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The Millionaire Next Door Summary – May 2022

Author: Thomas J. Stanley

Short Summary
The Millionaire Next Door (1996) is a self-help book on achieving financial stability and accumulating wealth. The authors research many American millionaires to provide their readers with well-researched advice backed up by evidence on how to get rich and stable regardless of their source of income and means of employment.
the millionaire next door summary
Source: amazon.com

Detailed Summary

The book provides an overview of how millionaires keep their wealth by investing and saving their money and by living in middle-class neighborhoods which is contrary to the popular belief that rich people throw money on luxury goods every day and live in white-collar high-class societies. Rich people can retain their money for a lifetime because they prefer financial stability and a happy retirement life over shiny things, for instance, Prada and Bentleys. The key to retaining money and economic well-being thus according to the authors is to change the habits and perspectives we have toward spending money.

The Millionaire Next Door Summary Key Points

Being Rich vs Appearing Rich

As people start earning and saving their wealth increases. With becoming rich they feel a societal pressure of looking rich as well. As a result, they end up buying luxury and branded items. So that when they carry these items, they can say “hey I am rich” without them having to open their mouth. What they do not realize is that they can afford to buy these high-end items but if they keep on accumulating such products they will not be able to retain their money. The wealth they had gathered keeps going down and eventually hits the bottom line. So to retain your wealth, you need to not give in to the temptation of buying luxury goods. You do not need to wear expensive clothes or have an expensive car. Let go of the mentality that you need to show off your wealth in society by putting it on display one way or the other. So ditch that channel bag and Prada shoes if you want to become affluent and prosperous. Remember Mark Zuckerberg still prefers wearing t-shirts after getting filthy rich!

Millionaires and the Mansion Lifestyle

As Thomas J. Stanley and William D. Danko set out to research profiles of several millionaires they found one thing similar in their lifestyles. Most of them were living in houses that belonged in middle-class neighborhoods. Contrary to the popular belief that a millionaire’s life is all about jets, mansions, and Bentleys, The millionaires tend to retain their wealth by not spending much on luxury goods and expensive houses. Why you ask?  Because it requires a great deal of money to manage a big house in a big neighborhood. You will have to spend a lot to maintain your lifestyle according to that neighborhood. From the furniture to the paints. Not to mention the huge tax that comes with owning a house in a fancy neighborhood.

Plan and Structure are your keys to becoming affluent

Now that we have established that Millionaires are not throwing money on every shiny item that catches their eye. What exactly are they doing? A survey of millionaires answers this precisely. For every 100 millionaires who are spending like crazy, there are 120 millionaires who are planning and budgeting to stay prosperous in the future. That is 20 more than those who are not. So this is the millionaire’s mindset. Planning and structuring their expenses, living costs, and investments.  So, if you want to become financially stable you need to plan your finances. For this, both Thomas J. Stanley and William D. Danko advise spending lower than your earnings and living below your means regardless of the figure you are earning.

So What Do Millionaires Exactly Spend On?

Although Millionaires tend to save up and not splurge when it comes to items such as clothing, houses, and Cars. They spend freely on things that can enhance their health, relationships, and finances. This includes spending money on things that matter in lives such as medical care, better educational opportunities for their children, updated computer software for work, and additional office space or therapy. Millionaires regard spending on such things as far more beneficial than buying things that add to flashy social status. The rest of the money is directed towards investment. According to the authors, you can invest too but the wise way to invest is by looking out for investment opportunities in industries that you know about. Do not invest just because someone told you real estate would be a good option. Do your research and know all the options available. What might be suitable to invest in for one person may not be suitable for you considering your income and financial goals.

The Millionaire Next Door Quotes

“Whatever your income, always live below your means.” –Thomas J. Stanley

“Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that’s why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.” –Thomas J. Stanley

The Millionaire Next Door Summary Review

The book provides solid and actionable advice to everyone who wants to get rich. Whether you are self-employed, an employee or a business owner, the tips provided by the authors can help anyone in any field and with any source of income. It not only emphasizes the importance of saving and investing but it brings your focus on the little things you can adapt while earning so that you can end up saving more in a lifetime. The Millionaire Next Door is about an economic lifestyle change that can help you in a long run by changing how you look at your finances. It is a good read for anyone who has just started earning and is new at managing his/her finances.

To Whom I Would Recommend The Millionaire Next Door Summary

  • To the twenty-five-year-old girl who wants to be financially independent but ends up splurging every month.
  • The thirty-two-year-old guy who has been saving and is about to decide between buying a big house in a white-collar high-class society.
  • To everyone who wants to live a happy and meaningful life while earning a humble living.

Link: https://amzn.to/3zJTYMc