Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Stop squandering my inheritance!

By Tyler Cowen, Money Magazine


(Money Magazine) -- Getting old brings a host of changes. Achy knees. Way more time to play bridge. And, occasionally, the tendency to make unwise money decisions.

For example, Mom insists on keeping the obscenely expensive membership to a country club she can't afford and never visits, or Dad digs into his retirement stash to shower diamonds and vacations on a girlfriend half his age. You're left watching your inheritance dwindle even as you struggle to pay your kids' tuition.

CDs & Money Market
MMA 0.32%
$10K MMA 0.27%
6 month CD 0.38%
1 yr CD 0.61%
5 yr CD 1.28%

Find personalized rates:
 

Rates provided by Bankrate.com.

The direct approach -- asking your parent to stop spending like Donald Trump, already -- is likely to back-fire. Who wants his child telling him what to do? It will also make you look like even more of a gold digger than Dad's new squeeze.

Economists have a remedy. Years ago three of them -- B. Douglas Bernheim, Andrei Shleifer, and Lawrence H. Summers (the guy who now advises President Obama) -- wrote a now classic paper called "The Strategic Bequest Motive."

After analyzing reams of data, they concluded that bequests are really trades. People generally want something in return for making them -- namely, time and attention. For example, studies show that children who frequently call and visit their elderly parents tend to inherit larger amounts than those who don't.

So the best way to stop your folks from frittering away their money is simply to shower them with love and devotion.

Whether consciously or not, they will treat their money more carefully because they'll want to leave it to you. Isn't it nice when self-interest and doing the right thing are one and the same?  To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed4.01%4.14%
15 yr fixed3.18%3.29%
5/1 ARM3.24%3.30%
30 yr refi4.01%4.14%
15 yr refi3.19%3.31%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 20,661.30 -6.71 -0.03%
Nasdaq 5,821.64 27.81 0.48%
S&P 500 2,348.45 4.43 0.19%
Treasuries 2.40 -0.04 -1.64%
Data as of 10:40pm ET
Company Price Change % Change
Bank of America Corp... 22.94 -0.08 -0.35%
Ford Motor Co 11.77 0.05 0.43%
Advanced Micro Devic... 14.10 0.28 2.03%
Nike Inc 53.92 -4.09 -7.05%
Wells Fargo & Co 55.33 -0.52 -0.93%
Data as of 4:01pm ET

Sections

The typical plan on the individual market would have a deductible of $4,100, an increase of 61%, according to a Kaiser Family Foundation report. More

The advertiser backlash to Google is growing. Major brands have halted ads on certain Google platforms after learning their promotional posts were appearing alongside extremist content. More

Your credit score plays a major role in your personal finances. The better the score, the better it is for your wallet. Here's how to help get it above the 800 mark. More