Research finds early financial literacy leads to higher paychecks

Miami Shores, Fla., tech consultant Rudo Boothe, 33, attributes his professional success — anyone’s professional success, actually — to having learned to read and perform basic math at age 4. So now with his own 19-month-old daughter, he makes sure to introduce those educational concepts at every turn.

“My attempt is to make numbers very important,” Boothe said. “Greatness is the objective. To be phenomenal at age 7.”

Boothe isn’t competitively parenting for mere sport, but rather for investing in his child’s future ability to make money — at least if you believe researchers in Scotland. Boothe, for his part, does put stock in University of Edinburgh findings that prove increased reading and math ability at age 7 will directly correlate with bigger paychecks later in life. And that these educational aptitudes are better predicators of income than even intelligence, education and socioeconomic status in childhood. American educators agree that early childhood education is critical for a lifetime of success, but offer their own proof as to why we shouldn’t dare discount the other variables.

Still, they also offer real and free ways we can introduce fundamentals to our young kids today so they can soar financially tomorrow.

“Children who have acquired more skill in reading at age 7 have a cascade of positive events,” said Timothy Bates, a University of Edinburgh psychology professor, “and by adulthood are earning significantly more.”

How much? Bates found an increase in one level of reading at age 7 translated into an $8,000 increase in yearly earnings by age 45. In fact, after following 17,000 people in the United Kingdom over four decades, Bates saw that young subjects who were better at reading and math still ended up having higher incomes, better housing and better jobs in adulthood than the kids who had perhaps higher IQs or richer parents, but read or performed math at lower levels. And he expects that here in the United States, where our system is more merit-based, we’d see the same effect, only stronger.

Hold it right there, say a litany of U.S. educators. They agree early learning is critical to career success and — in preferring to use third grade as a marker — say that it produces kindergarten-ready kids who will accelerate. But they also point out that income will most certainly affect the outcome.

For starters, only 40 percent to 55 percent of American children attend quality pre-kindergarten programs, said Libby Doggett, deputy assistant secretary of policy and early learning for the U.S. Department of Education.

“It’s not about ability,” Doggett said. “We create ability. And we create it early on.”

The kids most likely to skip quality pre-K programs are — you guessed it — poor children, said Greg J. Duncan, a professor at University of California-Irvine. That partly explains a gap – equivalent to about 20 IQ points or 120 SAT points – in reading and math skills between the nation’s richest 20 percent and poorest 20 percent of kindergarten-age kids. Even worse, American schools are not a great equalizer because those in low-income areas tend to have teachers without tenure, behavioral problems that slow down entire classes and more mobile families, he said.

“Most of the gap comes from what goes on in the home,” Duncan said. “It’s not to say cognitive ability doesn’t play a role, but much of the gaps are caused by differences in parenting practices.”

Reading and math lessons are easily disguised as exciting activities, said Silvia P. Tarafa, principal of the Key Biscayne (Fla.) K-8 Center.

Most people read with kids, but don’t forget to introduce nonfiction books about their interests, such as dinosaurs or sharks, she said. Bake cakes often, relying on your measuring cups or sticks of butter to help with fractions. At the store, compare prices together and try to pay cash for the subtraction equation you’ll get in return.

Don’t miss the opportunity to demonstrate that four quarters make a dollar, or any other useful coin combinations. When they paint pictures, frame the masterpieces, which requires measuring the length, width and perimeter — but feel free to calculate the area of the picture too.

“When a child has heard the concepts at an early age,” Tarafa said, “that child will make a connection to the concept when it’s introduced by a teacher.”

What to do

Silvia P. Tarafa, principal of the Key Biscayne (Fla.) K-8 Center, said parents can play a role in introducing the important concepts into daily activities. For example:

1. When packing for a trip, ask the child to bring three or four shirts and five pairs of pants, because number recognition — rather than counting on fingers — is critical.

2. Never use the term “take away” and instead say “subtract.”

3. Together, read nonfiction books about the child’s interest, such as sharks, cooking, outer space or dinosaurs.

4. At the store and online, always compare prices.

5. Pay with cash and discuss important coin combinations, such as how four quarters make a dollar.

6. Bake brownies, using your measuring cup and sticks of butter as tools to teach fractions.

7. Let them open a savings account and see how interest compounds.

8. Measure the items you’ll buy for your home, converting the lengths to inches, feet, yards — and don’t forget metrics.

9. Frame their artwork, but first, together measure the picture’s length, width and perimeter.

10. Remember, there are some things — such as multiplication tables — that need to be memorized.

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