I always encourage parents to find interesting ways to teach their children about responsible money management. When I do, I always lean toward behavior modeling. Children who, even at an early age, see their parents engaging in a positive relationship with money will subconsciously take what they observe to heart more than any explicit lessons they attempt to impart. Teaching financial literacy in schools is mostly a lost cause, as teachers aren’t trained for it, there isn’t enough room in the curriculum, and as Ramit pointed out, most students just won’t care enough about the subject for the lessons to have an effect. The responsibilities for teaching these lessons remains with the parents, and with many parents failing with their own money management, a good solution is almost impossible to design.

Using money as a motivational tool for children is dangerous, yet it’s common for parents to reward their children for bringing home good grades on the report card. Policies range anywhere from incentives only for As to a staggered system of rewards for any passing grade, with As receiving the highest monetary prize. These types of reward system broadcasts a few messages:

• Results are what matter, regardless of effort or method of achieving those results.
• Good results are rewarded with money.
• In the case of the tiered system, mediocre results are rewarded, as well.
• Money is the best type of reward, and success and effort are only worthwhile if a monetary reward is available.

I don’t see how any of these messages reinforce a positive relationship with money.

Results are what matter, regardless of effort or method of achieving those results. Children will link good grades with money. While most students achieve good grades by studying, working hard, paying attention in class, perfecting homework, and performing well on tests, a select frustrated few might take some shortcuts. Cheating is one way to get good grades, at least until the cheater gets caught. On the other hand, for a child who excels “naturally” in a class, they might achieve an A without any effort. In this case, the student could believe they will be ale to sail through life without developing the skills that will be necessary for their success in other tasks. Results matter, but so do attitudes and values.

Good results are rewarded with money. I often hear parents say that they wish to pay students for the work they do because this is how the real world works. I have two issues with this as it pertains to grades. First of all, students will come to expect to receive money when they perform well. Anyone who has worked in an office where people receive a pay increase just for being there or where people receive promotions based on their coziness with the boss rather than performance can attest to financial rewards are not necessarily linked to good results in the “real world.” THe distribution of money is often unfair.

Mediocre results are rewarded. Any monetary reward is enough to associate money with grades, and if there isn’t much perceived difference between the rewards for receiving grades of C, B, and A, then the children subject to this system will aim for the lowest rewarded score.

Money is the best type of reward, and success and effort are only worthwhile if a monetary reward is available. The world needs people who are solely motivated by money. I don’t think this is a complete loss unless every child decides to seek a path that they believe will lead them to the most money throughout their lifetime. This is the result of an increased focus on giving only money to children as rewards. Education and performance should be its own reward. If children see parents who value the lessons taught by schools and if parents reinforce the teachers’ goals and side with the teachers when it comes to completing work on time and accurately, they might have a better chance of getting the impression that what they are learning is important and knowledge is valued in society.

Bribing children with money if they bring home good grades is often a last resort to motivate a student when nothing else seems to work. I can’t fault any parents who have tried everything possible to help their students perform well in school, including finding tutors and seeing behavioral psychologists who specialize with children. Motivating with money doesn’t always have to be bad. If it is balanced with other messages, there is a better chance of children growing up to have a healthy relationship with money.

Disclaimer: I do not have any children, so I haven’t had any practical experience with this. I’m interested in hearing readers’ thoughts, especially from those of you who have children and have considered paying or do pay rewards for report card performance.

Update: A few days after writing this article, I came across this review and summary of Drive: The Surprising Truth About What Motivates Us by Daniel H. Pink. The research outlined in this book confirms some of my thoughts about motivation that can be applied to this situation, and goes much further.

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