As featured in The Wall Street Journal, Money Magazine, and more!

Paying Children for Good Grades

This article was written by in Family and Life. 38 comments.

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.

Updated June 1, 2011 and originally published May 30, 2011.

Email Email Print Print
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 38 comments… read them below or add one }

avatar 1 Anonymous

My wife and I raised two children and used monetary rewards as well a behavioral examples in doing so. Both seemingly turns out OK as neither is debt-burdened or unemployed. Although you classify a group of people as driven solely by money, and acknowledge their place, most of us have been rewarded in monetary terms over our lives, not just the chosen few. Everything from interest (the benefit of saving) to overtime pay is a reward for something you’ve accomplished. The one thing we did differently while our kids were in school is plan rewards on an annual rather than semester basis. The rewards came in the summer and were based on having completed whichever grade-level requirements applied.
Using examples of “just being there” and “coziness with the boss”, although unfair, doesn’t diminish the fact the pay for performance is still the basis of advancement the majority of the time and those pronouncements are oftentimes tainted by perception rather than facts. Real bias is actionable in a variety of ways.
I don’t agree with giving our school systems a pass on curriculum – we should demand that math and family level accounting is a part of it – they are failing in their basic responsibilities. Life skills should be taught early and although you may not be able to forecast your compound interest in your head or even on paper you should be able to do it the modern way …with a calculator.

Reply to this comment

avatar 2 Anonymous

Great post. As the parent of a college grad, a coll soph, and a HS senior about to graduate we always stressed the importance of getting good grades. It was an assumption to the kids that they would attend college. We pushed our kids and encouraged them to do the best that THEY could in school. To those who advocate paying kids for grades I say try being a parent.

Reply to this comment

avatar 3 rewards

I don’t think that “paying” for good grades is bad, whether it be money, praise, gifts, or all the above. Few parents take it to the extreme that you present and reward kids when they knowingly cheat. More than anything, your points speak to the importance of financial literacy which includes the role of money.

How would you motivate your kids who aren’t that interested in school?

Reply to this comment

avatar 4 Luke Landes

That’s a good question. Like I said, I don’t have kids yet, so all I can do is speculate. I would try to instill a love of learning, curiosity, and questioning by setting an example that does just that… outside of school and schoolwork as much as possible. I’d hope that they take that attitude and adapt it to school, but the education system is only one part of it…

Reply to this comment

avatar 5 rewards

For what it’s worth, my wife and I have a plan whereby our kids will get all the money that we’re setting aside for them if they obtain their own scholarships (and graduate!)

Reply to this comment

avatar 6 qixx

Find people in the community that now wish they had finished HS, gone to college, etc and find ways for you child to meet or interview these individuals. Other preventative measures for people not yet in that situation include start early (read to/with your child); encourage and support children while learning when still young or learning outside of school;
You also need to have a love of learning yourself. If you don’t like to learn or read now or didn’t like learning in school you will have a harder time in this. Make sure your children see you read (or start) for fun and enjoyment. Help them find things they are interested in to learn about (even if outside school) as this may lead to increased interest in the in school learning.

Reply to this comment

avatar 7 Anonymous

We have a 9 y/o with ADHD. We use a chip system where our child gets a certain amount of chips for daily tasks, ranging from 1 – 5 chips. He can earn 30 – 40 chips a day. However, he has to “purchase” the stuff he wants to do; such as playing outside, watching TV (in 30 min increments) and having a friend over. There are also bigger purchases, such as going out for fast food and other special things to encourage long term “savings”. He has to balance immediate gratification against saving for something bigger, and we’re not really using money. Finally, he has to pay a financial penalty for negative behavior.

For the report cards, we let him choose we’re he’d like to go to eat or play. It’s based on grades as well as behavior. I just want to make sure he tries his best, so it’s not strictly on grades. I don’t like paying a certain amount of $$ per grade.

Reply to this comment

avatar 8 tbork84

I have to admit that I like this strategy. I just need to check that the financial penalty is chip based as well right?

Reply to this comment

avatar 9 Anonymous

Yes, you take away some chips for bad behavior. You’re supposed to start with a warning and say how many chips you’re going to take away, and follow thru after the 3rd warning.

