- -Big hat, no cattle: spending most earned income on appearances; most of these people will have huge homes, fancy cars… …lavish, custom cowboy hats… but their net worth is much less than their constituents who earn the same, because of their lifestyle.
Go to Hell Fund: When enough wealth is accumulated that an individual can tell the world to go away, and live comfortably for 10+ years depending on their worth.
PAW: Prodigious accumulator of wealth. They are better at building wealth as compared to those in a similar age and income bracket. They tend to be more fiscally conservative than their UAW counterparts.
UAW: Under accumulator of wealth. These people tend to live above their means and will spend their money on upkeep of homes that are too big/expensive for them, fancy clothes, the newest car, or lavish vacations. While they might earn the same as PAW’s, their actual net worth is usually much less than their budget conscious counterpart.
2.*Wasteful: Spending on a lavish lifestyle, overconsumption; wastefulness is the antithesis of frugality.
*Leading a frugal lifestyle is the cornerstone to building wealth.
* Most people will never become wealthy if their spouse is wasteful.
*She continued to cut coupons; I believe this speaks more to how she had very little when they started out. People who earn their wealth have a greater appreciation for the hard work and sacrifice that it took to get them there.
3. * He wanted what he didn’t have as a child; to make up for his blue-collar background, he spent his money on expensive cars, lavish clothes and a pricey home.
* He felt the need to continually prove his worth by living a lavish lifestyle, but didn’t think to put a good portion of his income away, or in investments.
* Teddy’s parents never took the care to budget their money; what money they did have was spent on “junk”, never saving until it was unavoidable. If they needed a new appliance or house repair, they would eventually save, but this could’ve easily been avoided by putting away some of their paychecks each month.
* Kicking the nasty habit of smoking cigarettes could’ve saved them over $33,000 to invest in stocks which could’ve yielded them over $100,000 +. It’s crazy how purchases that seem so small at the time, can add up to such huge amounts over the years, especially when the purchases are not only unnecessary for living, but can, ironically, kill you.
4. Because they, (big-hat-no-cattle), tend to dream about how they will spend all of their money before they even get it.
* Mr. Allan doesn’t want to own a vehicle that portrays him as someone he’s not; he can’t throw fish in the back after a day on the lake, and the Rolls Royce would be out of place at a manufacturing plant. He also felt it would alienate his hard working employees. Lastly, if you can’t drive your car to some dive for great food and feel out of place, forget about it; millionaire with humble roots and a blue-collar attitude.
5. EOC: Economic outpatient care- Gifts and acts of kindness bestowed to the adult children and grandchildren of wealthy individuals/families who have often lived frugal lives.
* He was upset, he screamed at his parents saying that property was his.
*It was predictable because James has been coddled, given huge amounts of money from his parents, making him feel entitled. He will no longer be able to live the life he wants to, and he’s upset at the reality that he really can’t make it on his own.
* The lesson to be learned, the key to building wealth is to be frugal; live below or within your means to accumulate wealth for the future for a comfortable retirement. When you live above your means AND on top of that, rely on economic outpatient care to live your lavish lifestyle, you will never accumulate enough wealth to retire comfortably. Henry has made financially viable choices in his life from the home he lives in to the car he drives; he doesn’t feel the need to own expensive things, and it will pay off for him and his family in retirement.
6. Sarah was a strong, independent woman who was determined to shed the antiquated housewife image by getting her education and accumulating wealth on her own; Alice was subservient, wanting to make Papa proud, possibly a bit lackadaisical as well. Alicia and her family were the products of EOC, proving that the system can teach people very little when it comes to providing for them; in the end, it proved costly when her Papa’s money ran out. Sarah is a strong woman who actually benefited from being cut off from her father’s finances (though given money, she most likely would’ve been wise with it); as such she has plenty for her and her family and is even able to put aside money for her nieces college educations.
* Don’t chase the money, it won’t bring happiness. If you strive to be the best that you can be at your chosen profession, then your hard work will pay off with substantial pay.
