It took a little doing towards the end, but I wrapped up Thomas J Stanley’s The Millionaire Next Door this past evening.
The book is subtitled “The Amazing Secrets of America’s Wealthy.” I think that is a little misleading, because most of what is in there isn’t really a secret. It’s just that we’re so well trained that no one bothered to stop and ask. The core message is still “live on less than you make.” It is the simplest of concepts, and yet it is uncommon to see it put into practice. I guess that is why we aren’t all millionaires!
First things first, I have absolutely no reservations in recommending this book. As far as I’m concerned, you shouldn’t be able to graduate high school without understanding the truths that live in this book, if not reading it specifically.
The bottom line is this:
Think of the people that you know that you’d describe as wealthy. Statistically speaking, you are probably wrong about those people. High net income doesn’t translate to high net worth, and the more outwardly displayed that net income is, the less likely there is any net worth backing it up. People that look rich in America usually aren’t.
This concept – the surprisingly (or maybe not so much) inverse relationship between status and wealth – is the focus of most of the material presented. Stanley divides people into PAWs (prodigious accumulators of wealth) and UAWs (underaccumulators of wealth). Each chapter presents case studies on the behavior of PAWs versus UAWs when it comes to everything from automobile purchases to clothing and how they teach their children.
One thing to keep in mind as you journey through The Millionaire Next Door is that it is written by two gentlemen that are in the business of figuring out how to market to the affluent. Everything is written from this perspective and its a good view of how the affluent handle money. There are some parts that get a little obscure. I felt like they spent an unnecessary amount of time talking about cars. There’s a long chart in this book that lists automobiles by their price per pound. I’m not sure where they were going with that…
Road bumps aside, it’s well worth reading and will provide you with a lot of great context and insight into the minds of successful wealth builders. It will challenge the way you measure success, and that challenge is well worth taking to heart.
5:18 pm on March 4th, 2008 1
Bill,
Could I borrow this book from you sometime? Sounds interesting
4:09 pm on March 5th, 2008 2
You certainly can! I’ll bring it by with the DVDs next time.
4:01 pm on March 7th, 2008 3
Bill- I have been reading this book and it is interesting. The expected percentge of savings versus income and age were very high. To meet their expectations for that you’d have to be a hardcore saver- in my opinion anyway.
2:30 am on March 9th, 2008 4
That is true.. I forget their net worth equation, but I’d have had to have been making double or triple my salary and saving all of it since I was 20 years old to meet their requirements.
9:08 pm on April 3rd, 2008 5
I have thought for LONG time that there should be a required personal finance class at the high school level. Most of the things are pretty common sense, but if they haven’t been shared or practiced through family, then there is usually no other means for learning it. OR other bad money habits have been learned…
6:34 pm on April 7th, 2008 6
Hey – I just saw your comment out there waiting patiently to be moderated. I ought to just turn that off..
Thanks for stopping in!