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Pay for Grades? the Good the Bad and the Ugly!

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Now that kids are back at school, good grades are on every one’s mind. Kids need them, we want them and teacher’s jobs depend on them.

When my kids were in grammar school a very successful businessman explained his “Pay for Grades” concept to me and I loved it.



▪               $100 for an “A”

▪               $50 for a “B”

▪               $0 for a “C”

▪               Kids had to pay back $50 for a “D”

▪               And if they got an “F” the kids had to move out!

The next day I implemented this at home with my two kids. They loved it, except they didn’t believe the F… I said, “Well don’t get one and you don’t have anything to worry about.”

With one caveat, the money they earned went into their savings account. At 16 they could use that money to buy a car, save it, or invest it. But they were not allowed to blow it.

This served many purposes, how to save for something, financial responsibility, delayed gratification and the power of compound interest.

Luckily, back then the interest rates were high. They saw the power of saving their money and how compound interest worked.

It wasn’t about paying them; it was about teaching them and educating them in financial literacy.

When you try harder you’re rewarded.

It worked out great; I had to make some adjustments for my son because he wasn’t as academic, for him it was based on raising his grade point average.

When they hit 16 my saver continued to save her money and took the car we offered and my spender took what we offered and his own money to buy his car.

He appreciates it, takes care of it and feels empowered when his friends find out that he had enough money to buy what he wanted.

Now for the Bad

▪               Some parents feel that paying for grades is a horrible idea; that you should not pay kids for what they should already be doing.

▪               Some teachers feel it’s a horrible idea; because it diminishes the love for learning.

▪               Psychologists warn kids can perform worse because it cheapens the act of learning.

But… I haven’t met a kid yet that hasn’t loved the idea. It’s only the adults that have issues with it.

My daughter is in her second year of College and my son is a junior in High School and they’re fine. As far as – love for learning- they never had that. To this day they feel that what they learn in school is irrelevant to real life. It’s important that kids understand that school teaches you how to learn, problem solve and social skills.

Every adult I have talked to that was rewarded for grades found that it gave them that extra motivation to do even better.

I asked my daughter if she felt it diminished her love for learning. She looked at me like I was crazy and said, “Really, you think I love Organic Chemistry?”

The Ugly

The Ugly part was the death threats that Harvard economist Roland Fryer Jr. received for wanting to perform the educational research on how kids would do if money were rewarded for grades and behavior.

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He was kicked out of the schools for political reasons; his critics were saying, “You Can’t be Paying Kids!” And desperate schools weren’t interested in bringing in the program, because they were more interested in teaching the “Love of Learning.”

One reporter wrote, “It’s a Cash Course” and called it horrendous, which in turn caused a donor to pull a half a million from his funding.

A psychologist, who studies motivation, was very upset. He mentions that money and other tangible rewards don’t work very well in motivating people long term and particularly task that involve creativity. In fact, he has evidence that people actually perform worse.

He performed a study at a nursery school. 51 students drew pictures with markers. Half the group was told they would earn a special reward (stickers and a certificate) once they were done.  A few weeks later the same group that received the rewards spent half the time drawing for fun. The reward seemed to diminish the act of drawing.

And Roland Fryer Jr. got a different reaction from a group of kids that earned money, instead of stickers. In Dallas, the experiment produced the most dramatic gains of all. Paying second-graders to read books significantly boosted their reading-comprehension scores on standardized tests at the end of the year — and those kids seemed to continue to do better the next year, even after the rewards stopped.

Farther into the article it shows the kids were excited about earning money, and wanted to know how to earn more. It also explained that kids behaved better and attended school more often. But the kids did not do better on the standardized tests.

Money Doesn’t Make you Smarter

If someone said speak Chinese and I will pay you a thousand dollars, there’s no way I could do it. That doesn’t mean I wasn’t motivated, I was just asked to do something that I was unable to do, because I didn’t have the knowledge to back it up.

Standardized tests are standardized tests. If a child does not do well on the test, money has nothing to do with it.

Parents reward their kids with stickers for going potty. Teachers reward students for turning in their homework, sitting quietly and behaving. Employees are rewarded with commissions. CEO’s are rewarded with bonuses.

What’s the difference in rewards with money? NONE! The only difference is people’s opinions and everyone has one.

The Real Issue

The issue is that adults have issues with kids earning money when it pertains to something they feel kids should be doing anyway. Whether it’s grades, chores or reading a book.

Adults feel that if you pay the kids and then stop paying them, they will stop doing what ever they were being paid to do. Once again an opinion, no facts to back it up.

I paid my kids for chores, reading and grades. And many others I know did the same. Our kids have money in the bank, investing accounts, know how to clean a house and are all in college or going to college. So actually paying them gave more advantages then disadvantages.

Our kids understand the value of a dollar, are financially literate and value hard work.

And the truth is, we’re not paying our kids and stopping at that. We’re teaching the “love of earning.”

I do not believe in giving kids money, if there’s no educational value. If you give kids money and don’t teach them what to do with that money, then you’re teaching financial illiteracy.

We have enough of that!

In conclusion, the sooner a child is taught financial literacy the better and I think that the second graders proved that money can motivate and the motivation will stay even after the money is gone.

▪               If you’re doing what you love, you need no motivation, money helps, but you’ll do it anyway.

▪               If you’re doing something you have to do, money helps motivate you to do it.

▪               If you’re doing something you don’t know how to do, or you were never taught how to do, no amount of money will teach you, unless of course you can buy more time to learn what it is you need to know.

So my opinion is, adults need to get over themselves and look at what is in the best interest of the kids.

Our educational system needs to teach non-fiction, life skills and financial literacy. And parents, it’s your responsibility to teach your kids’ money management, the value of a dollar and how to earn things in life. Especially if you don’t want your kids bouncing back home after they leave.

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