Should You Pay Your Kids For Good Grades?

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As kids’ year-end report cards start coming home, many parents are considering this question: “Is it a good idea to pay our kids for doing well at school?”

Greenlight reached out to several family money experts for their advice. Here’s what they told us:

Expert: Neale Godfrey

What She Does: Chairman and President, Children’s Financial Network, Inc.

Pay for Good Grades: Yes or no? “No! Step away from your money! Getting good grades is the responsibility of and show of good behavior from your child. Getting money is the result of work and not of good behavior. I believe in paying money only for work.

“The other issue is that if you have more than one child in your family, one child could be working really hard to get Cs while another kid could be coasting to get all As. You should set separate goals for each child for each marking period. If they achieve their goals, the family should celebrate their achievement. A special outing of their choice—not money—is a great celebration.”

Expert: Rachel Cruze

What She Does: Speaker and co-author with Dave Ramsey (her dad) of Smart Money, Smart Kids

Pay for Good Grades: Yes or no? Cruze stands somewhere in the middle: “As a parent, it’s up to you to make that call. The most important thing is encouraging your child to work hard and do their best. Every child is different, so if yours responds well to cash incentives, then maybe you assign a dollar amount to their good grades that fits within your budget.

“Growing up, I wasn’t paid for good grades. However, my parents did pay me in the summer for reading leadership books and writing one-page reports. I say be creative and do whatever makes you most comfortable.”

Expert: Jesse Mecham

What He Does: Founder/CEO, You Need a Budget (YNAB) 

Pay for Good Grades: Yes or no? “I don’t think it’s a good idea and my wife and I don’t do it with our six kids. Hard work provides a sense of purpose and helps build confidence and character. Kids need to intrinsically understand that doing a good job is worth the extra effort because it feels good—to push yourself, to give your best, to accomplish something.

“In a similar vein, we don’t pay our kids an allowance for doing chores. We separate the two completely. They do chores because they are part of a family. They get an allowance so they can learn how to handle money.

“By paying kids for good grades, you risk teaching them that the only things worth doing are things that pay….If they are only ‘chasing the money,’ they may never find the thing that really brings them joy, the thing they could be really good at. Any job worth doing is worth doing well, for its own sake.”

(photo courtesy © Carissa Rogers cc2.0)

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Greenlight Kids Save 3 Times More than the Average U.S. Household

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As the average U.S. household debt continues to rise, Greenlight families are seeing a different trend. We’re thrilled to announce today that Greenlight kids have saved more than $1 million dollars using Greenlight Savings, The Educational Savings Account for Kids. Official story here. With the average U.S. household savings rate at 2.8%, Greenlight kids are saving a whopping 8.4% of their money on average. That’s triple the national average!  

The Educational Savings Account for Kids allows kids to see real growth in their savings account, how interest works over time, and the impact of spending versus saving, which helps them understand the importance of saving for the future. Not only that, but parents can set their own interest rate and pay the interest automatically within the child’s Greenlight Savings. The national average interest rate for bank savings accounts is 0.08%, making it difficult to educate kids on the value of savings. The average interest rate set by Greenlight parents is 19.84% enabling kids to see the benefits and importance of savings almost immediately.

Since April, Greenlight kids have more than quadrupled the amount of money in their savings accounts. We are proud to continue offering new features like the Educational Savings Account for Kids as an option that is convenient for families and offers flexibility for each family and each child’s unique needs. We are helping parents teach their kids to be smart about money and set them up for success financially, and are hopeful that impact can change the financial course for a new generation.

We’re on a mission to help parents raise financially-smart kids and are thrilled to see so many families using Greenlight Savings to teach their kids the importance of saving. But, we’re not done just yet. We have several new features that we’re excited to release in the near future. Stay tuned!

 

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Want your kids to make better food choices? Check out how one family is using Greenlight to help!

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Kids are tough. Shopping for foods they’ll eat, making lunches, getting them to do their homework, getting them up and out the door on time, and getting them to put down their tech and go outside can be challenging. One of the biggest challenges we as parents face when it comes to kids is getting them to eat healthily.

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