Book Review: The Millionaire Next Door
BOOK: The Millionaire Next DoorAUTHOR: Thomas J. Stanley, William D. Danko
SEXINESS: 4 Thumbs ups! (toes count)
Tied for my all-time favorite financial book! Where as The Automatical Millionaire (the other favorite) shows you HOW to reach your goals, this book helps get your "financial mind" positioned right - and does so brilliantly!
There's one defining concept portrayed throughout:
Always live below your means.
You do this, no matter your age, salary, etc, and your wealth will grow exponentially - and so will your peace of mind :) That's not to say you can't be a millionaire AND have fancy things, of course, but just that these guys choose not to.
Even if you DO earn a crazy high income, it doesn't necessarily mean you'll be rich (aka have a high net worth). The same holds true with the highly educated:
"How can well-educated, high-income people be so naive about money? Because being a well-educated, hight-income earner does not automatically translate into financial independence. It takes planning and sacrificing"Amen brother. If only they knew about our blogs! haha ... So who are these Pimps?
According to Stanley & Danko, the average millionaire is:
- 57 years old, Male, and married with 3 children. 70% of them earn 80% or more of their household income.
- Self-employed (2/3rds of them). 1 in 5 are retired.
- A homeowner. 97% of them own homes, which are valued around $320,000.
- First-generation affluent (80%) - meaning they are self-made millionaires, not because they inherited all their money.
And, on average, they:
- Invest nearly 20% of their household realized income EACH YEAR.
- Have total annual realized (taxable) incomes of $131,000, with average incomes at $247,000.
- Live well below their means, wear inexpensive suits and drive American-made cars.
- Have wives who are planners and meticulous budgeters. (they know what's up! Sexy all the way baby... i don't care what others say).
- They have a "go-to-hell fund" - basically, enough to quit working for 10+ years if they really wanted.
- And, are mostly tightwads! haha... hence, one of the main reasons they agreed to complete a long questionnaire for a few crispy dollar bills.
In all honesty, reading this book has become the financial ying to my yang. It goes right up there with the purchase of our house and living off a budget - I love it! You really do get to know their way of life, and it really sticks.
The ONLY thing i'd like to see is an updated version of this bad boy. While i'm sure this "way of life" hasn't changed much over the years, i bet the stats sure have! A ton of stuff has happenend since this book published in 1996. (You hear that Stanley & Danko? If you do this for me, I promise you 1 (one) sale of this new book)
I totally recommend this book to anyone interested in furthering their financial education. A+ baby, all the way!
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* You can buy the book here: The Millionaire Next Door
* And you can check out other book reviews here: Book Reviews
Labels: book reviews, education, millionaire love
posted by J. Money at
12:39 PM
9 Comments:
I didn't like this book that much. What I don't understand is the concept of living like you're poor to become rich. If I'm living like I'm poor - I might as well be poor? What's the point of having the money if I'm still going to live like I'm poor?
Sorry, I want to become rich so I can have a better life... not live like I'm homeless so I have a paper from my bank with a large number on it.
I disagree, jb. It's not living like your poor. It's not being extravagant with your money, so you have a secure future.
It def. requires a balancing act, that's for sure. These millionaires have fine homes, cars, etc, but the trick is not always "moving up" as they earn more money.
If you can be content with your life right now, and invest all extra $, you'll become wealthy a lot quicker.
Some prefer to enjoy life on a day to day basis though, so it's def. not for everyone :)
This is the first PF book I read and I loved it! It could have been written directly about my parents. It helped me realize that I should find some kind of balance when it came to my finances. Now if I had only put those ideas into actual practice earlier than I did, I would be in much better shape now! Live and learn. I re-read this book every couple of years now just to re-establish these thoughts.
Great review. This is a great PF book, with some great idea.
I have to also disagree with JB. I think this book is all about living below your means, not living poor. If you buy a new flat screen TV, that is fine, just don't go out to a bunch of movies. You just bought a TV, so stay at home.
It also gets into the "Keeping up with the neighbors" trend. Makes you think about how easy it is to waste money trying to fit-in.
Always a great read. A must have for everyone!
I read this book a while ago (great review). The concept of the book is great, but the stats paint a bleak picture for me: you can't become a millionare unless you are male, white and have a supporting wife. Like you, I would like to see this updated to see what has changed.
I never read that book, I'll have to get it from the library. But my aunt and uncle have a crap load of money and you would never know by looking at them. They don't wear the expensive designer clothes or give extravagant gifts. She is very thrifty with her money. Of course their house is worth millions in D.C. but that is really their only "splurge"
I couldn't even finish the book, I got somewhat annoyed with it... I mean, why does it sound like I'll be working my whole life just to hand it over to my kids? Or why am I living so far below my means, but really not enjoying any of it? I swear the book made me feel like splurging on designer anything, let alone, heaven forbid a sports car, was a felony.
Ah well, I'm a total rebel and seriously want to kick the "deferred life plan" to the curb. That being said, I agree with jb. Sure, saving and delaying gratification are good things, but like anything, there are extremes.
One big issue I had with the book is how the millionaires acted towards education. Most of them put themselves through school and didn't seem to be worse off for it, yet gladly spend the thousands to put their own kids through college. If paying their own way through school helped them become millionaires and develop great work ethics, isn't that actually hurting their own kids' chances of following their lead in the end?
I hear ya Foxie - it's def. not for everyone. You bring up a good point about the education part. There was a chapter or two dedicated to it at the end which i THINK covers that, but i just can't remember...it's been a while.
If you ever come across one you think is worth reading though, holler for sure.
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