I like to ask millionaires who have read The Millionaire Next Door what their favorite chapter is.  You may be surprised to learn that it is not Chapter 2, Frugal, Frugal, Frugal.  This chapter details the frugal lifestyle of millionaires in terms of the modest prices paid for clothing, shoes, watches, motor vehicles, etc.  This is merely a review for millionaires, affirming who they are.  However this chapter (which ranks 3rd) is the one they most often tell their children to read!

Chapter 5, Economic Outpatient Care, ranks second.  Often after a millionaire reaches the “financially independent” threshold, a new set of issues develop.  The typical millionaire next door has 3 children and 6-8 [median] grandchildren.   How millionaires interface with these offspring in financial terms can be the cause of much worry and unpleasantness.  Of course, not all children of millionaires are underachievers.  But as mentioned in The Millionaire Next Door, 

. . . in eight of the ten occupational categories, gift receivers [those who receive economic outpatient care] have smaller levels of net worth (wealth) than those who do not receive gifts.

These occupations include accountant, attorney, marketing professional, entrepreneur, senior manager, engineer, physician and middle manager. Of course, these data do not account for economic “inpatient care.” Keep in mind that 1 in 4 sons (ages 25-34) of high income parents live with them.

Chapter 6, Affirmative Action Family Style, ranks first in popularity.  The subtitle of this chapter, Their Adult Children are Economically Self Sufficient, succinctly summarizes the chapter.  Yet parents often distribute their wealth in ways that instigate friction among their adult children.  Those children who are the least productive in economic terms often receive the lion’s share of their parents’ capital. The results of  this inequity of distribution are predictable.  It further weakens the weakest child and strengthens the strongest child.  Or as a millionaire told me:

. . . children . . . . The ones who achieve do so by conquering obstacles . . . who were never denied their right to face some adversity.  Others were in reality cheated. . . sheltered. . . [as a result] never really inoculated from fear, worry, and the feeling of dependency.