The Millionaire Next Door by Thomas J. Stanley & William D. Danko


Admittedly, this isn’t normally the kind of book that I would read. (had to read it for a graduate class) But I’m glad that I did. Alot of it is common sense to me but it does drive some points about personal finance home. It gives you detailed information about America’s millionaires, the who, what,  habits,  lifestyle, & how they became wealthy. You’ll be surprised. They’re not the people you think they are. You probably wouldn’t even recognize one if you saw them walking down the street or driving a car.

The books facts are based on over 20 years of research including focus groups and interviews with more than 500 millionaires and surveys completed by 11,000 high net worth and/or high income people. It basically tells you what you need to do if you want to become wealthy  …truly wealthy. Not the kind of wealthy most people think of…you make a large salary then you spend it all. True wealth is building appreciable assets.

I think everyone can take something away from this book but the ones who really need it are the “big hat no cattle” kind of people (people with flashy things & zero net worth). But people like me who just don’t save or invest as much as they should need to read it too. The biggest thing it gave me is hope. I have spent an enormous amount of time worrying about my salary not being enough and not having enough money to retire comfortably. The information in this book helped me realize that you really don’t have to make an outrageous annual salary in order to substantially increase your net worth over time. Common sense tells me that if I reduce my spending, save as much as I can, and invest wisely that I will be in the best possible place I can be. What I realize now is that if I really commit myself the best possible place I can be is much better than I would’ve ever thought possible…maybe not a millionaire but still a good place.

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2 Responses to “The Millionaire Next Door by Thomas J. Stanley & William D. Danko”

  1. Saw this post on my reader. The millionaire next door series has done more to confuse the issue of retirement savings than help guide people even though the authors had good intentions. You are right the book is mostly common sense. But here it gets a little dicey. No where in the book does it suggest what you think it does that a person of modest income can SAVE their way into a comfortable retirement. The book does divide folks into wealth underachievers and over achievers which is useful to understand.

    The truth is most of those millionaires got there because they owned their own business or at least bought income producing assets consistently over time. Yes, they were able to do this because they bought used American cars and were generally frugal! But, for the most part they were not folks of modest incomes who saved 10-15 or even 20% of their salary.

    Again, you were right that the book was aimed at the “big hat, no cattle” crowd. The book was very good at identifying the life style of one particular segment of millionaires, but of course left out other millionaires like GS bankers and upper level management of major corporations, etc. Because the authors make that decision it makes it seem like anyone can become a millionaire just by saving. Of course, this propaganda from the financial service industry has been around for 40 years supporting the mutual fund sales folks!

    The truth is, unfortunately, a little more complicated. Becoming a millionaire is far harder than just saving your income and not buying consumer goods. It is more about learning how to invest and learning how to avoid paying taxes [legally] than it is about being frugal.

    I would be interested in a follow-up book which chronicles how these folks did with the market swoon in real estate and mutual funds and a more detailed account of where and what assets were owned by the millionaire next door.

    • payjturner Says:

      Thanks for your comment but I feel like your reading a little too much into what I wrote. Nowhere did I say you could save your way into a comfortable retirement or into being a millionaire. I also don’t think the authors are suggesting that the average person can become a millionaire just by saving. I’m simply commenting on one aspect of the book that the average person who doesn’t have a millionaire’s income can relate to…which is basically stop spending so much, do something more productive with your money and you will be better off for it. That’s the whole point of the book whether you are or ever become a millionaire or not. The authors use stories and real world examples from real millionaires lives to get these points across.

      I also don’t see how this particular book can confuse the issue of retirement savings. It’s not exactly giving people indepth advice on how to invest. It makes a few basic suggestions on what do to with your money but it is definitely not the book anyone would read to get detailed advice or a step-by-step process.

      As far as what the book says about who millionaires are….the point of the book is not to discuss every single millionaire in America. It is supposed to be a generalization based on the “average” according to thier research. Of course, as with any other topic, their will be those on both ends of the spectrum which may include the GS bankers and upper level management that you mentioned. Other concepts that the book points out, other than frugality, are the ones that you mentioned…spending time planning, learning, investing, and reducing your taxable income. As far as what the “average millionaire” owns….it emphasizes appreciable assets like real estate, stocks, etc.

      It would be easy to read this book and feel like the authors are saying, “if you just own this particular business, save this amount of money, invest in these things, adopt a frugal lifestyle, and reduce your taxable income you will become a millionaire at some point.” However, if you pay attention and look at the book as a whole you should see it for what it is.

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