Ask yourself this question: on your deathbed, do you think you'll wish you would have worked more, made more money, or spent more time with your loved ones? Time is so much more important to a child than money. I guarantee you they will never forget the time you spent helping them with their school work. Throwing money at them to get good grades is like reneging on a fishing trip and saying "Here kid, here's fifty bucks instead!" At the very least it's a slap in the face. We should spend time with our kids, not throw cash at them. In turn, they will spend time with their kids, and so on. That's a beautiful pattern to foster.
When I was in middle school, there was a girl in my class who came in one day all excited because her mother had told her she would start paying her for good grades. I remember getting a sinking feeling in my stomach. I was only twelve or thirteen at the time, but somehow I felt instinctively that this wasn't right. She was running around telling all her friends about it, bragging about how she was going to make a boat-load of money. She was treating it like a game; her mother had challenged her and she was going to win.
Part of me was jealous; what kid wouldn't want money? Somehow though the prevailing feeling for me was akin to "Just Say No!"
A couple weeks, and tests, later the unthinkable happened: she started cheating. It wasn't just a whisper here or a cheat-mark on the arm there, it was brazen. She had cheat sheets out and would openly turn to other students during tests to try and get answers. She had never done that before. What's worse is there didn't seem to be any trace of hesitation, guilt or reservation in her actions - it's as if she didn't realize that what she was doing was immoral.
The problem with cheating, with "going there," is that when you cross that line, it's not easy to cross back (especially for a child). Why would any child want to come back from "Easy Street"?
Many problems can arise from using money as an incentive:
With the promise of money, a kid might bully or bribe other kids into doing their homework for them; they may try to manipulate or even threaten teachers; when we're talking hundreds of dollars, who's to say that kids and teachers wouldn't actually work together? When the teacher gives a better grade, the kid pays the teacher off. That's outright fraud.
This all may sound extreme, but so did "shootings in schools" (For that matter, "paying for water" was once considered an outlandish notion, but we do it now).
It doesn't even work on a governmental level:
"Nearly $1 million in private funds was paid out to 1,161 New York City students yesterday (August 20, 2008) for scoring well on Advanced Placement exams. Still, the number who passed declined slightly:" This is a quote from: http://themoderatevoice.com/society/children/21943/p ay-for-grades-does-it-work/
This shows that the incentive of money can actually do more harm than good. In the long run it can serve to undermine the child rather than help bolster the child's performance in school.
Kids need a solid foundation to build on, not money thrown at them. If your own parent is so exasperated that she starts bribing you to do better, what kind of a message is that parent sending? When you give someone money to do something, they may just get the message that you don't believe they can do it without the money (no matter what you say to them: actions speak louder than words). The key point here is, "you don't believe they can do it." I wouldn't ever want to risk giving my kid that kind of a message.
Finally, "There's a lot of research that shows paying people for learning undermines their intrinsic motivation to learn," says (Bonnie Harris M.S.Ed.). "And so though we might see some short-term increases in certain behaviors, like taking classes and coming to school, the worry that we have is that you're taking something that should be inherently interesting and that you're doing for the purpose of increasing your skills and learning new materials and you're tying it to a monetary reward." (Taken from: http://www.hotchalk.com/mydesk/index.php/the-buzz/41 8-pay-for-grades-a-controversial-motivation).
When that girl from my middle school class started getting paid for grades, sure she performed better initially (as the above quote supports), but when the "money-moon phase" passed, she started cheating to keep her level of progress going.
In my humble opinion, a child needs to be encouraged and inspired to seek out what interests him or her, not get paid to win. Granted some situations present with extenuating circumstances, if you're chronically too busy to sit down and spend time with your child, you might want to consider an alternative lifestyle. Nurturing and time is what it takes, not money. The only variable that factors into this equation is a patient, attentive, caring and loving parent.