved before progressing onto higher values and giving change.
Make a price list of each job/activity. The same way that your child can ‘earn’ money, they must also ‘pay’ for items. Need a drink =2p, watch television=20p etc.
In this way children will begin to understand the addition, subtraction and value of coins in a very practical and meaningful way.