For about 3 years now our kids have had specific daily chores to do, and at each birthday another chore would be added to their list. They have one chore for each year old they are. They've always been fairly good at getting their chores done in a timely manner, with a few reminders and redos. But since the older kids are getting older, we wanted to teach them responsibility with money, saving, etc. We've always taught them to tithe with birthday money and we involve them in offerings by giving them change to put in, but we wanted to step it up a notch!
This is when I came up with the points system. It's quite simple! They get points (in increments of 5) when they do extra chores, or have exceptionally good behavior. Every other Saturday they are allowed to use their points to "buy" prizes out of the prize bag.
This prize bag has things that we collect when we go to dollar stores, walk down clearance aisles, and even things we find at garage sales that are in good condition. We have nail polish, notebooks, cute pens, toys, stuffed animals, small games, etc. We keep track of the points on our dry-erase board in the kitchen.
So on Saturday nights we pull out the prize bag and according to the amount of points they have, they are allowed to buy prizes. We try to do it early enough in the evening that they can play with or use the things they buy. We go in the order of who has the most points gets to go first, and go down the line.
This system has really improved morale around here. They don't get points for doing their daily chores because those are expected of them. They get points for changing a diaper, washing the dishes when it isn't their turn, getting the clothes out of the dryer, fetching something for a parent, you get the idea. We also give points for good scores on test, and other school accomplishments. They also get points for Bible verses memorized.
There are a few exceptions. If they ask how many points they'll get, they have to do the assignment and not get points. And if they earn points and constantly remind us/bug us about giving them their points the said points are diminished or eliminated.
Since we're usually pretty tight with our money, and kids lose money all the time, this system has seemed to work really well. I hope it can give you an idea of how to reward your children for working without breaking the bank!