The Millionaire Next Door Review – Key Info

Product: The Millionaire Next Door by Thomas J. Stanley

Rating: 8.5/10

Price: $12.82

This post focuses on The Millionaire Next Door Review and whether this resource is worth your time and energy.

*This post includes affiliate links and if you click one of these links, I could get a commission.

Overview

Thomas J. Stanley was born in 1944 and was an American writer and business theorist. He wrote the New York Times’ best seller The Millionaire Mind and served as chief advisor to Data Points, a company based on his research and data.

The Millionaire Mind is a follow up to The Millionaire Next Door and provides key insights into the mindsets of affluent individuals.

Stanley received his doctorate in business administration from the University of Georgia. He taught marketing at the University of Tennessee, University of Georgia and Georgia State University.

The Millionaire Next Door is a book that mostly includes a collection of helpful observations that were made during an extensive 20-year study on millionaires.

The study gathered data from over 500 millionaires and over 11,000 high net-worth and/or high-income respondents.

There are 8 chapters within this book and each has a specific purpose for showing what it takes to become a millionaire.

This book helps to illustrate that to become a millionaire one must be willing to live a certain way. But this is in many ways not a complicated life but a disciplined one.

Here are the 8 chapters:

Meet the Millionaire Next Door

Frugal Frugal Frugal

Time, Energy and Money

You Aren’t What You Drive

Economic Outpatient Care

Affirmative Action, Family Style

Find Your Niche

Jobs: Millionaires versus Heirs

Each chapter gives you critical information about what it will take for you to become wealthy. The necessary steps and lifestyle decisions are explained in detail about what you are going to have to do.

There are some factors that account for how the majority of millionaires became millionaires.

There are 7 key factors to why people successfully build wealth:

1. They live well below their means.

2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth.

3. They believe that financial independence is more important than displaying high social status.

4. Their parents did not provide economic outpatient care.

5. Their adult children are economically self-sufficient.

6. They are proficient in targeting market opportunities.

7. They chose the right occupation.

These are the main factors to determine how people become wealthy and are explained in greater detail as the book goes on.

If you want to find out if this book is worth your time, scroll down to the section titled to Buy The Millionaire Next Door or Not. This will give you the quick answer without giving away parts of this book.

Jar of Coins
Meet the Millionaire Next Door

Meet the Millionaire Next Door

This chapter delves into some important statistics of who is a millionaire and how they are rarely what most people think of when they think of millionaires.

There are specific terms defined in this chapter to show how much you are contributing to your wealth.

The book explains that there are two different kinds of people, PAWs and UAW.

PAW = Prodigious Accumulator of Wealth

UAW = Under Accumulator of Wealth

It is critical to understand which kind of person you are. This is important because you will know whether you should be changing your spending habits so that you can build wealth effectively.

The following observations are talked about during this chapter:

  • Most millionaires are self-employed
  • Most millionaires were not given any inheritance
  • 97% of millionaires are homeowners

This chapter focuses on the make up of most of the millionaires in the U.S. and how they got to that point.

To determine your wealth you must simply multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten and this will be what your net worth will be.

An example of this would be taking a 35-year old who makes $70,000 per year. Multiply the $70,000 by 35 to get $2,450,000 total.

Then divide by ten and his net worth would be $245,000.

$70,000 = Total PreTax Income

$70,000×35 = $2,450,000

$2,450,000/10 = $245,000 Net Worth

Another important observation brought up in this chapter is than less than 10% of all the millionaires in this study believed that they would be getting any inheritance in their lives.

This helps explain a potential increased drive that each of these individuals had because they knew that they had to make it on their own.

Frugal Frugal Frugal

This chapter can be summed up in the idea of living well within your means and be very good at saving money. Many people in the U.S. are very wasteful and buy much more than they need.

There are helpful tables provided in this part of the book to show just how little money each wealthy person spent on certain items.

These included the following clothing items:

  1. Suits
  2. Pairs of Shoes
  3. Wristwatches

The average amount spent per above item was much less than expected and well within their means.

Many wealthy individuals appear to have a lot of nice stuff but in actuality they do not have that much wealth because they are spending a lot of their money.

