The Millionaire Next Door

Thomas J. Stanley and William D. Danko

The Surprising Secrets of Americas Wealthy
Bland as much the title is, just like many of the correspondent books in a bookshop would boast with money magnet secrets piling up millions overnight, most readers dubiously skip this book on the base of suspicion. Sure enough, I did not have much lure for it upon coming across it first on the internet, though being referred to it and highlighted in numerous articles and lists made me make up my mind. Those sources advocating the Millionaire Next Door could not all go wrong, any bad it might be I decided to read the book in order to find out the truth and the real value of it. Huge astonishment in a positive way hit me hard upon skimming through the first chapter. From that point there was no stop and I engaged in a fascinating read that lives up to the highly promising title. I got caught up easily and could hardly put down the book later on. Not a vibrant adventure story, and I warn everyone not to expect such inspired poetry, though for someone having even the slightest interest in finance, it definitely makes a good read as it presents compelling insight and mind-blowing statics along the whole volume. The sole statistical base reprieved me from secondguessing the facts it declares, which would have normally arisen considering the level of impressiveness. The Millionaire Next Door tends to help you establish your budget and manage finances. Even though many things will seem familiar or commonsense, still they are delivered in a surprising way. I cannot promise that it will change your life completely; however it puts a whole bunch of ideas on wealth into the trash and introduces it from a unique perspective. It might break the ice for you towards your financial goals, though I admonish you that if you are in search of a get-rich-overnight tutorial it is not for you, much more on the contrary. The book is the result of comprehensive research on American households with a net-worth of over one million dollars. It may not seem that significant amount of money, nevertheless bear in mind that the book was first published in 1996, and in retrospect that meant quite a fortune. Even though, 15 years passed since its initial release, most ideologies and suggestions hold true and convey perpetual wisdom. Obviously most statistics did not keep their validation, hence should be assessed with this facile perspective and present only to indicate references and guidelines.

The authors Thomas J. Stanley and William D. Danko both highly recognized in their field are - apart from writing - acknowledged lecturers, university professors and experts of the discipline. Thomas J. Stanley himself is the author of seven books mainly covering the lifestyle of the wealthy; two of those were featured as The New York Times best-sellers. Besides The Millionaire Next door, the other one is being The Millionaire Mind, which was similarly compiled from interviews and surveys. Throughout his career numerous of his articles went into press at reputed papers and was a guest at television shows, also taught hundreds of students at various universities. William D. Danko, a professor like his co-author, is also a highly regarded advisor and public speaker. The book is a compilation of eight chapters each of which deals with a separate topic, though they are all deeply linked by their common wisdom and only distinctive in their approaches and perspectives on the pursued question. Before engaging in discovering these valuable sections of the book, the Introduction delivers precious insight into the essence of this book. Most people are much fooled by the faade and let to believe that wealth equals a high-income accompanied by the possession of precious cars and a fabulous mansion in an up-scale neighbourhood. Their fortune is the direct result of inheritance or a fortunate windfall. Though, in reality in most cases it cant be further from the truth. The majority of the real wealthy tend to live in a small town, to many peoples surprise in an ordinary house. In the course of their investigation, it was concluded that these families reached that high monetary level as a by-product of persistent accumulation. The quality shared by most of them, which is the most important, is that they live well below their means. They are more than ready to invest the necessary time and money in order to cultivate financial self-sufficiency, which is claimed as way more substantial than displaying social status. Inevitably, we could assume that a large proportion of these ultra-rich surely came into the legacy through their parents, and having said that, they do not have other responsibility than to maintain it and enjoy their fabulous life. We would be misled if we stuck to this belief, as 80% of them are first-generation self-made millionaires, and scarcely have ever enjoyed economic welfare support from relatives. The prototypical American millionaire has a median income of $131,000 per annum, which is considerably low as it is less than 7% of their net-wealth. Twothirds of them are self-employed firmly in dull-normal disciplines. Also the same proportion works between forty-five and fifty-five hours a week. On average, they invest a large fraction, 20% of their total income.