Reply to this comment

avatar 10 Anonymous

I got money for my grades when I was a kid. Honestly, it didn’t really affect the way I viewed schoolwork, probably because I didn’t get the money until the end of the school year. I was very motivated by grades and praise from teachers so I would have worked hard either way.

I don’t give my son money for his grades. I don’t think it would make a bit of difference for him – he hates school and doesn’t really care how he performs on “a bunch of pointless work that has nothing to do with real life” (his words).

Reply to this comment

avatar 11 Anonymous

I have two adult children who are successful. They were good students and received rewards for their grades. They were also required to save at least half of any money they received.
BTW, I teach financial literacy in high school. As a former CFO, I am well qualified to teach it to my students. I agree it is difficult to find qualified teachers to teach financial literacy to students. It is better to learn it from their parents, however there are many parents who probably should take my class.

Reply to this comment

avatar 12 Anonymous

I could see why some parents would approach grades this way but I agree with you, it is not a wise plan. When I was growing up we were never paid for grades although there was an expectation that we would attain a certain level; nothing under 75%. If we ever got below this a discussion happened about why.

I think an allowance for chores is reasonable but not for grades. What if you have a child who really struggles and can’t get a good grade in a class no matter how hard they try. It just isn’t part of their natural ability. By having them not reach the point of getting the money, you risk damaging their self esteem which can cause them all sorts of problems in life as a child and as an adult.

Reply to this comment

avatar 13 Anonymous

The $$$ for chores didn’t work for us, or my sister in-law’s kids. They would only focus on the money and not want to do anything unless you paid them; like I’ll clean my room if you give me $5. They also expected the weekly allowance even if they forgot to do their chores.

Our requirement was you simply had to do your chores w/o being reminded, and the chores were nothing time consuming. I just didn’t like that the focus changed to all about the $$$ instead of doing your share to help your family.

Reply to this comment

avatar 14 Anonymous

You make a valid point Jason. It should be about helping the family. I think parents should take a roll on forming a better attitude in their kids and teaching them it is not about the money. We never had to be reminded about doing our chores, it was just a given that they would get done. I think our allowance was just a way of giving us some money to teach us budgeting and stuff.

Reply to this comment

avatar 15 Anonymous

I agree that the concept of money management is under-taught in the schools, which is ironic considering that education should help prepare kids for the rigors necessary to succeed in the market system. As a parent of two adult children, it is my opinion that money for good grades is a mistake on multiple levels, and a slippery slope. What next? Are kids going to start negotiating their performance levels that are commiserate with the financial reward (compensation) they believe they deserve? I think it’s far better to instill in children the immense necessity of getting a good education, lest they don’t end up committing themselves to lives of day laborers.

Reply to this comment

avatar 16 Anonymous

I don’t think there is a rule of thumb for this. I don’t have kids so I’m just guessing when I say this…. there doesn’t seem to be any consistency in terms of what motivates one kid from the next, so you have to go with what works. All kids are different and parents should adapt to what works best for their kid.

Reply to this comment

avatar 17 Anonymous

I have to disagree in general. My parents rewarded my sister and I with money for grades. Paying for good grades does not turn kids into cheating, ruthless pragmatists who only care about money. I wouldn’t pay for mediocre grades though. A’s or at most B’s only. C’s are the new F and do not deserve rewards.

Reply to this comment

avatar 18 Anonymous

We have five children, and we pay $ for A’s, nothing for B’s, and they pay us for C’s. (We’ve not had to deal with anything less.) We stay involved with their school work and assignments – making sure that they’re on top of things and get help when/if they need it. They don’t get paid for chores but are expected to do a lot around the house in addition to keeping their rooms clean. They can get paid for extra jobs like mowing the lawn or (the older ones) babysitting. Our kids don’t cheat in school and they set aside money for tithing as well as savings… and they get to spend their money on things they want. I fully agree with what you’ve said about modeling, not only financially but in everything you do as an adult. I don’t see anything wrong with paying for grades as long as you’re staying involved and communicating with your child. It has to be balanced with all things in life… if they don’t do their chores they don’t get to go play… if they get good grades they’re rewarded financially… they’re expected to give both time and money to the church…. etc. It all fits together to form a complete picture.

Reply to this comment

avatar 19 Anonymous

“C’s are the new F” the very definition of Grade Inflation.

Reply to this comment

avatar 20 Anonymous

I also disagree with the idea that teaching finances to kids is a ‘lost cause’. Of course you can teach basic money principals to children.

