This book has become a classic on how to build wealth for the average wager earner. It remains one of the best guides on how to create financial security.
The Millionaire Next Door
by Thomas J. Stanley & William D. Danko
The authors spent a lot of time interviewing and studying ordinary people who accumulate extraordinary fortunes. School teachers, postal workers, mechanics, accountants, nurses, shop keepers – all people with modest incomes who saved and managed their money in a disciplined manner over a working lifetime and in the process found themselves millionaires usually before they retired.
How do they do it? Like most things in life it is very simple but not very easy.
There are seven common factors of the rich people the authors looked at:
1. They lived below their means.
2. They allocate their time, energy and money efficiently, in ways conducive to building wealth.
3. They believe that financial independence is more important than displaying high social status.
4. Their parents did not provide economic outpatient care.
5. Their adult children are economically self sufficient.
6. They are proficient in targeting market opportunities.
7. They chose the right occupation.
The authors studied over a thousand people between May 1995 and January 1996. They found how ordinary people with ordinary stable incomes amassed wealth and managed to keep it. They found how to determine wealth and what you net worth should be to sustain you for retirement.
Typical millionaires drive used cars; live in modest homes in modest neighborhoods; send their children to public schools and eat at home more than eating out. They buy their clothing at JC Penney and Sears. They do not invest in luxuries and they do not take expensive vacations.
The millionaire next door teaches their children to be self supporting from an early age. Because of how responsible they are with their money these parents are able to help send their children to the finest colleges to get a solid education so they can support themselves and lead their own pursuit to wealth.
Millionaires are often small business people. They are advertising specialists, auctioneers, coin dealers, engine rebuilders, engineers, consultants, janitorial service company owners, meat processors, inventors, rice farmers, sand blasters, mobile home park owners, etc. A disproportionally large number are business owners. They are risk takers but they take modest, measured and balanced risks to run businesses. They do not dabble in get-rich-quick schemes. Their road to wealth is built upon self discipline on a slow but steady rise to wealth.
The book ends with a summary of the kinds of businesses that people are most likely to succeed with and amass fortunes from. There is no big secret here and the authors readily admit that people from all professions and work areas can do this.
We have on the Creating True Wealth Blog discussed the fact that successful people were willing to do the things that most people do not want to do. These are not complicated things. They are often simple disciplines like saving every month, denying the desire for instant gratification and planning your life. Those that practice these disciplines most often succeed – and those that succeed almost always practice these disciplines. The millionaires next door, more than anything else, prove this fact. It was not so much what they did for a living or where they lived that mattered – it was how they lived, and to what extent they were willing to consistently do what others do not want to do.
This book is not about getting rich quick or instant success. It is about “slow and steady wins the race”. It is definitely worth the read.
Published by Simon and Schuster, Inc, © Thomas Stanley and William Danko. 258 pages.
Hope you enjoyed that review. What do you think?
Wishing you success and prosperity,
Daniel R. Murphy
Helping People Learn to Build Wealth
Wishing you Success and Prosperity,Wishing you well,
Daniel R. Murphy
Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.