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CONTACT: Scott Oberkrom
American Century Investments
Wednesday, September 19, 2007
Making the Grade: Should it Pay?

(Kansas City, Mo.) – The question of paying children for earning good grades has raged for years and will no doubt continue this school year. New York City officials announced this June that students can earn up to $500 with the city’s new incentive program, which includes cash incentives for children who perform well on standardized tests. And in homes across America parents are asking: “Should we pay our children for good grades?”

Two award-winning authors are sharing helpful insights for parents considering whether to pay for grades. According to authors Jack Jonathan and Sam Goller, paying for grades is not the best way to motivate children to do their best and nurture success. Rather, parents should inspire their children to take responsibility for their future. One way to do this is to teach children that earning good grades is their share in their own future, and not simply a way to earn money.

“Parents must carefully weigh the consequences of paying their children money for doing what is expected at school. Earning good grades should be expected,” said Jonathan, creator of Yes, You Can… Raise Financially Aware Kids. “Encouraging a child to be proud of their accomplishments doesn’t require a cash reward. Especially when a parent’s respect and love can have so much more value to the child.”

Jonathan and Goller offer three questions for parents to consider as they wrestle with the question of paying for grades.

  • What message do you want to send to your children by rewarding them for doing well in school? 
  • Do you want to show your children they must get good grades to earn money?
  • Do you want to teach your children they are responsible for their future, and in turn, responsible for earning good grades to help them secure that future?

If a parent decides to set up a payment system after answering those three questions, they should consider rewarding children with something other than money. Examples of other reward options include attending a sporting event or amusement park with a parent, going roller skating with a friend or staying up two hours past bedtime. These types of rewards offer parents an opportunity to nurture their child with a unique experience that will help them grow and become more caring and independent.

However, if a parent decides they still want to reward good grades with money, they should put several ground rules in place and then communicate them clearly to their children. For example:

  • Will you have the same standard for each child?
  • Will you pay only for straight A’s or designate a price for each—A, B and so forth?

 After the payment system is in place, Jonathan recommends parents discuss the following money values with their kids. Paying for grades offers an opportunity for children to learn responsible money habits at an early age.

  • Saving – A portion of any earned money, including cash for good grades, should be saved. It can go into a child’s college savings fund or saved for a big purchase. 
  • Giving – Parents should stress the importance of helping others. Moms and dads can set aside time to talk with their children about what causes mean the most to them. The next step is encouraging them to set aside a percentage of their earnings for their favorite organization.
  • Spending Wisely – It’s OK for a child to reward himself or herself with a special treat. Teach them how to be a smart consumer and get the most for their money. Helping a child determine their priorities is a valuable lesson that will serve them well throughout their lives.

 “The main question parents must settle when deciding if they will pay for grades is what values do you want to instill in your children,” said Goller, creator of Yes, You Can… Afford to Raise a Family. “We encourage parents to teach their children that they are responsible for their own future. Earning good grades is one way children can maintain control of their lives and secure a solid future ahead.”


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