Reply to this comment

avatar 21 Anonymous

Some very good advice here, however personal budgeting can also help you achieve your financial goals. Being a CPA we’ve published everything you need to know to get yourself out of debt forever.

Reply to this comment

avatar 22 Donna Freedman

As an elementary school student I was startled to hear that a couple of kids in my class would get money for each A they got. In my family you were *expected* to bring home good grades.
I still think that it’s a child’s job to do his or her best in school and to do certain things around the house because, well, they live there, too.
If a kid demanded money for cleaning his room, you could always give him the $5 and then say, “Oh, by the way, you owe me for all the times I changed your poopy diapers and all the lunches I’ve packed for you since you started school. It’s a lot more than $5, but this will do as a down payment.” Take back the fiver and prepare to hear the wail: “That’s not fairrrrrr….!!!!”

Reply to this comment

avatar 23 shellye

I have three kids, one in college, one in HS and one in middle school. I’ve never paid my kids for grades. I give them lunch money each week, give them money for birthdays and Christmas, and have given them cash at random times “just because”, but for some reason I’ve never felt led to pay for grades. Their reward should be the satisfaction and praise they get for earning an A or B, and the accompanying perks (honor roll, scholarships, etc) they get from school. I think paying for grades is telling a child, indirectly, that achievement can be bought. They certainly won’t learn that in the working world, if your work accomplishments go unnoticed by your boss, and you don’t automatically get a raise because the economy stinks, etc. Kind of the same thinking as giving everyone a trophy for participation. I just think it’s a bad practice to begin with.

Reply to this comment

avatar 24 Anonymous

My parents paid me to for A’s in school. Get a B, no money. School was far too easy me (show up <25% and still ace the tests), so my parents used monetary incentives as a means to get me to attend class (since part of our grades were based on attendance). Did it work? Sure did, but I still skipped every now and then…just kept track of my attendance rate. Graduated with straight A's in HS then graduated from Stanford. In debt? Nope. Am I an outlier? Perhaps.

Reply to this comment

avatar 25 Cejay

I am very involved in my niece and nephews lives and I do not pay them for good grades. I do give them money when they pass to the next grade but that is accumulated effort and I take into account the effort that each one puts out. I try to spend time with them, doing things they love to do. Also, in some cases, their parents are not financially able to give them money for the little extras so I try to do that when I can. I also ahve them help me around my house and they do. We talk, laugh, put on music, watch movies and eat. All of this comes into play when I give them moeny.

Reply to this comment

avatar 26 Anonymous

Hi Flexo, We would frequently (not always) give our daughter a gift for a reportcard of mainly A’s and B’s. But the major determinant of her good grades was our long term focus on the importance of education.

Reply to this comment

avatar 27 Anonymous

I think it’s a bad idea, because I didn’t like how it felt when I was the child being bribed. My mother would joke that I would have to pay her if I got C’s or less. I was a good student and found the learning and accomplishment to be the reward. Being given a financial incentive felt like bribery and manipulation, a bad kind of academic pressure, and something of an insult. It showed a lack of trust and acknowledgement of my abilities.

The question, “How would you motivate your kids who aren’t that interested in school?” is a good one. You might be able to pay them to feign interest and fight against their own inherent abilities, but it seems to me that that would not only be unpleasant, but it would detract from encouraging the development of their inherent talents. I can see using bribes and incentives for behavioral issues, but I guess I don’t see school performance as a behavioral issue. Certainly parents should instill a love of learning, by example and interaction.

Reply to this comment

avatar 28 Anonymous

Both my husband and I are firmly in the camp of not paying money for good grades. We want our two boys (age 9 and 6) to be self-motivated (and competitive) to push themselves to get the best possible grades they can. We’re lucky in that they both seem to be pretty bright and get good results. They love to read and find studying/learning fun for the most part. I do sympathize with parents who are struggling to motivate their kids and recognize that with parenting there is no such thing as a “one size fits all” approach.

One thing we do is to celebrate good grades, usually allowing the child to choose what I’ll cook for dinner one night. We make a fuss about it, but there’s no specific reward. We pay particular attention to noting how hard they have worked or how much effort they have made.

I found reading Daniel Pink’s book “Drive” really helpful on giving insight into how rewards like this can actually decrease motivation in kids.

