In one of my first classes, Young was one of the cleverest and most delightful students it had ever been my pleasure to teach. He was studious, curious, and had a generosity of spirit that made him a recognised leader.

His mother worked in a sweatshop seven days a week and raised him by herself. But he managed to overcome all obstacles and was accepted into one of the nation’s finest colleges. He had always been a computer whiz, and even built his own computer out of spare parts when he was 11 years old.

During his first week away at college, he called me and told me he had a serious problem. Before he could even say what it was, I was planning to send him the money he must be needing or give him the emotional support he was seeking for some crisis he was having his first time away from home.

Instead, this highly intelligent boy couldn’t figure out why his underwear had turned pink in the wash. It turned out that Young, who could do calculus in his head and thought physics was boring because it was too easy, didn’t know how to separate his lights from his darks.

Later that night, as I chuckled myself to sleep, I was thankful that he hadn’t asked me for money, because I was broke as usual. And it occurred to me how much time I spent thinking about my bleak financial situation, and how upset I was with myself for foolishly spending money I didn’t have.

Young always told me I was his favourite teacher, but I began to ask myself why this was so. True, he had a wonderful year in my class. I had taught him some important academic lessons, and perhaps I had supplied a little extra kindness to his already gentle soul, but I began to think about how a good teacher must be measured. It was an epiphany, and I never slept that night. I came to see that a good teacher gives a student skills that are used not only in class, but through the rest of his life.

I sat up all night wondering what skills I could give students to help them in the years to come. It was easiest to examine my own failures and pass on any lessons I had learned to help my students avoid the same traps. And so my class economic system was born.

On the first day of school, each child has to apply for a job, filling out an application form. For the more demanding jobs, such as banking, a student has a couple of days to get a letter of reference from another teacher or adult to confirm that he or she would be dependable.

Here is the list of jobs (and the pay that goes with each) from which the children choose: Banker ($600): A banker keeps records for four to six students in the class. This student must be good at arithmetic and a person of the highest integrity. The banker takes deposits and cheques from the bank customers, and co-ordinates accounts with the other bankers. There are usually five or six bankers in my class.

Janitor ($650): A janitor is given a specific area of my room to keep spotless. One scrubs the sink daily, two children sweep the room at least twice a day. Others wax cabinets or scrub desks. They are highly paid because I want a dazzling classroom. Thanks to the janitors, I spend no time organising or cleaning my own room. I spend each moment of my day teaching.

Grader ($575) I have student graders for two subjects: grammar and spelling. The work I give in these two areas is objective and can be graded by any fair person with an answer sheet. Again, having student graders frees my assistant and me to spend our time teaching or grading writing assignments that only we are qualified to handle.

Messenger ($525): Usually two students who handle all errands to other classes or the office.

Police officer ($500): I usually have three to five police officers. Each one patrols a selected area of the room. If a student breaks any of the class rules, the officer keeps a record of the infraction and helps me collect the fines.

Video monitor ($575): The video monitors organise our class collection of more than 400 videos and DVDs.

Recycler ($550): We usually have two monitors to recycle our waste. Cans are taken each day to the recycling bin.

Attendance monitor ($475): The monitor, who must have outstanding attendance, silently takes attendance each morning and accepts notes from returning students to be kept on file. This is a very boring job in my class, as 99 per cent of the students will never miss a day of school.

(It’s not that they don’t get the flu; they insist on coming in with it.) Clerk ($550): I usually have about three official clerks who pass out and collect papers, keep my desk organised and know where everything in my closet is stored.

Ball monitor ($485): This student takes care of all our athletic equipment - baseballs, volleyballs and weights used for aerobic training.

Librarian ($525): In charge of the class library.

The children are told that in my class everyone works. Why? Because they have to pay rent to sit at their tables. The class is set up with five or six islands of tables. I seat the kids facing one another as much as possible; it fosters friendships and co-operation. After an early class discussion, the islands are given names, usually based on a theme the children have suggested. The areas of the room closer to the front have higher rents than the ones in the back. For example, one year my class named our islands after parts of Los Angeles: Bel-Air (front of the room, $1,000 a month to sit here); Beverly Hills (middle of the room, $750 a month); Hollywood (next to our video library, $700); Santa Monica (near the water fountain, $675); Skid Row (back of the room, $550).

