How much do you know about millionaires?
Kris recently had dinner with her friend Linda, who is a high school social studies teacher. As they ate, Linda bemoaned the lack of personal finance and economics education in the United States. She mentioned that every year she gives her economics students a short “Millionaire Quiz” to see just how much they know about wealth and where it comes from. They do poorly at it, which surprises them. Linda says they always pay attention to the follow-up discussion.
I've reproduced the 15-question True or False “millionaire quiz” below. If you've read Get Rich Slowly long enough, or have read The Millionaire Next Door, the answers to these questions should be easy. (Hover over each question to reveal the answer as a “tooltip”.)
- Most millionaires are college graduates.
- Most millionaires work fewer than 40 hours a week.
- More than half of all millionaires never received money from a trust fund or estate.
- More millionaires have American Express Gold Cards than Sears cards.
- More millionaires drive Fords than Cadillacs.
- Most millionaires work in glamorous jobs, such as sports, entertainment, or high tech.
- Most millionaires work for big Fortune 500 companies.
- Many poor people become millionaires by winning the lottery.
- College graduates earn about 65 percent more than high school graduates earn.
- If an average 18-year-old high school graduate spends as much as an average high school dropout until both are 67 years old, but the high school graduate invests the difference in his or her earnings at 8 percent annual interest, the high school graduate would have $5,500,000.
- Day traders usually beat the stock market and many of them become millionaires.
- If you want to be a millionaire, avoid the risky stock market.
- At age 18, you decide not to smoke and save $1.50 a day. You invest this $1.50 a day at 8 percent annual interest until you are 67. At age 67, your savings from not smoking are almost $300,000.
- If you save $2,000 a year from age 22 to age 65 at 8 percent annual interest, your savings will be over $700,000 at age 65.
- Single people are more often millionaires than married people.
How'd you do? I got a perfect score, but that's only because I've been immersed in this stuff for the past four years. Most of this is burned on my brain.
For more information about the answers to this quiz, as well as a brief discussion of the problem of financial education in America, check out “Improving Economic and Financial Education: A Program for Urban Schools”, which was originally published in the May/June 2002 issue of Social Education.
Update: If you can't read the “tooltips”, you can find the answers here. Here's a good past discussion of compound interest. Finally, I've blocked the obnoxious ad, but it'll take a couple hours for Google to process the request.