Using Money to Reward or Punish

Cash as an incentive should only be used in small amounts in select circumstances.

Giving bonuses for good grades or withholding part of an allowance for misbehavior may be an effective way to teach a youngster about an economic system based on monetary rewards, but many child specialists fear it puts family relationships on the wrong footing.

Such actions mix love with money, and in young minds the two concepts can become confused. A better approach is to reward good behavior by showing pride and affection, and to punish wrongdoing with some penalty that fits the crime.

But this is America, after all, where money speaks, and the experts are divided on this question. Janet Bodnar, whose Money Smart Kids column appears on, addresses the issue frequently.

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"Using money as an incentive can be appropriate if you give small amounts under the right circumstances," she says. "For example, reward your kids after the fact for behaving well at the supermarket instead of promising them money ahead of time if they don't throw a tantrum. It may seem like splitting hairs, but the former is more of a reward, while the latter is an out-and-out bribe."

What about payment for good grades? janet Bodnar: "Some parents are appalled by the idea, but others are quite willing to fork over the cash, on the theory that school is a child's primary employment and he or she ought to be rewarded for doing good work (especially if that child is forgoing a part-time job in favor of full-time studying). One mother compromised by agreeing to pay her son $5 for each A on his report card, on the condition that the money be put into his college savings account."

The bigger lesson here, according to child specialists: Don't give kids the idea that money can be used to buy love or to buy your way out of a jam. Paying older kids for doing extra jobs around the house is fine, as long as they realize they also have regular family responsibilities that they should not expect to be paid for.