As someone who originally studied finance and economics in college and now teaches high school math, I’m often asked by my students about the connection between academic performance and future financial success. It’s a question that many people ponder, and the answer is not as straightforward as one might think.

On the one hand, academic performance can be a strong predictor of future financial success. On the other hand, there are certain other factors that come into play, such as luck, timing, and personal circumstances. But let’s take a closer look at some of the ways that academic performance can impact financial success, as well as some of the caveats to keep in mind.

1. Academic Success Leads to Higher-paying Jobs

One of the most obvious ways that academic performance can impact financial success is through the types of jobs that are available to those with higher levels of education. In general, people with advanced degrees or professional certifications command higher salaries than those without.

For example, according to the Bureau of Labor Statistics, the median weekly earnings for someone with a bachelor’s degree is $1,248, compared to just $746 for someone with only a high school diploma. And for those with a master’s degree (or higher), the median weekly earnings jumps up to $1,497.

However, it’s important to note that earning a higher salary doesn’t automatically translate into financial success. A person’s spending habits, debt levels, and other factors can also play a significant role in their long-term financial health.

2. Strong Academic Performance Leads to Financial Literacy

Another important factor to winning the personal finance game is a person’s level of financial literacy, that is their understanding of basic financial concepts along with their ability to manage their money effectively. While financial literacy can be developed through personal experience or other means, a strong academic background can be a major contributing factors.

Studies have shown that people with higher levels of education tend to have better financial literacy than those with lower levels of education. For example, a 2014 study by the FINRA Investor Education Foundation found that people with a college degree were more likely to have basic financial knowledge, such as understanding interest rates and the impact of inflation.

Having strong financial literacy skills is a major asset when it comes to making smart financial decisions. Choosing the right investments, avoiding high-interest debt, and planning for retirement are all necessary financial literacy skills to win the money game.

3. Academic Performance (and Financial Literacy) Impacts Future Access to Credit

In addition to affecting job opportunities and financial literacy, academic performance can also impact a person’s access to credit. Banks and other lenders typically use credit scores to determine whether or not to extend credit to a borrower, and a person’s credit score is based in part on their academic performance.

For example, one of the factors that goes into calculating a person’s credit score is their payment history. Do they have a history of making payments on time? Students who struggle academically often lack (or fail to execute) planning and organization. As a result, they may also struggle to keep up with their bills and credit card payments straight, which can negatively impact their credit score.

4. Education Opens Doors to Entrepreneurship

Finally, it’s worth noting that academic performance also impacts a person’s ability to become an entrepreneur or start their own business. While there are certainly successful entrepreneurs who didn’t go to college or perform well academically, having a strong educational background provides a solid foundation for launching a new venture.

For example, a person who has studied business or entrepreneurship in college may have a better understanding of how to write a business plan, secure funding, and market their product or service effectively. Additionally, having a degree or professional certification in a particular field can lend credibility and expertise to a new business venture.

While there are certainly advantages to having a strong academic background, it’s important to keep in mind that academic performance is not the only factor that impacts financial success. In some cases, personal circumstances, luck, and timing can play a much larger role in determining a person’s financial success than their level of education or academic performance. For example, someone who has a lower income or is dealing with significant medical expenses may struggle financially regardless of their academic achievements. Conversely, someone who comes from a wealthy family or has a knack for investing may achieve financial success despite a lackluster academic record.

The Bottom Line?

While there is certainly a correlation between academic performance and future financial success, it’s important to keep in mind that this correlation is not a guarantee. There are many other factors that come into play, and ultimately, a person’s financial success will be determined by a combination of personal circumstances, financial literacy, and perhaps a bit of luck. That said, investing in education and striving for academic success can certainly increase one’s chances of achieving financial stability and success in the long run.

Until next time…

Remember that success is a planned event. Believe in yourself.

Pay attention, do the work, and don’t give up!

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www.youtube.com/@PlanetNumeracy