Questions - The Millionaire Next Door: Ryker Olsen 9/24/2016

After reading The Millionaire Next Door, answer the following ten (10) questions and compose
your Reflective Writing.

1. Explain the following two (2) concepts addressed in The Millionaire Next Door:
Big Hat, No Cattle
-This term was used to describe people who act wealthy that arent. The Big hat refers
to purchased goods, while the cattle refers to money. Someone who has a lot of money,
but saves it all wouldnt have a big hat, but a lot of cattle.
Go to Hell Fund
-A fund in which money is saved to live on for a long period of time should the person
who owns the fund find themselves out of work.
2. 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 is smarter with his money. Rather than spending it all, he saves it and
invests it. Mr. Ford lives a higher-end lifestyle that requires a lot more money to
maintain than Mr. Richards. So despite Mr. Richards having a smaller yearly income, he
has accumulated a much larger net worth than Mr. Ford.
3. 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 ______________.
-Hyper-consumers.
Upon giving his wife $8 million of stock, from taking his company public, what did his
wife continue doing?
-She smiled, thanked him, and continued to cut coupons.
Why would someone who is a millionaire need to budget?
-To maintain their wealth. They got that wealthy by budgeting and that is how they will
maintain it.
4. 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.
-He believes that due to his tough background that the definition of success is the
possession of many material things.
What was the small change Teddys parents could have made that would put them in
the millionaire category? (Be specific.)
-They could have saved & or invested their money. They lived paycheck to paycheck.
5. Mr. Rodney is a high-income/low-net worth corporate manager. Explain why he is
described as having sold his financial independence.
-He never participated in his companys tax-advantaged stock purchase plan despite the
fact that it would have benefitted him greatly.
6. Why did Mr. W.W. Allan decline the gift of a Rolls-Royce?
-He felt that it did not match up to his lifestyle. He thought of owning a nice car like that
as a burden.
7. Regarding Economic Outpatient Care (EOC), answer the following four (4)
questions:
 Explain why Economic Outpatient Care (EOC) can be harmful.
-A parent who participates in EOC will probably be significantly less wealthy than a
parent who does not even if they are the same age and make the same amount of money.
This is because of them spending the money on gifts, etc.
Explain this statement: The more dollars adult children receive, the fewer they
accumulate.
-When a parent gives gifts to their children it probably doesnt encourage their children to
make money on their own, especially if the gifts are a lot of money. So EOC will
probably hurt the adult children if it is not in moderation.
What is the likely financial outcome for Mary & Lamar once her Mother passes away?
-They will not be able to afford their current lifestyle. The gifts from her mother will
stop, and they will likely have to budget and plan like everyone else.
As illustrated in the example of Henry & Josh, what is the fundamental rule regarding
wealth building? (Be specific.)
-To live well below your means. Just because one of the brothers makes significantly
more than the other, doesnt mean he is more wealthy. Wealth all depends on living well
below your means, and saving and budgeting.
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 and her husband lived with Beths mother for 3 years after they got married. Beth
never completed college but her husband did. Beth has a domineering mother. Beths
mother was more involved in Beths home purchase than Beth was, and relies heavily on
her mothers money for her housing. These are some of the challenges Beth faces after
receiving EOC from her mother.
Explain the concept weakening the weak.
-If a parent has two children, one that is skilled in making decisions, and one that is not,
and the parent helps the child that is unskilled in decision making make decisions, the
parent is weakening the weak and strengthening the strong. The parent is weakening the
weak because he or she is not allowing the child to learn how to independently make
decisions.
What did Kens father tell him often? (Be specific.)
-He explained that you should not chase money. He said that he is proud to be a
physician, and said, if you are the best in your field, money will find you.
9. 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 believed that it was because of his (and his familys) appearance. He didnt act or
dress like the multimillionaire that he is, and therefore, they wanted him out, using the
dog as leverage.
10. Now that you have finished reading The Millionaire Next Door, answer the following
three (3) questions in a minimum of three (3) paragraphs.
How has your perception of millionaires changed?
I knew that not all millionaires look like millionaires, but I didnt know that it was
such a large portion. I never would have guessed that so many wealthy people save a lot
 of their money rather than spend it. It is very interesting to me that millionaires are as
frugal as they are. I have had friends while growing up that belong to millionaire
households, and all of them lived the millionaire lifestyle. This may have contributed
to my preconceived notions that all millionaires live this way.
What are the two (2) concepts you found most useful?
The big hat no cattle concept really puts into perspective how important it is to
save your money rather than just spending it all. I also liked the go to hell fund
concept because it also has to do with saving your money rather than spending it. I think
that these concepts are very important when it comes to personal finance, because not
saving money can lead to many problems in the future. I will certainly apply these
concepts throughout my life.
Give a specific example of one small change you can make to improve your financial
well-being.
I could definitely save a lot more money. This book gave me a lot of knowledge
on strategies I could use to save money, and a lot of real life examples of what I shouldnt
do with my money. I now know that it is important to live well below my means, and
that saving and investing are good things to do if I want to be financially independent
later on in life.
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) Think Critically & Creatively

I have learned through completing this assignment that thinking critically &
creatively can play a large part in making money and managing it intelligently. I have
learned the importance of thinking outside the box when it comes to making money, as
well as the importance of following guidelines to managing that money. I have learned
that if I can think critically & creatively in order to make money, then I can correctly
invest and save that money, securing my future, and achieving financial independence at
retirement age.
Learning Outcome #2 (Paragraph #2) Communicate Effectively
This assignment has demonstrated the importance of communication with people
involved with my future when it comes to my financial security. Communication can
solve many problems related to EOC and other issues related to finance. I have learned
that I have to take my financial future into my own hands, and communication can play a
large part in this.