TEACH YOUR CHILDREN TO FISH 🐟 🦦
When we lecture about the relationship between cash gifts and economic achievement, people from the audience typically ask: “If not cash, then what form of gifts are more beneficial?” They are eager to learn how to enhance the economic productivity of their children. Here again, we remind them that teaching their children to be frugal is critical. Often those who are trained to be otherwise as children become adult hyperspenders, needing cash subsidies during their young and middle adult years.
What intergenerational transfers could help your children become economically productive adults? What should you give them? The affluent have a great appreciation for the value of a high-quality education. We asked millionaires if they agreed with the following statement:
◆ School/college learning is/was of little use to me in the real world of making a living.
Only 14 percent agreed; 6 percent had no opinion; and the balance, 80 percent, disagreed. That’s why millionaires spend a large amount of their resources on their children’s educations. What was the most frequently mentioned gift that millionaires received from their parents?
Tuition!
All other economic gifts are mentioned by a significantly smaller proportion of millionaires. About one in three received some financial support in purchasing his first home; about one in five received an interest-free loan during his lifetime; only one in thirty-five ever received funds from his parents for mortgage payments.
What can you give your children to enhance the probability that they will become economically productive adults? In addition to an education, create an environment that honors independent thoughts and deeds, cherishes individual achievements, and rewards responsibility and leadership. Yes, the best things in life are often free. Teach your own children to live on their own. It’s much less costly financially, and, in the long run, it is in the best interests of both the children and their parents.
There are countless examples of the inverse relationship between economic productivity and the presence of substantial economic gifts.
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Our own data, collected over the past twenty years, repeatedly support this conclusion. Independent of college tuition, more than two-thirds of American millionaires received no economic gifts from their parents. And this includes most of those whose parents were affluent.
WEAKENING THE WEAK
So what are affluent parents to do with their wealth? How and when should they distribute it among their children? We will detail the distribution of wealth in the next chapter. But at this point, here’s some food for thought: Most affluent people have at least two children. Typically, the most economically productive one receives the smaller share of his or her parent’s wealth, while the least productive receives the lion’s share of both economic outpatient care (EOC) and inheritance.
Consider for a moment that you are a typical affluent parent. You noted that your oldest son or daughter even at an early age was extremely independent, achievement-oriented, and well disciplined. Your instinct is to nurture these traits by not trying to control his or her decisions. Instead, you spend more time helping your less resourceful child make decisions, or you actually make decisions for him. With what result? You strengthen the strong child and weaken the weak.
Suppose you have a ten-year-old child who goes in for a physical checkup. The examining physician tells you that your son or daughter is underweight and underdeveloped. How would you respond to this evaluation? You would find ways to improve your child’s physical health. You would likely encourage your child to exercise, take vitamins, lift weights, and perhaps play sports. Most parents would attack such a problem proactively. Wouldn’t you find it odd if the parent took the opposite course? How would you respond if the parent encouraged his child to eat less and exercise less?
All too often this method of weakening the weak is applied to children who show personality-related weaknesses. In one case we know about, parents were told that their son was deficient in writing and related verbal skills. How did the parents respond to this problem? First, they transferred their child to another school. The verbal deficiency problem failed to improve, however, so the father began writing his son’s papers. He still writes his son’s papers today. His son is a junior in college.
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In another case, an affluent couple had a twelve-year-old daughter who was very shy and rarely spoke to anyone without some prompting. Concerned about her daughter, the mother wrote a note to her daughter’s teacher, asking that the child’s seat be moved from the front to the back of the room, since her daughter felt more comfortable there. The mother reported that the “kids in front were too often asked questions by their teacher.” The day the teacher received this request, she did not make any changes in the seating. The mother called the teacher that afternoon to protest. The teacher was unavailable, but she did return the call the next afternoon. Feeling slighted, the mother immediately transferred her daughter to another school.
In yet another case, a distinguished professor recently received a telephone call from his neighbor. The caller was irate:
Caller: Dr _______ , you’re in this business. I need your advice. How can I go about getting a professor fired? You probably don’t know this guy. He’s at the state university.
Professor: Why do you want to have him fired?
Caller: My daughter is failing his course. He says she lacks the background to do well in his class.... He has long hair. He never wears a suit.... He’s a jerk! I have already spoken to his chairman. I’m getting the runaround. I want this guy fired. (runaround [noun] is deceptive or delaying action especially in response to a request.)
Professor: Well, why doesn’t your daughter just withdraw from the class?
Caller: Then she will have to go to summer school.
Professor: There are a lot worse things than summer school.
Caller: If she goes to summer school, she can’t go to Europe with us. We have planned this trip for two years. Her mother won’t go without her daughter. What can I do?
What have all the parents done in these cases? They have contributed to weakening the weak. If your son has a deficiency in his verbal skills, make a commitment to overcome his handicap. In one case, a father recognized that his son had an extremely high aptitude in mathematics but that his verbal skills were poor. His dad attacked the problem. Each night during dinner, Dad would ask his son to define three words taken from the SAT study guide. During hundreds of dinner sessions, Dad tutored his son. He also hired a professional tutor for him. This combination worked. Today his son is a graduate of a top Ivy League school—the one with the highest entrance requirements!
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