The Millionaire Next Door (Book Review)

Wed Jul 25, 2007 6:20:09 am by Dustin
Filed under Book Review, Finance, Fun, General, Household, Payroll, a little about life

Full Title: The Millionaire Next Door, The Surprising Secrets of American’s Wealthy by Thomas J. Stanley and William D. Danko
ISBN: 0-671-01520-6
Get it cheap.

Summary: Have you ever wondered what the wealthy in America do for a living? What they drive? Where they shop? How they spend their spare time? The interesting part of this story is they live middle to upper-middle class lives, drive cars which will get them by, and typically work as professionals or small business owners. That’s right, they are just like me and you. Typically they do not come from families with large a inheritance and most often put themselves through college. Surprising enough, many of them are self made millionaires. This book also argues their current lifestyle of frugality sprouts from their childhood, and they would have never made this ’status milestone’ without that prior lifestyle.

What I thought: This was a very interesting book. Although, it seemed obvious that somebody who were to save 20% of their income year after year would become a millionaire, I did not exactly know who was doing this kind of savings. I also found it interesting that families typically do not have millionaire children. This comes from their parents establishing a lifestyle which the children cannot hold until they are well into a career. In order to keep that lifestyle, they ask for or receive gifts from their parents while not saving. The moral of the story is to get a college degree, get a nicely paying job or start a company, invest extra (typically 20%+ in these cases) income, live below your means, educate yourself of your financial situation and the situation of your country/world, and be happy with life not the furniture and other toys.

  1. Jeff

    It is very random that we would read the same book at the same time. I am about half way through this book.

    The emphasis of the book (or at least that first half) is on the frugal living of most millionaires. Buying used cars instead of new. Not buying the most expensive clothes. Stuff like that.

    Good book.

  2. James

    Despite that instant 10% drop in value when you drive a car off the lot, a new car can be a good investment, but you’ve generally got to hold onto it at least until the warranty is up to get your money’s worth out of it. A new car every two years isn’t exactly frugal living.

    Of course, the way some cars are getting overfeatured these days (refrigerated, light-up cupholders anyone?), you may also just be buying a lot of fluff, much of which is bound to break long before the car dies.

    Anecdote related on the theme: One of the big donors to our senior design project was a UP alum who has donated 6 or 7 digits to the school. He drove up to our thank you lunch in a circa 1990 Geo Metro.

  3. Dustin

    New cars can be a good investment (safer, better amenities, lower maintenance costs, etc). This book is not trying to make that point. Those who typically purchase new cars are doing so year after year – every year a new, brand new car. Over time this is what makes news cars not a good investment. On the other hand, those who reach millionaire status typically purchase slightly used cars every four to six years.