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Questions - The Millionaire Next Door: Amber Martin Financial Literacy FIN 1050 November 08, 2015 Eportfolio Assignment

This document contains an assignment on the book "The Millionaire Next Door" in which the student answered various questions about concepts from the book. The key concepts discussed are "Big Hat, No Cattle" referring to millionaires living modestly, the "Go to Hell Fund" which is enough savings to live off of for 10 years without working, PAWs which are prodigious accumulators of wealth who are frugal, and UAWs who are under accumulators of wealth due to wasteful spending. The student provides examples of characters from the book and discusses how small changes like investing spare change could lead to becoming a millionaire. The assignment concludes with the student reflecting on how the book helped them learn about financial

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55 views

Questions - The Millionaire Next Door: Amber Martin Financial Literacy FIN 1050 November 08, 2015 Eportfolio Assignment

This document contains an assignment on the book "The Millionaire Next Door" in which the student answered various questions about concepts from the book. The key concepts discussed are "Big Hat, No Cattle" referring to millionaires living modestly, the "Go to Hell Fund" which is enough savings to live off of for 10 years without working, PAWs which are prodigious accumulators of wealth who are frugal, and UAWs who are under accumulators of wealth due to wasteful spending. The student provides examples of characters from the book and discusses how small changes like investing spare change could lead to becoming a millionaire. The assignment concludes with the student reflecting on how the book helped them learn about financial

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Amber Martin

Financial Literacy
FIN 1050
November 08, 2015
Eportfolio Assignment

Questions The Millionaire Next Door


1.Explain the following four (4) concepts addressed in The Millionaire Next Door:
Big Hat, No Cattle:Most millionaires live modestly. So they have lots of
money,but look like it. So like the texas expression, they dont wear big hats, but
they do have lots of cattle.
Go to Hell Fund: A fund that you could live off of for ten (10) plus years
without working
PAW: (Prodigious Accumulators of Wealth) builders of wealth, people who
are frugal and live below their means
UAW: (Under Accumulators of Wealth) spenders, people who usually live
high-consumption lifestyles and dont manage their money very well
2. Provide short answers to the following four (4) questions:
How is wasteful defined in the book? A Lifestyle marked by lavish
spending and hyper consumption
What is the cornerstone of wealth-building? Being FRUGAL
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? Continued to cut out twenty-five and
fifty cents-off food coupons from the weeks supply of newspapers
3. In the example of Theodore Teddy J. Friend and his parents, answer the
following two (2) questions:
List two reasons why Teddy is considered a UAW. Allows significant
others (real or imagined) to determine his financial lifestyle. Also, his hyperconsumption lifestyle.
What was the message Teddys parents sent him about consumer
behavior? (Be specific) One Earns to spend. When you need to spend more,
you need to earn more

What was the small change Teddys parents could have made that
would put them in the millionaire category? Investing their cigarette money
instead of always buying cigarettes. Investing in a tobacco company even
4. In the example of Mr. W.W. Allan, answer the following two (2) questions:
He never extended credit to people who exhibited the Big Hat, No
Cattle philosophy. Why? Because, in his mind, they would never be able to
repay their debts. They spend, spend, spend in anticipation of having money
before they earn it.
Why did he decline the gift of a Rolls-Royce? It was too showy and
impractical. He didnt want to have a nicer car than his employees so as to avoid
feelings of resentment towards him. Also, he lives an outdoorsy lifestyle, which
having a Rolls-Royce wouldnt support. Its hard to throw the day's catch into the
back of a Royce.

5. Regarding Economic Outpatient Care (EOC), answer the following four (4)
questions:
Define Economic Outpatient Care (EOC). Substantial economic gifts
and acts of kindness some parents give their adult children and grandchildren.
Upon learning his parents were donating their property to the local
private college, describe Jamess reaction? Thats my property,too, and the
college people cant come in (to my yard). He lives of of his parents wealth. As a
result he views their things as his own and is possessive of them. Views it as a
threat to his lifestyle.
Why was Jamess response predictable? He viewed his parents idea of
giving their capital to the college as a threat to his future income, since he lives
off of their wealth and acts of kindness.
As illustrated in the example of Henry & Josh, what is the
fundamental rule regarding wealth building? (Be specific.) Whatever your
income, always live below your means.
6. . Regarding Affirmative Action, Family Style, answer the following two (2)
questions:
Why were sisters Sarah & Alice so different regarding wealth
accumulation? They were parented differently. The father had old-age ideas of
how a woman should be, such as a stay-at-home-mom without an education.
Sarah disagreed and so she struck out on her own and was iced out by her

father. Sarah had to learn to become successful to survive and in so doing


became a PAW. Alice however, was the opposite. She lived up to her fathers
standards and became an uneducated mother. Alice received financial support
from her father and so never learned how to become successful and
independent, thus a UAW. The father strengthened the strong (Sarah) and
weakened the weak (Alice).
What did Kens father tell him often? I am not impressed with what
people own. But I'm impressed with what they achieve. Im proud to be a
physician. Always strive to be the best in your field dont chase money. If you
are the best in your field, money will find you.
7. Explain the root cause for the conflict between Mr. W & the residents of the
vacation condominiums. (HINT: Its not because of his dog.)
Mr. W is a PAW. As such he lives below his means. So he can afford to go to nice
places, although he might not look it. So the rich people dislike the low-class look he
has and so try to find a roundabout way to get rid of him by making him get rid of his
dog, and by extension him.
8. Now that you have finished reading The Millionaire Next Door, answer the
following three (3) questions in a minimum of three (3) paragraphs.
1. How has your perception of millionaires changed?
2. What are the two (2) concepts you found most useful?
3. Give a specific example of one small change you can make to improve your
financial well being.
My eyes have been opened. I will never look at people the same way ever again. the
expression dont judge a book by its cover comes to mind. I have grandparents who
are true millionaires, and as such dont look the part. Ive always wondered why my
grandpa chooses to have older furniture and ten-plus-year-old day jeans to wear around
the house. Their was one time my aunts got him a pair of really nice expensive jeans to
replace his old worn ones. He politely asked my mom to directly return the gift as he
would never wear them (since all he uses jeans for is for yard work, which a $200 pair
of jeans would be hard to do in) just like the example of the Rolls-Royce in the book.
That being said, my two favorite concepts are be frugal and always live below your
means. Ive grown up with those concepts and Ive seen firsthand that they work. If I'm
frugal and only by what I need and not what i want, I can save my money and have a
better piece of mind. If I live below my means that means I maybe can afford a new car,
but a good used one will get me around all the same and I save money. Also the small
change I could make is saving more of my money. Recently Ive gotten into some bad
habits of spending more than I should and not saving anything. Well when it came time
to pay for tuition I had no money saved and so had to take out a loan. Now if I start

saving and am more smart with my money, next semester I wont have to take out more
loans and can be debt free.

Reflective Writing:
I feel like Ive this assignment has best helped me achieve the civically engaged and
lifelong wellness SLCC Learning Outcomes. This book has opened my eyes as to how
to actually become wealthy and successful in life. I also learned what are some good
career occupations to go into, as well as good lifestyles to lead. I learned about
Americas hyper-consumption UAW lifestyle that most people follow, and how to not
become like them. If Im financially well-off, it will make me healthy as well. Most
wealthy are physically active and have active lifestyles. Also, if you are financially welloff, then you will have less stress.

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