Our children must learn there is only one way to be saved: by taking refuge by faith under the covering for sin provided by the atoning death and shed blood of Jesus Christ. Study with them such passages as Isaiah 53, Romans 3:20–31, 1 Corinthians 15, 2 Corinthians 5:21, and 1 John 1:9. We want them to see that no amount of human effort can make us right with God; only faith in the blood of the Lord Jesus Christ can do that.
They also must recognize two things Jesus does for them that they cannot do for themselves. The first is to make full payment for their sins. Since we cannot do this for ourselves, we cannot satisfy the justice of God. By His suffering (His passive obedience), Jesus fully paid for sin, freeing us from all condemnation and punishment so that we may be counted righteous before God and be made heirs of everlasting life. Therefore, God can be the Justifier of those who believe in His Son, Jesus Christ.
The second is to obey the law perfectly. The law must be perfectly obeyed, either by us or by a substitute acting on "our behalf. As God's incarnate Son, Jesus fulfilled every demand of the law (His active obedience), acting as our substitute. Such perfect righteousness, imputed to us, allows us to stand before God not just guilt-free but holy.
We can use various examples to teach the principle of substitution. My favorite is the story about a handicapped boy who could not stand up. A substitute teacher noticed the little boy was being naughty and told him to come to the front of the classroom and stand in a corner. Another boy raised his hand and said, "I want to stand in the corner for him." When the teacher asked why, he said, "Tom can't do it for himself." The teacher allowed the other boy to stand in the corner for the naughty boy, then told the other children that Tom was much like we sinners, who cannot stand under the wrath of God. Jesus comes and stands in our corner to bear the wrath of God for us. That is the heart of the substitutionary atonement.
This excerpt is taken from Parenting By God's Promises by Joel Beeke.