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Give them an A* in money

Updated 24 November 2022

3min read

Nick Green
Financial Journalist

Should you give children incentives to do well at school? Or do you think bribery sends out the wrong message? Luckily there’s a third option – which teaches valuable lessons of its own.


Unless you’re a very lucky parent, there will come a point at which you have to chivvy your children along to do their schoolwork. You’re painfully aware of how close the exams are and how important it is to do well, but your kids don’t seem to share that sense of urgency. At this point, many mums and dads pull out the carrot: achieve these grades, and I’ll buy you a [insert suitably expensive item here].

One problem with this approach is the law of diminishing returns. If you’ve done it once then you’ll probably have to keep doing it, and with ever bigger prizes. A second problem is that once you’ve established a pattern, then schoolwork may become about the reward rather than the achievement. Children may actually begin to study less and less if you don’t keep dangling the money in front of them.

The third problem with this form of motivation is that a big one-off reward is quickly taken for granted, so ironically the lesson it’s intended to provide often fails to sink in. Having won their prize, the child may switch off and forget they have to do it all again next time.

How money can motivate

There is a better way to reward children for hard work, while also teaching good working habits. Instead of promising a single big prize, some parents set up a savings account with regular small payments, as a kind of wage for doing school work. Small regular payments are easier to budget for, and payments can be paused or withheld with the click of a mouse if the child doesn’t keep up their side of the deal.

How is this different from a big prize? Three reasons. Firstly, this kind of incentive rewards not an achievement (getting good grades) but an activity: doing the work. This is actually far more likely to deliver good results than the abstract command to ‘Get nine GCSEs at grade B or above’. Such a big target may be too daunting to contemplate, so only piles on more pressure. But a series of small, achievable targets (‘Complete this piece of homework well’) is both easier to grasp and more beneficial.

Secondly, the savings account is a neat parallel with what’s going on in your child’s brain when they sit down to study. A little bit goes in each time, and over the weeks and months it builds up. Your child can check the rising balance of their ‘study account’ and receive a confidence boost, when they realise that their own knowledge and understanding is also growing and accumulating interest.

Thirdly, the saving and the studying together teach a life lesson about effort and reward. Children come to realise that achievement doesn’t happen overnight, but over long periods of time and many small steps. It demonstrates the link between work and money in a sustainable way – and can also end up being the most valuable lesson of all.

A school will teach your children maths, but not very much about the practicalities of money. Many people pass into adulthood without ever developing financial responsibility, because they’ve never been taught it. A study-to-save reward system at home can train children in the most effective way of all, through experience. By giving them a positive first experience of earning and saving money, you may even reduce the risk of your children getting into financial trouble later in life. And if they do get the grades they were hoping for, they’ll have a fund ready for their next stage of education – and they might even spend it sensibly, when they know how much effort went in.

Find out more about saving and investing at all ages.

For other ways to save and invest for your family, talk to a financial adviser.

About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.