A token economy is one where students earn or lose some sort of token as a reward or consequence for their behavior. In reality, everyone lives in a token economy where the tokens for hard work is a salary. People can then spend their tokens however they wish.
Extending this idea to the classroom, teachers are attempting to empower students to understand the cause and effect of their actions. Here are some of the basics of a token economy:
The Tokens in a Token Economy
When setting up a token economy the first step is to decide upon what tokens will be used. Some teachers will use plastic tokens of some sort, others have created their own currency with their picture in the paper money and others have used rolls of tickets. When deciding on the type of token it is important to keep in mind that students must be able to save these tokens in an effective way.
How to Start the Token Economy
Setting up a token economy takes some thought. First, teachers must decide whether the tokens will accumulate each day or start over each day. Looking at each day as a part of a whole will set up a completely different type of economy than looking at each day as a whole in itself.
Then the teacher will have to decide whether each student will start the day with a set number of tokens or whether they have to earn each token. If the tokens will not accumulate, starting each day with a set number of tokens is a great way to set up the economy. If the tokens will accumulate, starting the school year with a set number is a better idea.
Redeeming Currency in a Token Economy
At the end of the day, students have to have a purpose towards which they are motivated to earn the tokens. Unfortunately students are rarely intrinsically motivated to follow the rules, especially when there seems to be a better reward for acting up (for example, not having to do the work!).
There are two basic ways for teachers to have students redeem their tokens. First, is to set up a store filled with trinkets and toys bought at the dollar store. The teacher will need to keep the store stocked, and each item needs to be labeled with a “cost” so that students have to save up for various items.
The other option is to have students redeem their tokens for “free” items. This cuts down on the cost for the teacher. Some ideas include:
- Extra recess time for the whole class (each student has to pitch in to earn this reward)
- Extra computer time
- Lunch with the teacher
- Homework pass
When creating a token economy there is a lot of thought and preparation that must happen before implementing it in the classroom. Even so, when done well, the token economy can be a very effective classroom management strategy.
Find a Play Money Set to use in your token economy.

Token economies are proven to be effective for classroom management, specially with secondary school students who are not longer motivated by stickers. Praising positive actions by using a School Rewards System based in token economy increases intrinsic motivation. The rewards must be agreed with the students so they feel part of the process.