Jessica Findlay

Finance 1050
Joe Howell
The Millionaire Next Door Questions
1. Explain the following two (2) concepts addressed in The Millionaire Next Door:

Big Hat, No Cattle

Big Hat, No Cattle is used to describe an individual who looks well-off. They typically have
nice things, like clothes, cars, homes, etc. However, these people who are living like they have it
all, actually do not have the means to support this kind of living.

Go to Hell Fund

Go to Hell Fund is a fund established that lets you live securely for 10 years or more. This can
be used in times of struggle, or if your job is terrible, you can to tell your boss to go to hell.

In the examples of Mr. Richards (PAW) & Mr. Ford (UAW), both men are close in age &
yearly income. Explain why Mr. Richards has nearly five times the net worth of Mr. Ford.
(Be specific).

Mr. Richards lives beneath his means and does not spend his money on the nicest, most
expensive things in the world. Mr. Ford on the other hand, lives paycheck to paycheck, spending
money on expensive cars, homes, and clothes. Both men have a different lifestyle, even though
they have close yearly income and are close to age. Mr. Richards chooses to save his money and
buy things that he needs, while Mr. Ford spends his money on things that he wants.

2. Provide short answers to the following three (3) questions:

Most people will never become wealthy in one generation if they are married to
people who are wasteful.
Upon giving his wife $8 million of stock, from taking his company public, what did his
wife continue doing? Clipping Coupons
Why would someone who is a millionaire need to budget? When you budget your
money, you direct where your money goes. Anyone can go bankrupt, even
millionaires.

3. In the example of Theodore Teddy J. Friend and his parents, answer the following two
(2) questions:

The book describes Teddy as being possessed by possessions. Explain this

comment.
Teddy would only work to have things. He did not care if he was financially independent
or not. He was obsessed with owning things, possessed by possessions.
What was the small change Teddys parents could have made that would put them
in the millionaire category? (Be specific.) Teddys parents should have put their
 Jessica Findlay
Finance 1050
Joe Howell
cigarette money in the stock market.

Mr. Rodney is a high-income/low-net worth corporate manager. Explain why he is

described as having sold his financial independence.

Mr. Rodney did not have a financial plan for the future. He did his job so that he could buy
things, and never saved. He is describes as having sold his financial independence, because he
never took advantage of the business's stock purchase plan. If he would have, then he would
probably be financially independent.

4. Why did Mr. W.W. Allan decline the gift of a Rolls-Royce?

Mr. Allan did not want the Rolls-Royce because it was not appropriate for the kind of life he was
living. There was nothing that the Rolls-Royce represented that was important in his life. Mr.
Allen also loved fishing, and this would not help him continue doing the things he loved.

5. Regarding Economic Outpatient Care (EOC), answer the following four (4) questions:

Explain this statement: The more dollars adult children receive, the fewer they
accumulate.

This statement explains that receivers of Economic Outpatient Care are prone to spend money
given to them, because they have not earned it or worked hard for it. It is much easier to spend
others money, than money earned by yourself through hard work and time.

= What is the likely financial outcome for Mary & Lamar once her Mother passes away?

Mary and Lamar are not sure how much money will be left for them by Marys mother, but since
the mother is making their house payments, they will probably struggle financially once she
passes away.

The parents of Ms. BPF were determined to give their daughter every advantage. After
they created an ideal environment for her, what was the result?

The parents contributed lots of money to start Ms. BPFs business that she wanted. The parents
let her live at home and thought it would make her life easier if she did so. Since she lived at
home, she did not have to be independent on things most people should be. She did not have to
clean her own room, or even pay rent since she lived at home. Now that Ms. BPF is older, she
still lives at home and depending on her parents. Since her parents helped out a little too much,
she will probably never be independent.

In the case of Laura (A Woman of Great Courage), explain the primary message derived
 Jessica Findlay
Finance 1050
Joe Howell
from her story?

Laura showed great courage for trying to support her family. She decided to be independent and
found a job in real estate that would be able to support herself and her family. She did not want
to depend on her parents for money, especially since she grew up in an environment that taught
her to be independent. She worked hard at real estate and really put her mind to it. She showed
great courage by developing an exceptional foundation for her sales career and became quite
successful with it. She was handed a tough situation or trail, but with dedication and
determination she was able to support her family and be successful.