Reply to this comment

avatar 29 Anonymous

I do not have children myself, however my parents never used money as a motivator. They used a checklist of things that I wanted really bad and I needed to get exceptional grades for achieving the same… which I guess amounts to the same thing.

Reply to this comment

avatar 30 Anonymous

My parents never paid me for getting good grades. It was expected that I would do my absolute best in school and bring home the best grades I could. In theory, if I was already working as hard as possible the added incentive of $$$ wouldn’t have made a difference. From my experience, if the family’s culture is one that values academics and high performance it doesn’t seem to matter if the parents use cash as an incentive. I’ve had friends who were raised both ways and all are similarly successful. I think the only problem is when parents off cash as a last ditch, desperate effort to increase performance.

Reply to this comment

avatar 31 Anonymous

Our daughter is a freshman in H.S. We pay $50 for each ‘A’, subtract $50 for each ‘B’, and forfeit the whole bonus for any grade less than a ‘B’. Four ‘A’s and two ‘B’s resulted in a $100 bonus for 1st semester. Different people are motivated by different things; our 15yo is motivated by clothes, makeup, etc. This ‘bonus’ system has forced her to allocate her time so as to turn her borderline ‘B’ into a solid ‘B’, thus avoiding a forfeit. It’s about rewarding effort. She complains about the tough criteria, but we have set the bar high – just like the bosses do at our employers. Want the whole $300? Then bust your butt.

Reply to this comment

avatar 32 skylog

this is an interesting way of going about this!

Reply to this comment

avatar 33 Anonymous

Really interesting. I penned some thoughts of my own on this issue in my most recent blog post I can understand how some parents feel that they have to resort to financial or material incentives to reward exam performance or academic achievement. That said I think that the goal is surely to teach children about the intrinsic merits of learning and education; achieving and exceeding expectations boosts confidence and sense of self-worth. Teaching your kids to get a kick out of working hard surely puts them in a good place to succeed in the workplace.

Reply to this comment

avatar 34 Thedogeofsl

I’m with Flexo on this one. When I was kind (back When Dinosaurs Walked the Earth), learning was valued as a end in itself in our home, not just a means to a financial end. I got good grades because I wanted to. Because doing well in school and getting an education was something that needed no external validation. It was a basic value.

I also learned good money management, but that was because my brother and I got allowances in return for doing chores around the house. In retrospect, this was great preparation for working for a living in the real world, where you might have to do things that weren’t rewarding in themselves in return for a paycheck.

I think we need to get over the notion that the only way to place a value on something is to give it a price tag. IMO we have become, as a notion, far too obsessed with what Thoreau called “getting and spending”. We’re turning into a people who define ourselves in terms of our possessions. That’s a one-way ticket to the death of the soul.

Reply to this comment

avatar 35 Anonymous

I love the way you put that, Thedogeofsl, and I wholeheartedly agree.

Reply to this comment

avatar 36 qixx

Paying for passing a grade is as bad as paying for grades. Or does your school actually hold people back that are not ready to move on? I’ve never found a school that will hold students back that are not ready to move on.

On the other hand there are plenty of jobs out there that paying for grades is good practice for. They are jobs paid on commission. You get paid for better results. Paying for grades is a good way to make better salesmen.

Reply to this comment

avatar 37 Anonymous

The research is clear. If you are going to pay for something, you should pay for the actions, not the results. So, paying for grades has little to no impact on grades. On the other hand, paying unmotivated, low-achieving students to read more books and take a test showing they did, improved their grades.

Reply to this comment

avatar 38 Anonymous

I haven’t paid my child for grades yet, but I am considering it. I think our situation is a bit different. Our daughter is a 15 year old highschool freshman. It’s the end of the year and she’s looking at the classes she will be taking as a sophmore. She’s at the age where she is wanting a car, a job, and the ability to get her hair/nails done or buy some pizzas when out with friends. She also wants to go to college and to be prepared for college entry. She’s weighing the responsibility of taking several honors courses against taking the more standard “college prep” courses (which at our school are sub-par) and getting a part-time job. We’ve always stressed to her that her education IS her job and we’re talking to her about paying for grades (A/B only) if she does take the honors courses so that she can focus on preparing for college and still have some cash. What are everyone’s thoughts on this?

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.