The Millionaire Next Door

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The Millionaire Next Door is a book was written by Thomas J. Stanley and William D. Danko. The book is a collection of research done by the two authors in the profiles of America’s millionaires. The term 'millionaire' refers to U.S. households with a net-worth exceeding one million dollars.

I always believed that you are considered wealthy when you make a high income. According to the authors, most high income earners are not rich, which surprised me. Most people with high incomes fail to accumulate any lasting wealth. They live hyper-consumer lifestyles, they spend their money as fast as they earn it. I always perceived millionaires as living the lavish life with their big sport utility vehicles and huge mansions. Well I was wrong, in order to accumulate wealth, one must not only earn a lot (play “good offense”), but also develop frugal habits (play “good defense”). This book focuses on spending less and earning more, which are required to succeed. Most books only focus on either spending less or earning more but to actually become rich you must do both.

This book focuses on the fact that you must earn your wealth and not inherit wealth. I always believed most millionaires became wealthy by inheriting their wealth one way or another. But the truth is that 80% of millionaires earned their wealth by working hard and only 20% inherited their wealth. When people actually earn the wealth they accumulate, they never want to let that go. That means most millionaires live well below their means. In general, millionaires are frugal. Not only do they self-identify as frugal, they actually live the life. They take extraordinary steps to save money. They don’t live lavish lifestyles. They’re willing to pay for quality, but not for image. The people that end up losing their wealth are the ones who spend to look cool. These are the people that buy the massive SUVs just to show off. They spend money just so other people know they have money, and this is how they end up...
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