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how to set up a reward system for children

Make a chart. A chart is an easy way for both you and your child to track progress. Place the chart in an area where the child will see it often, such as the refrigerator or in the child’s room. Every time your child succeeds, draw or stick a star onto the chart next to his name. Mark milestones on the chart, where the child gets a special reward for reaching that point.

Consider a calendar. This may be more appropriate for a child 12 years old or older, who may be able to focus on longer-term behavioral goals. For example, the child can mark the calendar with an “X” every day he completes homework without being told to do so. Give the child the reward after a complete week has been marked, or based on the number of "X"s before a certain deadline.
If you want to reward chores, mark them on the calendar with a check box next to them.

Add a timer for sensitive chores. Use a timer or a clock to time your child in completing a task such as picking up toys or completing chores. This can help with children who keep putting off tasks. The child only earns the reward if he or she completes the task before the deadline.

Select behaviors you’d like to influence. Decide on the specific behaviors you want to change or encourage in your child. These can be negative habits you want to discourage, such as lying or leaving toys on the floor, or positive habits you’d like to encourage, such as following a bedtime routine. Consider starting with just one or two behaviors, while your child is getting used to the system.

Choose rewards. Choose rewards based on the child’s age and what the child wants. Here are a few ideas:
A child under the age of six may respond to a reward of stars placed on a chart next to his name.
For small chores, offer candy, or a short TV or computer session.
For big achievements or prolonged good behavior, offer to buy a toy or go on a day trip.
Some children respond best to privileges, such as getting to stay up late or go to a sleepover.

Ask the kids what they want. Let the kids give feedback on what chores they’d like to do and what rewards they’d like to earn. Make it clear that the final call is up to you, but listen to what they have to say. They’ll do more work if they’re excited about the rewards.
If the kids can’t agree on a fair way to split the chores, roll dice to divide the chores. Change it every month so no one gets stuck too long with bad luck.