Knowledge. Human connection. Dollar signs and statistical figures. Whether you care more about immeasurable rewards or tangible payoff, there’s something for everyone among the substantial benefits of learning a second language.
To be sure, learning a foreign language can make a positive impact on your mental health, brain power, travel experiences and cultural competence. None of those are things you can quantify completely, even if you kept a running tally of new friends you make on your travels thanks to your multilingual finesse.
But that’s not really what we’re interested in here. If you came here to talk cash, then there’s a compelling financial case to be made for taking those German or Mandarin lessons you’ve been thinking about.
So just how much extra money can foreign language knowledge pad your pockets with? Here’s a detailed look at all the financial benefits of learning a second language.
Increased Earning Potential
It goes without saying that being multilingual opens you up to more job opportunities, which can certainly make your life more enriching and exciting. But not all of those jobs are necessarily ones you take for the money. Teaching English abroad, for example, is lucrative as an expat opportunity, but it probably won’t make you rich.
However, The Economist has previously taken a stab at analyzing the dollar value of foreign language skills.
The short answer: people with language skills can earn anywhere from an extra $67,000 to $128,000 over their lifetime.
The long answer: This figure was calculated in response to a Freakonomics podcast that determined foreign language knowledge only increases one’s salary by 2 percent, which the team at The Economist argued failed to properly account for compound interest. With the assumption of a $45,000 average starting salary of a university grad, plus a 1 percent salary increase per year and a 2 percent real return over 40 years, that would amount to an extra $67,000 earned by retirement age.
That $128,000 figure accounted for the fact that not all languages are valued the same (2 percent is the average). Knowing German can earn a premium of 3.8 percent, which then amounts to $128,000.
Of course, other experts and organizations have also tried quantifying the bilingual salary boost. Bric Language Systems CEO Ryan McMunn posits that learning another language can boost your salary by as much as 10 to 15 percent. And according to Salary.com, bilingual employees make between 5 and 20 percent more per hour than monolingual workers, depending on the language and the field.
On a macro level, America’s foreign language deficiency hurts our collective economy too. According to the U.S. Committee on Economic Development (CED), American businesses lose more than $2 billion each year due to linguistic and/or cultural misunderstandings.
Beating The Competition
Sometimes, the financial payoff isn’t necessarily as obvious as a pay raise. The magic can occur during the job search itself, especially if you’re up against a lot of other qualified candidates and your multilingual abilities give you a needed edge.
The majority of the U.S. population speaks only English, so in some sense, this is kind of a supply issue if you live in America. There aren’t a ton of people here who speak a second language well enough to make it count professionally, so the demand for language skills (and the associated asking price) will logically be higher in the context of this limited pool.
The U.S. government, for example, is dealing with a lack of qualified bilingual applicants relevant to its diplomacy and foreign intelligence needs. Only 74 percent of the State Department’s “language-designated positions” were filled with fully qualified personnel in 2012. By the way, multilingual members of the military earn an average of an extra $1,000 per month.
If you’re in business, proficiency in Mandarin will make you a stand-out candidate, as Mandarin is now the second-most important language in global business. The same goes for languages like Portuguese, Arabic, Japanese and German, which are spoken in booming business markets across the globe.
The value of your foreign language knowledge will also depend a lot on where you are. A previous Babbel Magazine article offered the example of Rob, who studied Dutch and found that his knowledge of this relatively fringe language paid off well. Few people bother to learn Dutch, as there are only a few million Dutch speakers in the world, and most of them speak English pretty well. However, Dutch speakers account for a vastly disproportionate percentage of the world’s GDP, which made Rob a valuable candidate for companies that do business with Dutch firms.
Better Self-Control
Increasing your top-line earnings isn’t the only way to produce more wealth for yourself, of course. There’s also the matter of holding on to what you have, investing it wisely, and putting it to good use.
According to research published in American Economic Review in 2013, the language you speak can potentially predict your ability to plan for the future and make smart decisions. And unfortunately for us, English speakers don’t exactly come out ahead in this sense.
Study author Keith Chen theorizes that languages with a strong future tense (like English) can predispose speakers to living too much in the present moment, which can make one less inclined to save money and stick to New Year’s resolutions. Essentially, when your language doesn’t have a strong future tense, it doesn’t clearly distinguish between “today” and “tomorrow,” and so the present and the future become equally important in your mind.
Languages with a strong future tense, like English and French, conjugate verbs differently depending on whether they’re referring to the present or the future. But languages like Mandarin and Finnish use the same verb tense in both scenarios.
Whether or not these findings are actually true, the bilingual brain does enjoy better cognitive function, and specifically, improved concentration and inhibitory control. This means knowing another language — regardless of what it is — will probably make you better at drafting an effective budget and stopping yourself from making frivolous impulse buys.
What’s more, foreign languages allow you to access a more rational part of your brain, which reduces decision-making biases. A study from the University of Chicago pointed to this as the reason why foreign language knowledge seems to lead to better financial decisions.
Vacation Savings
It doesn’t take a stretch of the imagination to see all the ways knowledge of the local language can save you money on your travels. Restaurants that cater to English-speaking tourists are often kind of a ripoff, and if you plan on buying anything while you’re there, you’ll be at an advantage if you can successfully haggle, compare your choices, push back against a price that seems excessive, or even just ask the right questions.
However, the biggest savings will arguably come from potentially reduced transportation costs. Airfare, bus and train fares are sometimes notably cheaper on the local-language version of the company’s website. And when you’re relatively comfortable with the language, you’ll feel more comfortable finding your way via the local bus or metro system (versus taking taxis everywhere), as well as skipping the pricey guided tours in English.
Sometimes, Googling flights, tours and accommodations in the local language can also lead you to discounts you would never have found in English. This isn’t even necessarily because tourism industries in other countries are trying to overcharge foreigners on purpose (though that’s not unheard of). Some sites just won’t pop up early in your search results if you’re Googling in English.