Explain to the students that decimals, like fractions and percentages, indicate parts or portions of a whole. Write ".01," "1/100" and "1%" on the board, and explain that each of these notations represent the same portion of a whole: 1 out of 100. Decimals are separated from whole numbers by a dot called a decimal point. Whole numbers are placed to the left of the decimal point while parts of a whole are placed to the right of the decimal point.
Using a place-value chart, review the placement of whole numbers, then introduce (or review if you've covered this material earlier) the numbers to the right of the decimal. Emphasize the “th” sound at the end of each word so students won't confuse these new placements with tens, hundreds and so on.
Allow the students to call out various prices containing both dollars and cents as you write them on the board. Point out that all of the prices contain only two numbers after the decimal point because cents are percentages of a dollar. It takes one hundred cents to make a dollar, so any portion of a dollar would be that number out of one hundred. For example, .53 is fifty-three hundredths or 53 out of the 100 cents it takes to make one dollar. Using the place value chart and various amounts of money, practice and discuss several decimals using the following template. Write $1.32 on the board and attach a dollar bill, three dimes and two pennies. The one dollar is a whole number and is placed to the left of the decimal. It takes ten dimes to equal one dollar, so a dime is 1/10 of a dollar. There are three dimes which equals 3/10 of a dollar. Write the three in the tenths place. It takes 100 pennies to equal one dollar; therefore a penny is 1/100 of a dollar. I have two pennies, which is 2/100. Write the two in the hundredths place. The amount is then read one dollar and thirty-two cents.
Write .04 and .4 on the board and ask the students to identify which number represents four cents. Discuss this common mistake, and remind the students that monetary decimals represent a part of a hundred and must be taken to the hundredths place. In the case of .4, this can be accomplished by adding a zero to the right of the four, making the decimal .40 or 40/100. Zeros added to the right of a decimal notation do not change the number's value, only its appearance.