7. The dog was misdirection. Mr. W. clearly didn’t look the part, whether it is his older car, his clothing, or his all-around blue-collar attitude. He was viewed as an outsider to a complex full of, as alluded to, mostly UAW’s who feel the need to look a certain way with designer clothing, nice cars, and most likely large credit card payments in order to pay for the accumulated debt. It should be noted to not judge on appearance; Mr. W. most likely had a net worth larger than most of those people combined, and he certainly made his point clear in the meeting.
8. I suppose my perception of millionaires has changed a bit regarding what large percentages of them scrimp and save. I have a wealthy grandfather and a wealthy family friend; I couldn’t speak on their net worth, but my grandpa is in the banking industry and our family friend deals in commercial real estate. The family friend lives in a nice, but smaller house in Holladay, where he wears his flannel shirt, drives his ’99 civic, and his wife clips coupons; my grandpa lives in a giant home in Bountiful with a brand new Audi and enjoys traveling abroad multiple times a year. I’ve seen both sides of the self-made millionaire. I do have a great appreciation for their hard work, as both men came from very humble backgrounds.
1. First concept that I found useful was being frugal; looking at something in your life that you can give up in order to save that money for investments or savings. It’s easy to get caught up in worldly possessions, but living within your means can help prepare you and your family for a comfortable retirement.
2. The second useful concept was the noticeable education that most of these millionaires had; it makes me feel the need to finish my education. Though it’s entirely possible to accumulate wealth and be successful without a college education, I noticed that a good number of these millionaires had their college education, bachelors and higher. It gives you a step up in the workforce if you’re good at what you do.
3. I enjoy scuba diving, traveling abroad in order to dive popular sites. Cutting down on this would improve our retirement outlook greatly; not cutting it out altogether, but spending less traveling and diving would help. Also, I tend to eat out a lot, not fast food, but at various other restaurants, due to convenience; if I cut down on this (which I’ve already started to do), I’d save several thousands of dollars per year. This money saved can be used to go towards retirement, investments, or a general savings fund.
Students develop the knowledge and skills to be civically engaged: By completing this assignment and the Finance 1050 course in general, it’s helped me better figure out my financial future. Reading The Millionaire Next Door has given me insight on the importance of living below or within your means in order to have money for later; we often get caught up in “stuff,” junk we think we need as some kind of status symbol, when really we need to be investing our money in land, smart stock options, retirement funds, etc. Learning these skills can help other’s to budget their money properly and teach future generations the importance of saving for tomorrow rather than splurging today; best to have a nest egg rather than a lavish lifestyle that accumulates potential large amounts of debt.
I was told by my supervisor to take this course, and the skills that I take away from this course will help me in my everyday life, he was right. This assignment opened my eyes to not only answers regarding my financial future, but to take what I’ve learned and pass on the information to friends and family. Looking at how a millionaire budgets their money, what pitfalls to avoid along the way, and the benefit of frugality, has given me some talking points to present to our employees during the next training session. What people seldom learn, if they aren’t getting a good example of finances in the home, is how to budget, invest, and not be wasteful with money; I will take several tools I’ve learned from the book and apply it in my life and pass the knowledge to my co-workers.
Students think critically and creatively: When looking to invest in opportunities, it’s necessary to sometimes think outside of the box; I’m sure that several of these millionaires in the world didn’t earn their wealth by always playing the safe bet, nor the foolish one. Having a creative outlook on potential money making ideas/investments can help you tap what opportunities have been overlooked; where one person might see an ugly, unused piece of land, another might see condominiums, a business complex, waterpark, or children’s amusement park. The chance to make money is there, you just need to have an eye and a know how to go about making that income.
This concept can also apply to how to keep a smart budget to live on; The Millionaire Next Door proves that you don’t need to be flashy, but you do need to use critical thinking skills in order to evaluate stocks, real estate and have a balanced budget. You need to do your homework on what stocks to invest in, put time into picking out a reasonably priced, mechanically sound vehicle, and into where to invest in land. None of these millionaires are slouches, they’ve worked hard, saved their money and invested wisely; cutting out any unnecessary items from your budget will prove to be a potentially lucrative decision, this book has given insight on how to spot these opportunities and make them profitable.