When children feel envy it is often because another child has a toy that s/he wants. It is rooted in the materialism that the modern world promotes - the endless commercials and advertisements calling for the need to possess new toys and products.
The following ways are to help children overcome envy:
1. Teach children to be grateful to Allah. Teach children to be thankful and happy for the many other things that Allah had given them. For example, family, health, home, food and clothing. Teach them that if they don't get it in this world then surely they will get it in the Hereafter if they are good and go to Jannah. And if Allah hadn't blessed them with it then surely there is Wisdom behind it. For example, the toy might have distracted them from their studies or from playing with their siblings. This has to do with contentment with the decree of Allah.
Parents can find creative ways to teach children to be grateful:
a) Some people teach their children to write something that they are grateful for each day onto a strip of coloured paper over a period of time and then make them into a paper chain. It is then hung up so that the children can see the many blessings Allah had given them.
3. Teach children to seek refuge in Allah from envy and make dua for Allah to remove the envy. Teach them surah al-Falaq, its meaning and memorisation and to say a dua for the removal of envy in their heart at seeing someone with a new toy.