“Economic Outpatient Care” is when parents give money to their adult children, especially if the funds are substantial or continual (142). This practice tends to reduce parental wealth and results in adult children becoming dependent on their parents’ continued generosity. The authors lament that many supposedly affluent people receive annual gifts of tens of thousands of dollars from their parents. Their luxurious lifestyles mask their low overall net worth and dependency.

Stanley and Danko recall the story of Mary and Lamar, a couple who always needed Mary’s mother’s money in order to maintain an upper-middle class lifestyle. Mary’s mother felt disappointed in Lamar’s low-paying profession and offered to help them buy their first home. In spite of continually receiving large gifts from Mary’s mother, the couple never saved and their spending outpaced their income. On the outside, they had all the status symbols ascribed to millionaires, like private school educations for their kids, a large home, and new cars. However, the couple privately worried about their financial security.

The authors feel that adults like Mary and Lamar are delusional. Their inability to provide for themselves creates dependency and a state of uncertainty. To make matters worse, receiving cash or valuable items as gifts tends to prompt more consumption. For instance, receiving a beautiful, expensive rug from their parents prompted one couple to upgrade their old furniture and lighting so the rug would not seem out of place. Ironically, many gift recipients are more dependent on credit than adults who do not receive parental gifts. Gift recipients also tend to invest less money than others, as they are more oriented toward spending.

The authors argue that a better way to support one’s kids is to teach them financial discipline and pay for their education. This helps children provide for themselves, rather than creating continued dependence and helplessness. While the media sometimes presents poverty as a prerequisite to learning frugality, the reality is that becoming a millionaire increases your chances of having millionaire offspring. Children of truly affluent parents tend to learn by example: that it takes frugality, consistency, and hard work to build wealth.

The authors describe millionaire couple Berl and Susan, who give each of their kids $10,000 per year. Their eldest sons, schoolteacher Henry and lawyer Josh, have different incomes, yet lower earner Henry has a significantly higher net worth. The authors credit Henry’s modest lifestyle with helping him build wealth, while Josh and his wife spend nearly all their income to keep up the appearance of success. The authors point out that Josh’s children are growing up in a “high-consumption environment” (163). They will likely not receive the same gifts or inheritance as Josh, setting them up for long-term financial uncertainty. Henry has learned to enjoy his modest lifestyle and will retire in comfort, while Josh is recklessly burning through his and his parents’ money. The authors reiterate that paying for tuition and teaching frugality and independence are the best “gifts” to give children. Making decisions or even doing work for them is merely “weakening the weak” (167).

The authors tell the story of a young businesswoman whose parents lavished her with support as she began her venture, allowing her to live at home for free while giving her regular cash payments. While her business eventually turned a profit, she continues to live at home, where she spends most of her income as well as her parents’ gifts. In spite of these luxuries, she lives in fear of financial insecurity, knowing that if her parents’ wealth dwindles she will face ruin. The authors conclude that learning independence and resilience is more helpful than receiving financial support from one’s parents.

The authors’ real-life anecdotes paint a grim picture. They include statistics which compare gift receivers to non-gift receivers. This substantiates their claims that people who regularly receive money from their parents tend to have lower net worths than others with similar occupations. For instance, “[h]ouseholds headed by accountants who receive cash gifts from their parents have 57 percent of the net worth of those in the same occupational category who do not receive gifts” (151). This provides the reader with food for thought about the effect gift-receiving may have on adult children.

The authors also claim that “[g]ift receivers frequently are underachievers in generating income” (153). They point to evidence that gift receivers tend to have lower incomes than others in the same line of work. Receiving gifts makes them feel less motivated than others to work hard and earn more. This claim is tricky to prove. Affluent parents who see their children struggle may be more likely to give gifts, but may not if their children were earning more. Indeed, the authors mention that parents tend to give more to their lower-earning adult children.

The authors reiterate that overspending is a disastrous habit. They lament that many gift receivers use their parents’ money to acquire a home in an affluent area, only for this to add to the social pressure they feel to spend more. They explain, “Remember, expensive homes are typically located in what we call ‘high-consumption neighborhoods.’ Living in such neighborhoods requires more than just being able to pay the mortgage. To fit in, one needs to ‘look the part’…” (153). The authors present societal trends as a key factor in people’s financial health—or lack thereof.

Chapter Lessons

• Frequent gifts of money can lead to dependence and financial uncertainty
• Teach children how to be frugal and self-sufficient so they can become financially stable
• Maintaining the appearance of an upper-class lifestyle may prevent you from ever building real wealth

Reflection Questions

• Have you ever been in the position of giver or receiver, and has this passage changed your perspective on this experience?
• Do you agree that gift-giving creates dependency?