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4 Ways to Boost Your Child’s Future Earning Potential

Dec 21, 2011
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The best way to harness earning power, no matter what your age, is to understand the factors that go into it. For example, most people who have careers that are plateauing usually have a learning problem that manifests itself as an earning problem.

For parents, schooling discussions are really earning discussions. You can say that children with a love of learning are lifelong learners, but truly, who wants an unemployed Ph.D candidate? You don't want a lawyer who can't get a job because of poor social skills and you don't want a kid with perfect SAT scores who marries for money because supporting oneself seems too daunting. Every parent wants to raise a child who is capable of supporting himself and finding engaging work for a stable life.

Here's how to boost your child's future earnings potential:

Focus on Pre-kindergarten through third grade.

Why focus on Pre-K? There is very solid data that the earning power of children who attend a Pre-K program is so much higher than kids who don't, that Head Start is one of the most sacred of all publicly funded programs in the US. This means that the impact on one's earning potential starts as early as Pre-K.

Why third grade? Research from Project STAR shows that after third grade, the quality of one's classroom has little impact on their future personal finance situation and earning potential. There is clear data (spanning 25 years and researched at six universities) proving that test scores after third grade are not indicators of future earning potential.

Ignore standardized test results and obsess over self-confidence levels.

It doesn't matter how a child performs on national standardized tests, since those test scores do not have impact on earning potential and the sixty years they will spend in the workforce.

This conclusion is consistent with one of my favorite studies of all time: It is from Alan Kreuger , a professor at Princeton, and his research shows that while it is true that children who go to Harvard and Princeton have advantages when it comes to future earning power, you can get those same advantages just by simply applying to those schools. The concept behind this is that having ambition and believing in yourself are the real harbingers of success and the fancy diploma is merely a red herring.

Teach your children to find mentors.

Faye Crosby, a professor at the University of Santa Cruz, believes that the two most important factors in a person's earning potential are quality of schooling and quality of mentoring. Now, we know that the schooling part of this equation only goes up to third grade, so starting in fourth grade, we should be teaching our kids how to get the best mentors .

Let's consider what life would look like if you took all fourth graders out of school and started teaching them how to get mentors. The act of finding a mentor is very consistent with what current research on education reform says that children should be doing: Following the paths that interest them and then finding someone to guide them down that path.

The best schooling after third grade is unschooling.

Psychology Today featured an article suggesting that school reform will not work because schools are so incredibly ill-suited for teaching children. In fact, the formula for school–telling kids what they should learn and how they should learn–is a method that only results in killing their creativity.

Lisa Neilsen, who manages teacher training for New York City public schools, also comes down hard on the traditional classroom structure. She tells parents that children should learn in a project-based program, where the lesson plans are dictated by a child's current interests. Neilsen says, “If the school won't do that for your kid, take your kid out of school.”

I take this research very seriously. In fact, I took my own children out of traditional school three months ago. We are now homeschooling, not because I think it will be fun for me, but because I'm scared to death. After years of reading studies about what makes people financially successful in their careers, it's clear to me that taking kids out of traditional school gives them the biggest benefits.

4 Ways to Boost Your Child's Future Earning Potential” was written by Penelope Trunk.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on your taxes, your investments, the law or any other business and professional matters that affect you and/or your business.

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