10/18/2012 02:23 pm ET Updated Dec 18, 2012

Special Words of Financial Wisdom for Parents

"Teach your children well." -- Crosby, Stills and Nash.

I have three suggestions for parents concerning money:

1. Keep your children from being spoiled rich jerks.

I helped a young child who is being raised by a committee. His single mother was killed in an accident. The child received a large sum of money from his mother's death and lives with extended relatives.

A judge decided to appoint a committee to handle his upbringing and named a non-related attorney as administrator. I advised the committee as to how to handle his finances.

The child comes from a lower-income family, and few of his relatives are well-educated.

When it came to the issue of the child's spending money, the first thing that the administrator decided was that that the child would have to earn his allowance by working with handicapped children and others less fortunate than himself. He also suggested that the child should be involved in youth groups and receive special tutoring.

The boy is going to have a rough time going through life with no parents, and it will be harder still for him to know that he received a huge amount of money because of his mother's death. Helping children with physical handicaps will give him a sense of self-purpose, and it will also force him to recognize that others in life have adversity and learn to deal with it.

Helping other people might keep the child from being a spoiled, rich jerk.

Money can bring power and security, but it also can bring insecurity. People who are rich never know if someone likes them for who they are or for their money. Many develop the attitude that everyone wants something from them, and they are often right.

I grew up hating private country clubs and considered them to be the pinnacle of snobby elitism. I won't join a private club -- although in fairness, no private club has ever asked me to join.

As an adult, I can understand why rich people want to hang out with other rich people. In that environment, everyone is of similar financial status and the rich can feel more secure.

In the case of the young boy, the committee decided that he should take golf and tennis lessons. His finances are set for him, and he will receive large payments over his lifetime. He will probably have friends who are well-off, too. Being a golfer and tennis player will allow him to bond with children who grew up with similar wealth.

If you have children, you want to ensure that they are financially secure. There are some steps to making sure that money does not warp them.

  • Don't let them have it all at once. Most people spend a lifetime gathering significant wealth. Getting too much, too young, does not give a person the proper perspective.
  • Make sure they understand it is not easy to come by. Having them earn money, rather than having it given to them, is a good way for them to find out what other people do to feed themselves. I had a friend that grew up wealthy who once complained that he felt deprived because his neighbor was given a chain of gas stations by his parents and he was not. He could not relate to the idea that many people his age were hoping to get a job pumping gas or making change at a gas station, instead of owning one. His perspective on life was warped.
  • Make sure they know money can do good things. Too many people with inherited wealth spend it trying to impress other people with inherited wealth. If your children know they can spend it to make other people's lives better, they will be happier in the long run.
  • Don't let them think in terms of a big inheritance. I have seen many young people waste their lives waiting for a rich relative to die and leave them a big lump sum. The relative would do them a bigger favor by spending the money on their education and setting up a trust or other mechanism to make sure that any inheritance does not come in as a lump sum.
  • Be a good role model. If you give money to charity, your children probably will, too. If you volunteer to do things in the community, your children will follow your lead. If you want to teach your children not to be spoiled, rich jerks, don't act like one yourself.

2. They don't teach your children about money in college. You need to step up to the plate or it is never going to happen.

If they ever let me speak to a college graduation, here is what I am going to tell them:

College seniors enter a world based on economics and without much preparation for what is about to hit them. College is good for many things, but preparing students for "real world" finance is not one of them.

There are three things a college graduate should know about money: How to make it, how to keep it and how to use it to develop a lifestyle that that will give you long-term happiness.

Even when planning on being an entrepreneur and having their own gig, most graduates get experience by working for someone else. They need someone to hire them.

Getting hired is a tricky thing. There are courses, counselors and tons of books devoted to the subject, but I offer students only one piece of advice: "It's all about them, not about you."

Employers hire employees to help employers make more money. They are not interested in accommodating your personal desires unless that somehow happens to coincide with adding to the bottom line.