Another year, we used the names of department stores: Bloomingdale’s, Saks Fifth Avenue, Macy’s, Sears, and K-Mart (it helps to have a sense of humour).

Payday is the last Friday of the month. Each student receives a set of cheques at the beginning of the year. I used a computer to create Jungle cheques. I teach the students how to fill out a cheque and how to deposit one in a bank. I also give each child a sheet for keeping banking records.

As you’ve probably noticed, in our economic system rent exceeds even the highest pay. If the students can’t pay their rent at the end of the month, they’re evicted from their seats and have to sit on the floor. How can a child save enough money to afford the monthly rent? The answer lies in a system of incentive payments we call bonus money. Students can earn bonus money by doing well in class, displaying outstanding citizenship, and participating in certain optional activities. Conversely, our police officers will fine students if rules are broken.

Following are lists of bonus opportunities and fines levied on any student who doesn’t toe the line: Bonus money $50: perfect spelling test (after three in a row, the amount doubles), or 90 per cent on any other test; $200: 100 per cent on any other test; $50: completing a weekend video assignment; $100: perfect attendance for the month, coming to school early for extra math, staying after school for Shakespeare, joining the school orchestra or chorus, playing guitar during recess and lunch; $200: being complimented by another teacher. Fines (these double when offences are repeated): $50 for being late (this doubles with each offence); $50 for missing homework; $50 for rudeness, such as not listening when another student is speaking; $100 for a messy desk (discovered in police raids); $500 for dishonesty.

Bonus money and fines are distributed and collected as “cash”. I make money on a computer and print it on card. I change colours every year so students can’t borrow from the previous class. This part of the programme also teaches the students to take care of their cash and understand the security of a cheque account.

Now the fun really begins. At any time a student may purchase his seat and call it a “condominium” by paying the bank three times the amount of his rent. For example, if the rent is $800 per month, a $2,400 cheque to the bank makes the student the official owner of his seat. From that time on, the student no longer has to pay rent each month. This teaches the students how to save money, and the advantages of owning instead of renting property.

But that’s not all. Students may buy another person’s rented seat and become a landlord. If a student buys another person’s seat, then the student renting the seat must pay his landlord every month. As you can imagine, students are highly motivated to earn and save their money. They find out quickly that the rich really do get richer when they work hard and plan ahead. Incidentally, we have rent control in our class, because some landlords tend to raise the rents through the roof.

It gets deeper still. Students who own seats must pay property taxes every December 10 and April 10. This is figured into the income tax returns all students fill out by April 15. They learn mathematics, book-keeping, economic responsibility, and tax structure. And they have lots of fun doing it.

The system allows children to be creative. Phillip, an incredibly enterprising young man, created an insurance company and wrote policies for children to cover their fines. If a child often missed homework assignments, Phillip would create a policy to cover the fines up to a certain amount of money per month. This became particularly hilarious when one student came to Phillip to write a policy to cover fines for tardiness.

Phillip checked the kid’s attendance records and turned him down, saying firmly, “I’m sorry, but you’re a bad risk.” Phillip made a fortune. Today, he majors in business at an outstanding university.

Kenny was very bright but one of the laziest kids I had ever known, constantly forgetting to finish his homework, and his fines mounted. By the third month of class he was going to lose his seat. I had a conference with Kenny’s mom to get her approval to put him on the floor. She was all in favour of it; she had the same problems with her son at home - she adored him, but he drove her crazy. Kenny readily admitted that he was lazy and was more than willing to accept his punishment.

The following morning I arrived at school at my usual 6.15am, but Kenny was already there, standing by the classroom door with a homemade sign around his neck: “I am a Vietnam vet and need help.” He put the bite on every kid who entered the room that day with his cup in his hand and his eyes pleading for charity. By the end of the day he had raised enough money to pay his fines and get his seat back. I wasn’t sure I approved of his strategy, but I had to give him credit for ingenuity.

Today, Kenny makes independent films. He is an excellent fundraiser.

Extract from ‘There Are No Shortcuts’ by Rafe Esquith. Copyright ) 2003 by Rafe Esquith. Reprinted by permission of Pantheon Books, a division of Random House, Inc