Star Rating: 2/3 stars My biggest takeaways from the book: If want insight into becoming wealth-oriented instead of consumer-oriented, then it is a great place to start.
While the book is a bit dated, even with the revised edition, the main ideas still apply. If you feel your household struggles with accumulating wealth, this book is for you. Also, parents should emphasize their children’s achievements over accumulation of status-symbols. Thus, ensuring that your children won’t realize you’re affluent until after they’ve established a mature and disciplined lifestyle. This includes teaching your children discipline and frugality no matter how wealthy you are. The final chapter of note offered advice for affluent parents. The third chapter is aptly named “You aren’t what you drive,” a friendly reminder that the material objects we own should not reflect who we are as people. Most millionaires forego the need for ‘ status-symbols’, and instead invest that money to accumulate wealth. Over 60% of millionaires surveyed reported knowing how much their household spends per year on food, clothing, and other goods, down to the nearest dollar. High wealth-accumulators spend roughly eight hours a month on investing and budgeting. Similarly, you can have a smaller yearly income of $50,000, but if you play great defense and only spend $35,000, you are well on your way to accumulating wealth.Ĭhapters two and three cover car-shopping methods, time spent on budgeting, and financial goal-setting. The key takeaway here is that you can make $200,000 a year by playing great offense, but if you play terrible defense, spending $220,000, you’re not really amassing wealth. Rather playing defense is critical to amassing wealth. Earning well over six figures, does not equate to being a prodigious wealth accumulator. UAWs have a low net worth relative to income, while PAWs have a high net worth relative to income. The authors go through painstaking measures to prove this point, noting that there are Under Accumulators of Wealth ( UAWs) and Prodigious Accumulators of Wealth ( PAWs). Most cited frugality as the cornerstone of their wealth-building, noting that defense (saving money by budgeting and planning) is more the foundation stone of their wealth accumulation than offense (making money).
Those interviewed over a 20-year span reported living in less expensive neighborhoods and houses, driving used vehicles, and avoiding custom-made clothing. Some sections are rather outdated, such as the pricing on used vehicles from the 1990s and early 2000s, but a few chapters stand the test of time:Ĭhapter one details how most millionaires live well below their means, thus allowing them to amass their fortunes.
They divide the book into seven sections, describing the main ways in which millionaires differentiate themselves from non-accumulators of wealth. Originally published in 1996, authors Stanley and Danko compiled their observations from hundreds of millionaires they interviewed. Most millionaires realize that a heavy-consumption lifestyle isn’t conducive to achieving wealth, and eschew this lifestyle for one of frugality. What The Millionaire Next Door depicts is a strikingly different situation.
We often think of the millionaire lifestyle the way media portrays it – opulent homes, luxury vehicles, lavish spending sprees on consumer goods. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (Revised 2010) by Thomas J.