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By: AgFed Credit Union

Welcome to AgFed Credit Union's MoneyDig blog! 

Get confident about your personal finances with a number of articles, tips, advice and more.


Should You Pay Money for Good Grades?

 Apr 19, 2022
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Every parent wants the best for their child, and schooling plays a significant role in determining what opportunities await them later in life. While there are many techniques to help children excel in school, a commonly debated topic is whether you should pay your child for good grades.

On the one hand, incenting your child may encourage them to devote more time and energy toward their schoolwork. Yet, on the other hand, it could devalue learning as your child only focuses on the prize and not necessarily what they are being taught.

It’s a popular discussion among parents and professionals, but the decision ultimately comes down to you, the parent, and what you think will work best for your child. Before you decide, it’s important to understand how paying for grades works and the potential benefits and drawbacks.


How Much to Pay?

Some parents choose to pay their children regularly for big tests or projects throughout the school year. Others reward their children for their final report cards. As the parent, the direction you choose and how much you pay is entirely up to you. If you choose to pay based on grades, you may use a scale such as A = $10, B = $5, C = $1.

Furthermore, how much you pay your children may depend significantly on your preference and comfort level, along with their age. For example, you may feel totally comfortable paying your son or daughter $100 for their straight A's during their senior year but may only reward your 5th grader with $15 for straight A's.


Pros & Cons of Paying for Grades

As a parent, you know your child better than anyone else. So, how you choose to incent them for good grades may vary depending on the child and their motivation. Review the potential benefits and drawbacks should you determine to pay for good grades.



  • Incentive. Money can be a great incentive — especially for teens that are becoming more independent and learning to manage their finances. Paying for good grades can encourage your child to work harder to achieve better grades.


  • Setting Goals. Some children enjoy working towards a specific goal with a prize at the end. A monetary reward may be the perfect thing to help keep them focused.


  • Builds Confidence. When your child does well on tests or earns a good grade on their report card, it can help build their confidence. Oftentimes, a small incentive to help a child become more confident is money well spent.


  • Extra Recognition. When your child starts a new semester, their final report card is quite far away. So the incentive for their report card may not be a significant driver in their schooling habits. Instead, when report cards come out, it serves more to recognize a job well done. It’s a pat on the back for your child for all their hard work throughout the school year.



  • Cheating, lying, and laziness. Children may be tempted to cheat on tests and lie about their results if you reward them for individual tests or projects throughout the year. Also, rewarding them for their grades may reinforce their disconnect with good grades. Instead of learning for their future, “learning” becomes just a means to an end for good grades and money in their pocket.


  • Removes focus from what’s important. Incorporating money into school may cause your child to lose focus on the bigger picture. Instead of learning the materials to build their knowledge and improve their skills, they simply get the grades they need for the end reward.


  • Unmotivated. For some children, money isn’t an effective form of motivation. It may actually have the opposite effect in that it causes more stress on the child - leading them to withdraw from their studies.


  • Entitlement. As a parent, you probably hear the phrase “What do I get for it?” quite often. You ask your child to do a chore, and they ask how they benefit. Paying for grades can encourage this sense of entitlement.



Whether to pay your child for good grades will ultimately come down to what you feel is suitable for your child. If you base your incentive on their report card, it will likely serve more as recognition of their hard work throughout the year. If you regularly pay for tests or projects, it could lead to negative behaviors over the long term. Striking that balance is up to you as the parent.


We’re Here to Help

Whatever direction you choose for your child is entirely up to you. If you do decide to offer monetary incentives to your child, you can use this opportunity also to teach the importance of financial literacy.

Special accounts for kids of all ages are available at the credit union. Depending on their age, your child will have access to account features that help them learn to manage their money responsibly. If you’re ready to open a youth account for your child or you have questions on these accounts, we’re here to help.


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