Great ideas!
We have a little jar where they have been depositing their money. Once the jar is full, they have counted the money and then I transfer that money into the bank account. We are guesstimating that 12k needs to be saved, but since it is so far away we don't really know exactly what is reasonable for a family of five (we have a little one who is too young to grasp this project right now). The enormity of this goal is starting to hit the 9 year old and he has been asking questions about what would happen if they don't have enough money saved so that is why I am looking for other suggestions.
We are planning on doing just what Mrs. MMM suggested for our end of Christmas and birthday gifts. Although, I probably should provide kind reminders to relatives that helping them save money would be a great idea instead of purchasing a toy.
We have already instituted a pretty limited spending birthday event policy. For our older son's party last year we did a book exchange instead of presents and party favors, as well as a homemade cake.
Any other ideas people have would be greatly appreciated!