You need to sell them. They don't need to sell you.

Do potential employers look at your Facebook page and other social networking sites? Of course they do. I have for a long time. It can make or break a person. I don't mind pictures from drunken keg parties. I can only imagine what my Facebook page would have looked like if people carried cameras during my undergrad years (and, of course, had there even been Facebook then... or computers... or electricity). Doing crazy stuff is part of the college experience.

Employers want a hard worker with a positive attitude. The quickest way to NOT get a job is to mouth off online about your former and current employers. I'm stunned when I see examples of people posting negative remarks about their job or boss, usually while they are sitting at the job where they are supposed to be working.

Which leads to the second topic: How to keep the money you make.

The days of lifetime employment are over. Corporations and government entities come in and cut thousands of jobs on a whim. They will invent a computer or robot that does your job. One day, you will wake up and find that someone in India has taken your position.

Be ready and build a "take this job and shove it" fund. Former Treasury Secretary Don Regan called it "f--- you money."

Either way (though I prefer the Regan terminology), it means freeing yourself from staying in a job you hate because you can't afford to quit.

In order to do that, you need to be financially independent. Most college students aren't.

It used to be that students just didn't have any income. Now they have huge debts.

I keep running into the same type of college graduates. They have big credit card debts, student loans outstanding, payments on cars they're upside-down on and looking to buy their first home.

They are never going to have "f--- you" money. They will spend the next 50 years of their lives at the whim of whatever boss, bank or creditor who wants to pull their chain.

Before buying a brand new car or a house, the focus needs to be on paying down debt and getting some savings in the bank.

Somewhere I read that a person's financial style is set by age 27. If a person is a spender at 20, he may get over it by 30. If he is a spender at 30, he probably will be for the rest of his life.

The years after college are the time to be "reborn," in a financial sense. It's a time to set up your life so that money works for you, rather than you working for money.

Class of _______. You are now ready to take on the world.

3. When it comes to children, play the hand that is dealt to you.

My father was a professional gambler. When faced with any kind of crisis, he would say, "You have to play the hand that is dealt you."

In my career as a structured settlement consultant, a number of my clients have brain-injured or special needs children. Having been at it for over 30 years, many of the children I originally worked with are now adults.

One of the most fascinating things I have seen is that the parents, almost universally, step up to the plate and do what they need to do to make it better for their children.

Being the parent of a special needs child is one of the toughest jobs in the world. It is a lifelong assignment. You don't ship the child out the door at age 18. Or 30. Or 50. Or ever.

The parents are involved until the day they die.

I've dealt with hundreds of parents of special needs children. They take the hand that is dealt to them. And usually turn that hand into aces.

Much comes down to having a positive attitude. Any child, especially a special needs child, forces parents to understand there is a world beyond themselves.

One of my Facebook friends is the parent of a severely injured child and she summed it up perfectly in a post on my Facebook page:

"I think a lot about the phrase from expectant parents 'as long as the baby is healthy.' No one wants their child to suffer or experience a handicap, but the love and bond you feel with that child that was not born healthy is like no other. It gives you a whole new meaning and depth to life that honestly I would not trade."

Having a special needs child could be a burden or a blessing. Parents with healthy children deal with issues like drugs, substance abuse, sexually transmitted diseases and children who grow up to be selfish, lazy and unmotivated. I see the parents with adult children living at home for no apparent reason. I see grandparents raising grandchildren when the parents are unwilling or unable.

I've seen a lot of people who thought they had a winning hand with healthy children, but wind up "busting out." To raise a special needs child requires a degree of unselfishness and level-headedness that the average person doesn't have.

Parents of a special child understand that you play the hand that was dealt to you.

A pretty good philosophy for all of us.

Don McNay, CLU, ChFC, MSFS, CSSC is a bestselling author and expert on what to do when you win the lottery. His latest book, Life Lessons Learned From the Lottery, will be available on Kindle on November 10.