BOOK: The Millionaire Next Door
AUTHOR: 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, high-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.
This is all broken down throughout the chapters, so if you get bored with one pile of stats, you can easily move on to others. They also categorize high earners into what they call PAWS and UAWS, and then compare the differences between them. PAWS are “Prodigious accumulator of wealth”, and UAWS are “Under accumulator of wealth”. You want to be a PAW ;)
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!
* You can buy the book here: The Millionaire Next Door
* And you can check out other book reviews here: Book Reviews