Show junior the money?

FORTUNE — Okay, be honest: Do you bribe your kids?  Do you offer them cash (or similar rewards) for good behavior? For grades? For abandoning the cell phone at the dinner table? For keeping the cursing at bay?

I’ll confess.  I’ve done it, albeit with so-so results. (My offer to pay to go to the gym was initially welcomed then discarded in favor of other, non-sweat-producing activities.) And so have half of all parents, according to the most recent T. Rowe Price Kids and Money Survey.  More than two-thirds of parents told the data collectors they’re very or extremely concerned about setting a good financial example for their kids. Yet, bribery seems to fall within the acceptable boundaries.

That raised three questions for me:  First, is bribery on the up-and-up?  Years back I listened regularly to a radio psychologist named Dr. Joy Browne.  She was hugely in favor of bribery to get the desired results.  But does that opinion extend to kids and money?  Second, what’s the difference between a bribe (which has huge negative connotations) and an incentive (which doesn’t)?  And third, if you decide a bribe is okay after all, how do you structure it to produce the outcome you’re looking for?  Here are the answers, one by one.

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Is bribery okay?  Yes and no.  If what you’re looking for is a short-term fix — getting your kid to try a new food, for example, or to capitulate and see the movie that the rest of the family wants to see — a bribe can actually be fairly effective, says Dean Karlan, economics professor at Yale University and the founder of Stickk.com.  You draw the line.  The child toes it.  You pay up.   (As an example: A friend of mine was having trouble getting her child to sit down to write her essay for the common app.  She offered a bribe — even let the child name the amount.  Fifty dollars and two-and-a-half hours later, the child emerged with a “beautiful essay.” The reason this is such a good example is because it was a task that would never have to be completed again.)

“The problem is that once that line is drawn you may have trouble getting your kid anywhere near it without a similar — or larger — payment in the future. “Understand, if doing X gets your kids Y, you’re setting up a structure where that takes place,” says Stuart Ritter, a certified financial planner with T. Rowe Price.  That means it can be tough to produce the desired behavior without paying for it next time.

What’s the difference between a bribe and an incentive? Both are forms of negotiation.  You give a little to get what you want, the child gives a little to do the same.  The difference is that bribery usually happens in the crunch.  For whatever reason, you feel your child’s behavior must change immediately so you make an offer that you hadn’t planned on making. Incentives are a little more planned. (In hindsight, my gym offer was more incentive than bribe.) You’ve thought about what sort of carrot might bring about the sort of behavioral change you’re after, and you’re prepared to make an offer to spur the change.

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Financial literacy expert Susan Beacham, founder of Money Savvy Generation, explains: “A lot of parents use a bribe not because we’re confident it’s the best parenting tool, but because we’re tired.” (Yep.  That sounds about right.) “We’re overwhelmed and we want our child to do what’s best, and we can’t figure out how to use our words effectively enough to get them to understand it.  So we think to ourselves, ‘Okay, the shortest distance between two points is to get them to just accomplish a task and over time, they’ll get it.’  Unfortunately, a child who is given a bribe to do something is focused on the bribe, not the task.  So it doesn’t work.”

So how do you use both bribes and incentives more effectively? First, says Beacham, stop and think about why you’re doing this — and communicate that to your child.  Say your child has to read 20 books over the summer.  You want them to accomplish their goal (and are willing to bribe/incentivize) them to do that.  But what you really want is for them to start to enjoy reading.  It’s okay to explain that.  And to offer ways to make the task more fun. (Reading on the beach is fun; so is a half-hour of reading time after what’s supposed to be lights-out.)

Karlan suggests rewarding effort rather than outcomes (i.e. 30 minutes of reading rather than completing a book).  That way a slow reader is not likely to get frustrated and give up because he or she has the same shot at the reward.  And make it clear that this is a limited-time offer.  Otherwise, you risk them not wanting to read (or whatever) without being paid for it.  “Kids are pretty perceptive,” says T. Rowe’s Ritter.  “They’re aware of what’s going on.”

Reporting by Kelly Hultgren

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