In my lessons I aim for all my students to be able to read and understand music so that when I'm not sitting next to them during their practice time, they can work out any problems they come across. For my younger students I teach in a way that incorporates colours as well as ups, downs, steps and skips. All very simple concepts for children to grasp. For my older students I use similar methods (minus the colours) to work on either a favourite pop song or well known pieces to put into practice (while enjoying it) the basics of music.
I can take students through exams if that is something that is of interest or work through a repertoire based system that exposes a student to as much music as they want.