In this chapter, we examine the direct and indirect effects of household income on children’s achievement using Japanese data. We focused on estimating the extent to which a positive correlation between income and children’s outcomes is mediated by expenditure on private supplementary education activities. Although previous research has shown both correlational and causal links between income and children’s outcomes, the specific mechanism remains unclear. We employed mediation analysis and utilized data on each child’s academic abilities, equalized household income, and educational spending. Overall, our estimate showed that educational spending mediates the total effects of income on children’s outcomes by approximately 10% for math and Japanese language scores. Our main results suggested that other channels through which income affects children’s human capital may exist and that future research should focus on broader parental involvement that is not limited to financial investment.