Legally, a child's money is usually a child's money. There is of course the obvious loophole that allows you to spend the money on behalf of the child, and the fact that law enforcement doesn't bother with such small amounts of money.

Still, if for example a child inherits a couple million dollars, the guardian cannot freely spend that money. Local laws differ.

Ethically, taking money from others is wrong. It's considered a form of bullying. Teaching these ethics to your children will be a bit tricky if you take money from them. I realize there's a difference, but it can be hard for your children to see that difference. And on the topic of ethics: if you realize you did wrong, how much money do they ask from you, and do you give it to them?

Next is the problem what you teach them. You teach them that essentially, their money is your money, since you can and will take it from them at any time for (in their mind) totally unjust and arbitrary reasons. You also teach them that if they want their money to be their money, they need to get away from you.

If you want to punish them with money, take it from their allowance, before you hand it to them - at that point it's still your money, both legally and psychologically.

Then there is the bigger problem of linking behavior to some metrics, be it good/bad child points, or money. Even if they worked, do you really want to teach them that they must adapt their behavior for money? Teach them that getting in the car with a stranger fine as long as the stranger offers enough lollies? Keep in mind your goal: You want them to do the right thing because it's the right thing to do, not because they get paid to do it.

Legally, a child's money is usually a child's money. There is of course the obvious loophole that allows you to spend the money on behalf of the child, and the fact that law enforcement doesn't bother with such small amounts of money. So practically, there isn't a legal problem, but it may still be counted against you in a battle for custody.

Ethically, taking money from others just because you can is wrong. There's a reason why companies are not allowed to do this to their employees. It's considered a form of bullying. Teaching ethics to your children will be challenging if you take money from them for what they will on some occasions perceive to be no good reason. I realize there's a difference, but it can be hard for your children to see that difference. And on the topic of ethics: if you realize you did wrong, how much money do they ask from you, and do you give it to them?

There's also the issue of accuracy. If the punishment is too easy for you, it's literally guaranteed that you will accidentally abuse it at some point. Here I'm assuming you're judge, jury, and executioner, in which case a single bad call will mean they will be punished not because they did wrong, but because you made a mistake. Unless you never make bad calls, there will be instances where their money is taken from them no matter how good or bad they behave.

Next is the problem what you teach them. You teach them that essentially, their money is your money, since you can and will take it from them at any time for (in their mind) totally unjust and arbitrary reasons. You also teach them that if they want their money to be their money, they need to get away from you.

If you want to punish them with money, take it from their allowance, before you hand it to them - at that point it's still your money, both legally and psychologically.

Then there is the bigger problem of linking behavior to some metrics, be it good/bad child points, or money. Even if they worked, do you really want to teach them that they must adapt their behavior for money? Teach them that getting in the car with a stranger fine as long as the stranger offers enough lollies? Keep in mind your goal: You want them to do the right thing because it's the right thing to do, not because they get paid to do it.

So in conclusion, if you want to avoid the issues I mentioned, do not use this method excessively (once a month is excessive), and only use it when the link with real money already exists, e.g. if they break something valuable. Every time you do this, make sure they are actually the guilty party. And never force them to hand over their money, allow them to pay through deductions in their allowance.

Legally, a child's money is usually a child's money. There is of course the obvious loophole that allows you to spend the money on behalf of the child, and the fact that law enforcement doesn't bother with such small amounts of money.

Still, if for example a child inherits a couple million dollars, the guardian cannot freely spend that money. Local laws differ.

Next is the problem what you teach them. You teach them that essentially, their money is your money, since you can and will take it from them at any time for (in their mind) totally unjust and arbitrary reasons. You also teach them that if they want their money to be their money, they need to get away from you.

If you want to punish them with money, take it from their allowance, before you hand it to them - at that point it's still your money, both legally and psychologically.

Then there is the bigger problem of linking behavior to some metrics, be it good/bad child points, or money. Even if they worked, do you really want to teach them that they must adapt their behavior for money? Teach them that getting in the car with a stranger fine as long as the stranger offers enough lollies? Keep in mind your goal: You want them to do the right thing because it's the right thing to do, not because they get paid to do it.

Legally, a child's money is usually a child's money. There is of course the obvious loophole that allows you to spend the money on behalf of the child, and the fact that law enforcement doesn't bother with such small amounts of money.

Still, if for example a child inherits a couple million dollars, the guardian cannot freely spend that money. Local laws differ.

Ethically, taking money from others is wrong. It's considered a form of bullying. Teaching these ethics to your children will be a bit tricky if you take money from them. I realize there's a difference, but it can be hard for your children to see that difference. And on the topic of ethics: if you realize you did wrong, how much money do they ask from you, and do you give it to them?

Next is the problem what you teach them. You teach them that essentially, their money is your money, since you can and will take it from them at any time for (in their mind) totally unjust and arbitrary reasons. You also teach them that if they want their money to be their money, they need to get away from you.

If you want to punish them with money, take it from their allowance, before you hand it to them - at that point it's still your money, both legally and psychologically.

Then there is the bigger problem of linking behavior to some metrics, be it good/bad child points, or money. Even if they worked, do you really want to teach them that they must adapt their behavior for money? Teach them that getting in the car with a stranger fine as long as the stranger offers enough lollies? Keep in mind your goal: You want them to do the right thing because it's the right thing to do, not because they get paid to do it.