Plain as a pikestaff, that much of their piled up money is the payoff of their intensive and obsessive investing in financial markets, mainly stocks and bonds, start-ups and also into their children and own education. Income is spare change for them in comparison with their influx of money from capital gains as well as dividents. In order to assess how you are doing in joining the group of these millionaires, the book introduces a sophisticated algorithm taking into account age and income. The result of the little calculus provides a rough estimate of how much wealth you should have accumulated. In that sense, the authors section out two categories UAWs (Under Accumulators of Wealth) who are falling short of their investment and PAWs (Prodigious Accumulators of Wealth) the ones with burning desire to put money aside for the future. Being a sound investor is not the only characteristic most of them share. I understand those fellows who are disenchanted to hear that much of these millionaires are frugal. Surely there are exceptions, those who manifest themselves in fancy suits in lavish Michelin-star restaurants just to denote how much gourmets and connoisseurs they are. Though, they are the minority. The rest is budget-conscious and not the normally expected hyper-consumer. Is being acquainted with the sums of money you spend on food, housing and transport superfluous? Maybe it needs reconsideration, as the majority of millionaires do know the figures. Displaying their social-status through the purchase of goods is just a far cry from their intentions. On average, these millionaires have been living in the same house for as much as 20 years. As for automobiles, on average (median) the typical millionaire paid $24,800 for his most recent acquisition. Beyond belief, over one third of them reckoned that this last purchase was a used vehicle. While still being in shock, we also get to know that the most popular car among the rich is not a Mercedes or any of that kind, nor an import of a foreign manufacturer, but a dull Ford F-150 pickup. And the list goes on and on. The book could hardly be accused of not supporting their findings with enough evidential data, as it goes into great length in examining specific spending sectors, including clothing, grocery, method of car purchase and many others. Each of these further advocates the theory that for most each penny counts and should be employed efficiently. At core, the plurality is frugal and proudly regards it as the most substantial attribute that lead them to wealth. Of course, the book does not stop at scratching the surface of these millionaires life. If you strive to know every nuance that sets them apart, this is

the book for you. Covering credit card usage, taxation, their jobs, as well as their inner concerns, fears and worries, even adventuring into parenting make this book comprehensive and multidisciplinary. It does this in a straightaway tone, which is more than effortlessly conceivable for the unvarnished common man. Humour and roaming stories make it digestible and combined with academic grounding it results in an outstanding book. It was not written for economists or accountants, but for those curious minds who wish to know the real life of the average millionaire. It was an eye-opening read in many ways. It breaks with the conventional belief on wealth-accumulation and almost suggests than even the average Joe can aggregate a fortune practising discipline in spending and humbleness. High income does not equal to wealth nor does wealth predicate a massive inflow of annual earnings. For me, the heart of the matter boils down to two invaluable characteristics of the rich. Emphasis on setting money aside regularly for investing purposes in the hope of future appreciation is the first. The other one is consumer behaviour, essentially dominated by the eschewing of wasteful spending and a precise focus on budgeting. The essence of the book is unquestionable, yet upon reading the book doubt germinated within me, and my query remained unanswered. What sense does it make to hive such a wealth and never enjoy it? It makes no difference, when you lay in the grave, how much money you have accumulated. Those credit-fuelled hyper-consumers with no propensity to pull the brake when it comes to spending have a point in that they seem to have a good time while traveling, enjoying gourmet meals and surrounding themselves with luxury and gran houses. Frugality beyond a certain threshold is unreasonable. At a point the book says these humble millionaires are happy because they have financial-independence. Hard as I might, I could not persuade myself into this skimpy lifestyle. Of course, I outlined extremity, and the authors are hardly advocating this either. The Millionaire Next Door is a financial guide for everyone who is to attain wealth. Insightful in many ways as it reveals the know-how of enrichment though astonishing statistics that may leave your jaw drop sometimes. Also it awakens from the general suppositions and puts fortune into a whole new perspective. It conveys its message plainly in witty tone, which will please readers from all background. I reckon the book as a must-read for all who are starting out in life or those who are tired of living from pay-check to paycheck and also those who seek wisdom regarding wealth-building.