8. Regarding Affirmative Action, Family Style, answer the following three (3) questions:

= In the example of sisters Ann & Beth, describe the consequences to Beth & her husband
from receiving EOC?
= Beth & her husband are not financially independent. They depend a lot on the parents to help out.
The parents seem to have more control over them since they help them out so much. The
negative consequences to this is having the parents more involved in decision making and having
more say in what goes on in their lives.

Explain the concept weakening the weak.

; The concept weakening the weak is basically when someone financially supports someone
else. This causes the person to become financially dependent on that individual. This cause them
to depend on the other person all the time, and weakens them instead of helping them to become
financially independent.
;
; Select one of the Rules for Affluent Parents & Productive Children & explain why you think
this rule is most important.
The rule I think is most important in #10 Tell your children that there are a lot of things more
valuable than money. I think it is important to remember that money is not everything. There is
so much that can make you happy in this world like family, and friends. Some of the most
happiest people in the world are those who dont have all the worldly things and lots of money.

9. Explain the root cause for the conflict between Mr. W & the residents of the vacation
condominiums. (HINT: Its not because of his dog.)

The root cause was that most of the residents of the vacation condominiums did not feel like Mr.
W and his family lived up to the standards that they thought were necessary to live there. His
family did not look the part that the residents all thought they should live up to. Since they were
not happy with this, they started making rules at the vacation condominiums that would make it
difficult and awkward for the Mr. W and his family.

10. Now that you have finished reading The Millionaire Next Door, answer the following
questions in a minimum of three (3) paragraphs:

;
 Jessica Findlay
Finance 1050
Joe Howell
= What are the two (2) concepts you found most useful? Explain why.

To me one of the most important concepts that I found most useful is that I should be
financially independent. I think it is important to get a job, and pay for school yourself rather
than relying on your parents. I still live with my parents while I am in school, but I am also
paying for my own college and trying to save as much money as I can so in the future I can be
completely independent financially. It is important to be able to handle things on your own, and
be responsible with money at an early age. If you want to spend more money, than you need to
put in more hours and work to earn that money.
Another concept that I can apply to my life is not to spend so much. It is important to
save, and not waste money on things you want all the time. It is important to really think about
where the money is going and to put some aside. Sometimes it is easy to get caught up in the
new trend or trying to impress people, that you dont really think about how spending the money
could impact you.
It is not a good idea to have a Big hat, and no cattle. You want to put necessities over
wants and to make sure you always have money set aside. This book really shows you that acting
like you have it all can have a negative impact on you financially. It is important to be smart with
your money, and if you are frugal with your money, it can be more beneficial in the long run
compared to someone who spends paycheck to paycheck.

= Give a specific example of one small change you can make to improve your financial well-
being.
1 One thing I can change in my life to improve my financial wellbeing is to save
more money and not spend it on things that I want. It would be a good idea for me
to start putting a certain amount of money like 20% or more of my paycheck into
my savings. I also think that by doing this it will help me become more
independent financially.
;
= Reflective Writing Compose 2-3 paragraphs explaining how completing this assignment
helped you achieve at least two (2) of the SLCC Learning Outcomes:
= Learning Outcome #1 (Paragraph #1) Learning Outcome #2 (Paragraph #2)

By reading The Millionaire Next Door, I learned to think more critically. It is important
to analyze what you learn about and to ask questions before making a decision. By reading this
book, it really opened my eyes to how I should be spending and saving my money. I was able to
get something out from each story and apply it to my own life. I feel like I have more knowledge
about the importance of saving and being financially independent.

With the examples given in the book, it really was eye opening to see the different
situations and how each individual was affected by their actions with money. I especially thought
it was interesting how in the book, Millionaires are not always driving the fanciest cars, and
living in the luxurious homes. They have the money, but dont show it off. This was something I
had never really thought of or new before. I always thought people that had a lot of money
showed if off, but the smart ones are the ones who live normal, comfortable lives and save. I feel
like I was able to understand the economic aspects of this book, through studying and
understanding what I was reading.