American students struggle when it comes to financial knowledge. When the OECD (the organization which runs the international PISA exam) tested students in 18 countries for their financial literacy abilities several years ago, it was discovered that U.S. students “ranked at best eighth and at worst 12th.”

Bottom line? American students need more instruction in the area of financial literacy.

But who should teach them? That’s a question asked of educators in a recent PWC survey. Surprisingly, a majority of educators believe that the home (i.e. parents) should be the primary instructor in all things financial. Many teachers also believe that financial education is not happening in the home, a theory which might be spurred by the fact that a number of American adults are financially illiterate themselves.

So how can parents who feel financially illiterate become their children’s teachers in this all-important area? The blog of financial guru Dave Ramsey offers some interesting tips, three of which are below:

1. “Set an example. Little eyes are watching you. If you’re slapping down plastic every time you go out to dinner or to the grocery store, they will eventually notice. If, at the end of every month, you and your spouse are arguing about money, they’ll notice. Set a healthy example for them, and they’ll be much more likely to follow it when they get older.”

2. “Give commissions, not allowances. Don’t just give your kids money for breathing. Pay them commissions based on chores they do around the house like taking out the trash, cleaning their room, or mowing the grass. This will help them understand that money is earned—it’s not just given to them.”

3. “Give them the responsibility of a bank account. By the time your kid is a teenager, you should be able to set them up with a simple bank account if you’ve been doing some of the above all along. This takes money management to the next level, and it will prepare them for (hopefully) managing a much heftier account balance when they get older.”

Still feeling inept when it comes to teaching your kids how to handle money wisely? Check out the book Smart Money Smart Kids for more practical advice on the crucial subject of financial literacy.

Image Credit: Homies in Heaven bit.ly/1iowB8m