By Chris Taylor
NEW YORK, Sept 2 When it comes to getting good
marks in school, the traditional reward is an old-fashioned pat
on the back. But these days some kids are responding to
something a little different: Cold, hard cash.
Like the children of Ganesh Subramanian, director of
business development finance for French drugmaker Sanofi-Aventis
. Last school year he set the bar pretty high for his two
boys, Anik and Navin: All A's on a report card, and he gives
them $100. All A's, all year - four straight report cards - and
the reward gets bumped to $1,000. Just a single B-plus, and that
hefty reward is nixed.
"It started out as kind of a joke, but then they actually
did it," says Subramanian, of Hasbrouck Heights, New Jersey. "It
incentivized them, because they know if they start falling
behind in their homework, that could bring one grade down to a
B-plus and then they lose everything. So when they come home
from school, they always make sure to get their work done."
Subramanian is not alone in linking schoolwork to cash
rewards. A study on children and money by the American Institute
of CPAs (AICPA) and Harris Interactive, conducted in July, found
that fully 48 percent of parents paid out for good grades. The
average going rate for an A, among those who dipped into their
wallets for superior schoolwork? $16.60.
"I don't see anything wrong with paying for performance,"
says Clare Levison, a certified public accountant in Blacksburg,
Virginia, and a member of the National CPA Financial Literacy
Commission. "It's gone on for a long time in corporate America.
I think it can be an effective incentive, as long as you're
using it as a teachable moment to tell them about budgeting and
It does not have to be just for younger kids, either. Orange
County, California, media strategist Mike Nason is a father of
five, with his youngest daughter, Chandler, now in college at
Arizona State University. She is already 19, but they have still
worked out a financial deal: She keeps her grade point average
above a 3.0, and he covers her punishing gasoline bills.
It works out to a little over $40 a week, and if her grades
fall below that level, the extra financial help gets clawed
back. But the college sophomore is doing so well, they have not
yet had to cross that bridge.
"Gas is so expensive, I don't know how young people do it
these days," says Nason. "So it's been a great motivator."
But some parents are not convinced that cash is the way to
go when it comes to getting good grades. Since it is something
that kids should be achieving on their own, without any added
incentive, rewarding grades strikes some as too much of a
Palo Alto, California, resident Bill Dwight, a father of
five, tried the paying-for-grades idea with a couple of his sons
in recent years. A's received top payouts, B's got less, and C's
or less resulted in zilch. But after trying it for a year, he
realized the system did not bring about markedly different
behaviors. So he and his wife scrapped the idea, and their sons'
school performance has remained the same as before.
"Our judgment was, it wasn't really improving their scores,
and philosophically we weren't in tune with it," says Dwight,
founder of the money-management site FamZoo. "But I don't
criticize other parents for trying. I say try a bunch of
different things, and find out what works for your kid."
So how can you introduce the idea of paying for grades,
without turning your kids into miniature versions of Gordon
Gekko? Here are some tips from those who have tried it:
* Try paying for habits instead. If the idea of linking cash
to grades leaves a bad taste in your mouth, you could always try
promoting good studying habits instead. So instead of paying for
an A, link your child's regular allowance to a shorter-term
goal, like completing homework for the week, which could
subsequently lead to that A. "The bad thing about paying for
outcome is that if the semester is going down the tube, then
there's no motivation anymore," says Dwight. "But if you're
paying for a habit like reading regularly or doing homework,
then it's never too late."
* Earmark the proceeds for different purposes. Whether
allowances are tied to grades or not, it is critical that kids
set aside some of their cash for different priorities.
Philadelphia's Kelly Whalen, a mother of four and founder of the
blog The Centsible Life, does not link schoolwork to cash. But
she makes sure that 25 percent of her kids' allowances goes
toward savings and another quarter toward charity, in order to
teach them fiscal responsibility. "Have them put the money into
separate piggy banks or envelopes, so they get the concept at a
young age," Whalen says.
* Retain veto power. Giving your children money for grades
does not have to mean they can do whatever they want with it.
You can retain control, and decide whether they are using it
wisely. Ganesh Subramanian's kids, for instance, have not yet
touched the $1,000 they each earned last school year. "If they
want to spend $400 on a toy or something, I'm not going to allow
that," he says. "Maybe when we show them how much college is
going to cost, they'll want to move it over into their 529
college-savings plans. It's very important for kids to learn
about finances early - and this is one way to do it."