I’m an impatient person. While some people – like my husband – live by the phrase, “Why do today what you can put off til tomorrow?” I embrace the exact opposite perspective. I have a tough time procrastinating with just about anything I do, whether it be finishing a project for work days ahead of schedule, loading the dirty dinner dishes into the dishwasher before my family’s even done eating, or picking up an extra gallon of milk from the store even though we haven’t even opened the jug currently in our fridge (hey, it was on sale!). Maybe that’s why I’m already headlong into evaluating education costs for my daughter – who is only three-and-a-half.

My Education Obsession

To be completely honest, I started thinking about her education from the day I found out I was pregnant. When the doctor told me I was due the first week of September, I knew she’d be on “the bubble” in terms of kindergarten enrollment in our district. From that point on, I’ve debated whether to send her to kindergarten early – thereby making her the youngest in her grade – or to hold her back, making her the oldest kid in her class.

This question over what’s become known as the “early kindergarten debate” in my house has become full-fledged obsession with each passing year. Right now, my daughter is happily attending preschool three mornings a week. After meeting her last spring, the preschool directors decided we should enroll her in an older class, making her the youngest. However, she’s thrived there, despite her age; her teachers actually told my husband and I at our last parent/teacher conference that they’d never know she was the youngest based on her behavior and intelligence.

I was already convinced my daughter would do better being the youngest – as opposed to the oldest – in her grade. But what put me over the edge were the calculations. Yes, I’ve used a series of equations to figure out the financial implications of sending my daughter to early kindergarten over the course of my lifetime – and hers too.

The Bottom Line Part 1: My Money

Preschool tuition for my daughter isn’t that expensive. But if we sent her to kindergarten early, we’d go from paying $305 a month (for the school’s pre-kindergarten program) to paying absolutely nothing to send her to our local public elementary school. Over nine months, the savings would really add up:

$305 x 9 = $2745

I started thinking, what would the impact to our bottom line be if we could save that $2745? And I wasn’t looking small picture either; oh no, I was wondering how saving $305 a month for a mere nine months could change our financial picture in the long term.

So, I used Dave Ramsey’s investment calculator to do the math for me. (Disclaimer here: I am NOT a Ramsey disciple; in fact, I’m not even a Ramsey fan. However, I think his investment calculator is easy to use and understand, which is why I use it myself and am linking to it here.) I quickly saw that the relatively small nest egg accumulated by saving my daughter’s preschool tuition would make a big difference:

  • Assuming a modest 4% return, that $2745 would turn into $4613 by the time my daughter graduated from high school
  • Assuming a moderate 6% return, it would amass more than $3200 in interest, for a total value of just under $6000 by her high school graduation
  • Assuming a more aggressive 8% return, we’d be able to triple our initial investment, turning the original $2745 into $7739 over that 13 year period

What could that $7739 do for our bottom line? It could pay for almost a full year of tuition at a public university (using today’s tuition rates, of course; by that time, it probably wouldn’t even pay for a single semester of in-state tuition). If my husband and I chose to put it in our Roth instead of our daughter’s 529, that original $2745 would be worth $14,666 (assuming the moderate return of 6%) by the time we reached 59 1/2.

The Bottom Line Part 2: Her Money

Of course, there are two sides to this equation. While I’ve been able to quantify how much money we’d be able to save, invest, and earn by sending my daughter to kindergarten early, I was wondering how that decision would impact her earning power over her career.

The results here, while far more theoretical, are even more astounding.

According to the National Association of Colleges and Employers, the expected median starting salary for 2012 college graduates is $42,569. I can’t accurately forecast what the starting salary would be for the class of 2030 – the year my daughter would graduate if she started kindergarten just a few days shy of her 5th birthday – so I’m just going to use today’s numbers, knowing they’ll be horribly antiquated two decades from now.

Let’s compare my daughter to her best friend, K, who is two weeks younger and whose mother isn’t even considering sending her to kindergarten early. If they both worked until they were 65 years old, my daughter would work for a total of 43 years; K, by comparison, would work just 42 years.

So let’s take that extra starting salary, and extrapolate it over a 43 year career. Say my daughter averages a 3% annual raise over that time. By the time she were 65, she’d be making $147,318 a year; K, averaging the same raise over 42 years, would make about $4500 less at retirement age. Over the course of their careers, my daughter would earn roughly $100,000 more than K – plus the additional $42,569 she earned when K was still in college – for a grand total of roughly $142,000 more. Additionally, because my daughter would have made more money during her career, she would stand to get a bigger monthly payment from Social Security (assuming that Social Security is still around in 65-70 years from now – a haughty assumption at this point).

Is It Worth It?

I’ve talked to parents, educators, and friends who contend that it’s better to be the oldest child in class instead of the youngest. I’ve also talked to plenty of teachers and friends who think just the opposite. Either way, my daughter will always be on one end of the age extreme – she’ll never be right in the middle, simply due to the fact of her September birth.

My daughter has succeeded in her first year of school, while surrounded by children as much as 10 or 11 months older than her. Socially, she’s right on target. Academically, she’s right on target. I’ve got another year before I have to make the decision of whether to enroll her in kindergarten early.

But I think these rudimentary calculations I’ve made here are interesting, because they show that the decision I make is not one that will affect her for a year or two; it’s a decision that will impact her finances for the rest of her life.

It’s a heady thing.