Obtaining old brings a host of changes. Achy knees. Way a lot more time to play bridge. And, occasionally, the tendency to create unwise cash decisions.
For example, Mom insists on keeping the obscenely costly 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 invest your kids’ tuition.
The direct approach — asking your parent to end spending like Donald Trump, already — is most 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 3 of them — B. Douglas Bernheim, Andrei Shleifer, and Lawrence H. Summers (the guy who now advises President Obama) — wrote a now classic paper known as “The Strategic Bequest Motive.”
Right after analyzing reams of data, they concluded that bequests are truly trades. People usually want something in return for making them — namely, time and attention. For example, studies show that kids who regularly call and go to their elderly parents often inherit larger amounts than those who don’t.
So the greatest method to stop your folks from frittering away their money is merely to shower them with love and devotion. Whether consciously or not, they will treat their cash a lot 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 exactly the same?
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