How Much Financial Assistance is Too Much?


As political analyst Ben Shapiro often states, “Facts don’t care about your feelings.” This statement resonates with me as I frequently observe individuals behaving combatively when facing statistical data at odds with their way of life.

Let’s use the divorce rate as an example. There’s only a 50% likelihood that a marriage lasts until the death of a partner.

Most individuals will accept this data at face value. But when it comes time to examining where they fit into that statistical sampling, they’ll often attempt to rationalize why they aren’t subject to its premise. In most cases, they theorize that they have unique characteristics or circumstances that make them materially different than others surveyed or examined. Take an engaged couple that is confronted with this data, for example. That couple might ignore recommendations that they consider prenuptial agreements because they believe their romantic covenant is exceptionally strong. They assume that they won’t be part of the 50% of failed marriages because they are different.

The problem is that dismissing data ignores two valid principles backed by the available data:

1. Human nature is inherently unpredictable.
2. Statistical data based on large sample sizes are bound to include representation for situations similar to yours.

Another example that is almost as touchy as marriage involves how we should address financial assistance for lower-earning members of society. Low-income individuals include struggling families as well as young to middle-aged adult offspring. So, not only do we need to decide how much assistance our government should give to the poor, but also how much support parents should give to their adult children. We may not have much control over government welfare programs, but at least we can control our financial interactions with our children.

Financial Assistance to Encourage Self-Sufficiency

When parents who are funding their children economically are confronted about that practice, they’ll likely attempt to defend themselves against that criticism. They’ll say things like “I’m just helping my kid get started” or “I’m easing him into independence.”

Proponents of our current welfare system might argue that the aid will help many government assistance recipients eventually become self-sufficient.

Arguments such as these ignore the overarching principle that governs economic potential:

Excessive financial assistance is a deterrent for wealth building.

Before examining family and governmental support, let’s define what excessive financial assistance means to me. In my opinion, excessive support is aid that is given indefinitely and/or assistance that allows for more than a baseline level of comfort. I reason that both parental and governmental support is intended to habilitate or rehabilitate the recipient. When subsidies enable too great a level of comfort or comfort that will continue indefinitely, there’s little incentive for the beneficiary to strive for self-sufficiency.

Economic Outpatient Care

In the Millionaire Next Door, Tom Stanley uses the term “economic outpatient care” or “EOC” to refer to young to middle-aged adults whose incomes are supplemented by their parents. Based on a 20-year study, Stanley determined that parents and their children alike are more likely to have a lower net worth if they take part in an economic outpatient care arrangement.

This statistic is alarming as nearly 50% of affluent couples (i.e., millionaires) give annual gifts of more than $15,000 to their adult children. In those instances, because economic aid arrives at regular intervals, the recipients subconsciously view them and rely upon them as if it were part of their regular income. Despite this false categorization by the EOC recipients, the recipients are far more likely to earmark the financial gifts for consumption than they would with self-generated income.

Gifts Can Lead to High-Consumption Lifestyles

The majority of EOC dollars that children receive ends up bumping the recipient into a lifestyle that they could not attain with just their self-generated income. What’s worse, this lifestyle inflation only encourages (and often necessitates) more spending.

For instance, let’s suppose that EOC dollars allows a family to move into a gated community. Their affluent surroundings may compel them to purchase luxury automobiles, send their children to private schools, and incur other expenses in an effort to keep pace with their wealthy neighbors and assimilate to their affluent community.

In general, most EOC payments from parents to their children provide more support than is necessary to merely achieve a baseline level of comfort. By subsidizing greater levels of comfort, these parents can actually create a disincentive for adult children to ever improve their ability to generate income.

Help Where Help Isn’t Needed

Almost 75% of parents in diverse income classes state that they provide monthly financial assistance to one or more adult offspring. Of those individuals, 59% are giving aid to adult children who are not enrolled in college. To make matters worse, about one-third of parents don’t specifically know what the money is being used for.

The fact that so many parents don’t know what their financial aid is being used for suggests most adult EOC-recipients could actually survive comfortably without assistance.

Is Government Welfare Better than Parental EOC?

While welfare contradicts the principle of excessive financial assistance, its use in society is applied far more effectively than parental EOC. This is backed by government statistics.  Roughly 55% of Welfare recipients receive benefits for less than two years before realizing a disqualifying income. In comparison, this looks outstanding when you consider that 43% of adult children in their thirties received at least 12 years of adult financial assistance.

The reason for the better results is simple: welfare (in many cases) only provides a minimal level of comfort, whereas EOC generally goes above that standard.

In a nutshell, welfare recipients have greater incentive to lose access to aid by achieving a moderate level of comfort. EOC recipients, on the other hand, are often complacent because their parents are subsidizing an above-average lifestyle.

Though welfare is better in its application than EOC, it is a very flawed system. In the US, there are six states where welfare pays more than a twelve-dollar-an-hour full-time job. In other words, those welfare recipients are receiving a higher level of comfort than someone working a full-time job for two dollars above the average minimum wage. Talk about a disincentive.

Furthermore, as long as the welfare recipient maintains a monthly income under about $1,000, there is not a steep decline in benefits over time. This means that if a welfare beneficiary is content with whatever lifestyle they live with government assistance, they’ll probably make sure their income stays low enough to continue receive that aid.

Don’t forget: Excessive financial assistance is a deterrent for wealth building.

A Few Final Thoughts

When examining the motivations behind welfare and EOC we can see that the end goals are mostly the same. We want to help individuals in our society or family become independent and self-sufficient. We should do this by establishing situational, finite agreements that give our dollars specific use. These agreements should only allow the recipient to achieve a minimal amount of comfort, as to maintain the necessary economic incentives.

By discerning the specific use of EOC or government assistance dollars, we can ensure that rather than enabling recipients to flat line in their development, we instead provide a temporary, declining subsidy with a clear and timely purpose in mind.

Learn what it takes by joining our community of Dollar Builders. You'll receive FREE wealth-building tips, tools, and strategies delivered straight to your email inbox!
We hate spam. Your email address will not be sold or shared with anyone else.

About the Author:

Hi, I'm Darian! I am a twenty-something insurance professional working on my ultimate quest for financial freedom. I hope you enjoyed this article. Stick around to learn more about financial strategies to manage debt, save more, spend less, and live the life you want.


  1. TheBrain March 12, 2018 at 2:50 pm - Reply

    I really liked this post. It spoke to me. I don’t yet have adult children, but I do worry about how not to coddle them as they grow up.

    I think my parents did a great job with me. I was taught not to take things for granted and that I don’t deserve anything that I’m not willing to work for.

    Helping others is still important. but give those less fortunate a rope or ladder to help them climb…not a couch and TV in the pit, so they never bother climbing out…

    • Darian
      Darian March 12, 2018 at 2:59 pm - Reply

      Appreciate the comment. I think the ladder metaphor is a great one, and even though all kids require different types of “ladders” to get to where they need to be, just the fact that you are thinking about that gives you and your future kids a huge leg up!



  2. Steven McMillian March 18, 2018 at 10:15 am - Reply

    I’ve had to learn to support myself when I moved out. It was a good lesson my parents taught me. I have not had to ask a dime from them since I have been on my own. When you are out on your own, you have to take responsibility financially. My parents won’t be around much longer. Great article.

    • Darian
      Darian March 18, 2018 at 12:17 pm - Reply

      Thanks for the comment Steven. I really feel folks like you will end up being the high level contributors in society (if you aren’t already). Though you may have had success in your DNA I think your self sustaining life style and lacking EOC shoots you down the right path that others may never find their way onto.

Leave A Comment