Association between transient financial stress during early childhood and pre-school cognitive and socioemotional development

Economic difficulties in early childhood are associated with significant adverse long-term socioemotional and cognitive outcomes. In this study, we examine an understudied financial stressor that is often observed during periods of high unemployment—transient familial financial stress (TFS). We use the early childhood longitudinal study–(birth) cohort, to examine the association between exposure to TFS during early childhood and subsequent socioemotional and cognitive development. Exposure to TFS early in life is associated with a 1.25- and 1.16-point reduction (p <.05) in preschool reading and math scores, respectively. Path analysis suggests that these outcomes are partially mediated by mother–child interaction and parental investment. These findings provide important insights that can help inform early intervention efforts.