Background We aimed to first, estimate the association of early childhood out-of-home placement with adult income and reliance on social welfare, and second, to test whether, and to what extent, mental health problems in adolescence/young adulthood and primary school grade point average (GPA) explain these associations. Method We used linked registers of all 59,476 births in Finland in 1987. Children who were first placed between the ages 2–6 years were selected as our exposure-group. Outcomes measured in adulthood (26–28 years) were low income (i.e. <11,000US$ annual income during ≥2 of 3 years) and social welfare use (i.e. >3 months of annual social welfare during ≥2 of 3 years). Putative mediators were mental health problems (i.e., psychiatric diagnoses from inpatient/outpatient visits) at ages 18–25 years, and Grade Point Average (GPA). To account for background differences, we matched placed to non-placed children using propensity score matching on parental (e.g., psychiatric diagnoses, education) and child characteristics (e.g., neurodevelopmental problems, prematurity). Results Of 54,814 children with complete data, 386 (0.71%) experienced placement (384 were matched). At ages 26–28, placed children had greater odds than never-placed children of low income (OR, 1.74; CI, 1.31–2.32) and social welfare (OR, 2.09; CI, 1.34–3.04). We found significant indirect effects of out-of-home placement on social welfare use via mental health problems (proportion mediated, 22%) and GPA (proportion mediated 11%), and on low income via mental health problems only (proportion mediated, 34%). Conclusions Prevention of mental health problems and increased school support for children who experienced out-of-home placement may effectively reduce poor adult socioeconomic outcomes associated with placement.< Réduire