The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley & William D. Danko was a great book that was first published in 1998. The book is not very long, at 272 pages and it is a very easy read with charts to help illustrate the point that the author is trying to get across.
As I approached this book I didn’t know what to expect. It turns out the book was a case study of the affluent that was 20 years in the making. Despite being a case study the book turned out to be very easy to read. It was well organized so that each part flowed right into the next.
When the authors say The Millionaire Next Door it is worth noting that they are not referring to the latest sports star to earn a multi-million dollar contract or the top selling pop music artist of the time. They are referring to individuals who have a high net worth and that have achieved a sustainable level of financial independence. As you learn early in the book, they categorize their case studies into two groups: the first being UAWs ( Under Accumulators of Wealth) and PAWs ( Prodigious Accumulators of Wealth ). Unfortunately the majority of Americans are UAWs but if you are reading my blog I would say that you either are or are striving to be a PAW.
The book digs into the details of the spending habits and saving habits of these two types of people. What their study ended up showing was that the key to accumulating wealth was living below your means and making smart investment decisions regardless if thats investing in stocks and bonds or in your own business. A lot of the high earners that were part of the study were also big spenders so despite their large income they were not accumulating wealth.
The book goes in depth into the spending habits of these two types of people ranging from buying an automobile to gifting money to family members. They also look at how their family and children can affect their ability to accumulate and hold onto wealth.
One thing that I did find very interesting based on this book was the fact that the majority of the affluent that participated was that they were business owners who had only been married once and lived in the same house the whole time.
There is a lot of useful information that can be learned from this book. While reading this book I was constantly analyzing my own lifestyle versus the affluent lifestyles that they were speaking about in the book. Their were also a couple of things that I learned that I will start to apply to myself to help me on my journey to gain personal financial independence.
In conclusion, I think that The Millionaire Next Door is a great book for anyone regardless if they are striving for financial independence or if they have already reached it. This is definitely not a how to book but what it does do is provide the information and then it is on the reader to take from the book what they want to.
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Have you read this book? If so I would love to hear what your opinion is on it!
As always I look forward to reading all of your comments and questions, until then….. happy investing!