Is it smart to pay for good grades?

My husband, who agrees with the school-as-a-job approach, is sensitive to these concerns. He'd like to focus the reward system on areas in which our daughter can be expected to achieve good results with good effort. He believes this will help teach her to "develop her strengths," as he did when he focused on developing his artistic abilities -- the abilities that help support his family today.

(Our daughter's in preschool, by the way, so this is all still theoretical for us.)

If parents do want to pay for grades, Kiplinger's Bodnar said, they should be conscious of the differences in children's natural abilities, intelligence and learning styles. Having more than one child makes this even more critical. If one kid has a learning disability, for example, a parent might want to reward improvements in grades rather than the grades themselves. But then they may have to contend with issues of equity if they wind up punishing one child (the achiever) for a C while rewarding the other for the same grade.

"It pretty quickly becomes unwieldy," Bodnar said.

It's a slippery slope

Money can be like drugs: It can take more and more to get the same effect.

If cash becomes your child's primary reason to achieve, you may well lose your leverage when she's old enough to earn her own, Bodnar said. Either that, or you may find yourself constantly upping the ante to keep your child's interest.

It may start out as a few bucks for an A, she said, "and by high school it's 'How about a car, Mom and Dad?'"

Bodnar recommends parents who want to use cash rewards do so for a limited time to avoid these side effects.

You may be sending the wrong messages

I'll quote poster "No_Rulz": "Paying for grades sets kids up for an unrealistic expectations of the future. How many people in the working world get bonuses every six weeks for doing the job that is expected of them?"

Furthermore, as much as we'd like to believe that hard work and achievement are always rewarded in the marketplace, we know differently. Success also is tied to picking the right field, staying ahead of trends in our industries and economy, developing relationships and connections with others, and knowing how to negotiate, among other factors.

• Talk back: Do you pay your kids for grades?

In other words, there's a difference between working hard and working smart. Our kids need a good work ethic, but they need to know it takes more than that to succeed.

There may be better ways

Even parents and experts who support pay for grades say praise, encouragement and parental involvement are equally, if not more, important motivators.

If you want to avoid cash payouts but still reward your kids for their successes, consider experiences instead, such as dinner out or a special trip.

"Experiences cost money, but unlike cash, a nonstandard, shared outing takes a special and lasting place in your child's memories," said Judy MacDonald Johnston, a co-founder of Blue Lake Children's Publishing, which produces children's magazines and money-management kits for parents and kids.

I like this approach because it fits with all we're learning about how experiences contribute more to lasting happiness than stuff does. For more details, read my colleague MP Dunleavey's column "7 ways to buy happiness" or read her book, "Money Can Buy Happiness.")

Johnston recommends defining each family member's "family contribution" -- the unpaid, nonnegotiable tasks and expectations for being part of the family that can include chores, behaviors and achievements.

Maintaining a B average might be part of a child's family contribution, Johnston said. Anything below a 3.0 draws consequences, such as the loss of a treasured privilege, while achievements above that mark merit special rewards. For example:

• One A merits a family dinner out at the child's choice of restaurant.

• Three A's merit a concert or sporting event ticket.

• Straight A's merit a family overnight trip to the destination of the child's choice.

"Each family's finances and dynamics are different," Johnston said, so parents "should customize the reward system to meet their needs."

If you'd like to share how you motivate your child to succeed in school and in life, visit the Your Money message board.

Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life,"is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Published Jan. 14, 2008

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