by Matthew Ting

Starting early and becoming successful are strongly correlated. There is a proverb in the English language: “The early bird catches the worm.” A British interpretation asserts, “Success comes to those who prepare well and put in effort.” An American explanation claims, “If you wake up and get to work early, you will succeed.”

Financial literacy relies on the foundation of numeracy. In other words, someone possessing a strong number sense should know how to manage money well. The concept of principal and interest is introduced and taught in middle and high school math curriculum of Pre-Algebra, Algebra 1, and Algebra 2. For simple interests, the formulas are *I* = *Prt*, or Interest = *Principal* x *annual interest rate* x *number of years*; and *A* = *P* + *I* = *P* + *Prt* = *P*(1 + *rt*), or *Cumulative Amount* = *Principal* + *Interest*. For compound interests, which are widely used in real world, the formula is *A* = *P*(1 + *r*/*n*)^(*nt*), in which *n* is *number of times the interest is compounded each year*.

Albert Einstein was quoted declaring that compounding is the eighth wonder of the world and the most powerful force in the universe. Whether our physics genius really said it or not, the simple math speaks for itself: at 7% interest rate, our money roughly doubles every 10 years. Many Home Economics textbooks repeat such an investment scenario: if a 25-year-old invests $380 a month (that is $4,560 a year) at a 7% compound annual interest rate for 40 years (total contribution $182,400), he or she will have exceeded $1 million in personal wealth by age 65.

If a person starts later at age 35, the compounding factor will be far less robust. He or she will not have amassed even half a million under the same conditions. In order to reach the goal of $1 million, the person will have to be more aggressive and contribute $820 a month or $295,200 total for 30 years. On the other hand, if a person starts five years earlier at age 20, then he or she will have $1.45 million on hand at age 65. Or, the person can lower the monthly contribution to $270 and still reach the million dollar goal under the same conditions.

The Library of Economics and Liberty claims: “Saving and investing is one of 51 key economics concepts identified by the National Council on Economic Education (NCEE) for high school classes.” Readers of this blog post can use any physical or virtual compound interest calculator to discover and determine the “dollars and sense” at any age. Below is one of many useful sites: http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

The “early bird = success” axiom applies to learning math or any other subject, but probably more so for math, because math concepts and skills constrict the grey area between numeracy and innumeracy (mastery or the contrary) to nearly nonexistent. Either you know it, or you do not know it. If I hear a student saying with hesitance, “I kinda know what Laws of Sines are …” I usually pressure for an example, then will hear, “I forgot.” That is no mastery. That is innumeracy. Having heard the term does not mean much.

Those students who preview in a solid fashion tend to succeed easily at school. They typically spend far less time on assignments and retain far more content knowledge than their counterparts moving along or falling behind the teacher’s pace.

Being or becoming an “early bird” is essentially **habit-forming** and **confidence-building**. Some of my university students would raise their hands on the first day of class asking whether the weekly readings listed on the syllabus are due before or after each class meeting. The answer is before. To encourage the habit and enhance the confidence level, I routinely give reading and lesson quizzes. Full and through, “early birds” command our respect by having the fewest emergencies and performing at optimal levels most steadily. They are simply persons, cases, and anecdotes of successes.

Are you an “early bird”?

(Inspiration and input by Steve)