While caught up in the daily grind of life have you ever looked at your kids and wondered how you would teach them to be money smart? It happens to me quite frequently.

I have two daughters and I barely get time to do anything after my day job and taking care of them. Whenever I look at my kids I can't stop thinking how can I teach them strategies and techniques to build wealth over time and help them make smart money decisions in life?

With lack of time I sought after the help of a very good friend of mine, Sarah, who has been doing research in educating kids about money and making them money smart. We always wondered why don't schools include money matters in their course work.

Nevertheless, after talking to Sarah I learned that whatever money related matters kids learn in their childhood make a deep impact on how they handle money matters later in their lives. So it is very important to introduce money matters to kids in an interesting way so that they learn the right thing at the right age.

Sarah told me to follow strategies outlined below. She stressed on the point that kids need to be reminded about these concepts on a regular basis so never lose a chance to teach your kids about money in practical life. You will find many instances where you can educate your kids and stress the importance of being money smart.

Limited source of money

Never fulfill all the demands and wishes of your kids. See what you can manage and tell your kids that you can't do it because you have only limited amount budgeted for that purpose. This will break the myth kids usually have about money that parents usually have unlimited supply of money. Being frank with kids about limited supply of money is always a good idea.

Credit card is NOT free money

Break another myth kids usually have about the credit card that it's free money; just swipe the card and somehow someone pays the money for the goodies. Teach them that your credit card is not free. You have to pay to the credit card company at the end of the month. Also tell them that not paying them will ruin your credit history and it's never a good idea to buy something you can't plan to pay for.

Buy low priced books

Kids, especially high school & college goer usually don't have time to think that they can save over 50% if they buy the used book and shop them online.

They also lack the patience to wait for the books to come (3-4 days) if they buy them online.

They end up going to Borders or Barnes and Noble and buy the book at a premium price. And just after a few months that book would be worth only a couple of dollars.

Give them incentive to put the difference between the new book and the used book price to be credited to their college saving or investment accounts.

Give them allowance

Allowance is a good way to teach kids that there is no free lunch. It tells them that they need to work to get money.

But I can understand how tough it must be for parents to see their kids doing chores. To avoid the pains and enjoy the learning process ask them to do things that they enjoy - like washing cars or taking pet for a walk.

Don't give them money immediately. Give them some points and at the end of the month pay them cash based on points. You can add your 10-20% add-on if they choose to save that money rather then spend. That way they will have incentive to save the money.

Shopping manners

It's very usual for kids to demand something while walking with you in a shopping mall or stores. Kids love to have trendy stuff the way others have.

Guess what? Those trendy toys and stuffs become 40 to 50% discounted in just 6 to 8 weeks. Teach kids that she can have two toys at the price of the new trendy one. Help her evaluate which one gives her most value for the money being spent.

Do I need it?

How often have you asked yourself "Do I need it?". If you ask it before buying anything you would end up having less items from the shopping mall or stores.

It's the psychology. When we see something we think "It would look great there. Let's take one." and we buy things that we don't really need.

Next time before putting that new item at store in the shopping card ask yourself "Do I need it?".

Kids will learn from you and they will never spend on things that they don't need.

When kids save some money this way put that money in their account. Give them incentives. That's the power of positive reinforcement!

Meaningful Gifts

So what are you going to gift your kid this holiday season or on her next birthday? Another soft toy? Maybe a story book?

How about giving her a book that will teach her the importance of money? Or how about giving her a stock to introduce her to the amazing world of investment?

When you go buy the gift do a little research and you would find money educational story books and toys (BTW Monopoly is NOT money educational game).

Give you child the gift of money education and she might not like in the short run but she will thank you zillions later and you would be happy that you gave the right gift at the right time.

It has been helping my daughters and I hope they would come out to be money smart kids. I hope this will also help your kids.

Hope to hear your experiences.