95% of millionaire households are composed of married couples with each playing an important role in making or saving money.

The husband generally brings in the majority of the money but the wife is very good at saving money. It truly is a combination of work on both their parts to continue building towards wealth.

The following are some critical questions with the answers showing where someone’s wealth is heading:

  1. Does your family have an annual budget?
  2. Have you calculated and determined what your family spends on food, shelter and clothing?
  3. Do you have goals set up for each day, week, month, year and your life?
  4. Do you plan for your financial future a lot?

Wealthy individuals will answer yes to these questions because they are actively preparing, calculating and planning for their future.

A major observation is that to build wealth you must reduce your taxable income to as little as possible. This must become a consistent priority in a person’s life if they want to build wealth.

The average millionaire in these surveys had a total annual taxable income of about 7 % of his wealth.

There are many case studies given throughout this chapter to help illustrate how minimizing your taxable income is very important for consistently building wealth.

Time, Energy and Money

Finding a way to make your money work for you while continuing to consistently work was what it took for most of these individuals to become millionaires.

A useful table here illustrates how much more effective a PAW is compared to a UAW for the following important areas:

  1. Your Economic Well-Being
  2. Your Children
  3. Your Physical Well-Being
  4. Your Government
  5. Your Domestic Tranquility
  6. Your Financial Adviser
  7. Your Parents, Children and Grandchildren

This table helps show how much more effective a PAW is over a UAW at most of the income and wealth-building habits listed above.

UAWs were found to worry more about not having enough money to retire comfortably and they were concerned with the idea that they would never have enough wealth for their whole lives.

PAWs instead took an active role in changing their situation and habits to set themselves up for building wealth.

This is a dense chapter with lots of examples of what it takes for a person to invest their way into becoming a millionaire and many other helpful tips for wealth building.

There is a case study shown here that explains how 2 doctors, who both have high incomes, can either be building wealth or not building wealth due to their spending habits and lifestyles.

I found this part of the book to be interesting because most people would associate achieving a job as a doctor as definitely putting yourself into a very financially strong position and this is not always true.

Barely Running Vehicle
You Aren’t What You Drive

You Aren’t What You Drive

Buying a nice car is how many high income earners show how well they are doing financially. Even though by buying this expensive car they are greatly reducing how wealthy they actually are and will become.

Not buying a fancy car but instead opting for the dependable and reasonably priced used cars was a key observation discovered in this chapter.

Most self-made millionaires are not focused on displaying their higher social status but instead want to keep building their financial independence.

Not making a ton of money, such as generating $80,000 per year, but being a frugal saver and thrifty shopper could be just the right combination to allow you to save up and become a millionaire.

There was a fascinating observation here that concluded the following:

  • In the U.S. it is much easier to make a lot of money than it is to accumulate wealth.

I thought this was particularly important to point out because so many people in the U.S. focus on how much they make instead of focusing on saving and budgeting their money more effectively.

There are tons of helpful case studies in this chapter to demonstrate how many medium income earners are able to effectively build wealth.

When comparing these medium income earners to high income earners, the medium income earners tend to actively plan their financial future more.

Economic Outpatient Care

This chapter explains the implications of economic outpatient care and how this affects the ones giving this money and the ones receiving this money.

Economic OutPatient Care = EOC

The main problem with parents providing EOC to children is that it causes the children to be significantly unproductive with their financial lives.

A great example is given in this chapter that shows how being a person who generates significantly higher income is not necessarily the way to become a millionaire.

The example provided focuses on two brothers in a family and how one of them is a teacher, a lower income job, and the other is an attorney, a high income job.

Most people would assume that the attorney would have more wealth than the teacher but throughout this part of the book that is proven to not be true.

The attorney has much higher expenses while the teacher has made much less per year but has been able to live a more disciplined life and will likely end up with much more wealth when he retires.

Key advice in this chapter is no matter what your total income is, always live below your means.

The key observation in this chapter is that if two children receive EOC from their parents, then the one who receives significantly less than the other is more likely to end up leading a productive life that is more self-sufficient.

Affirmative Action, Family Style

This chapter shows how influential a parent can be on a child and how likely that child will be to accumulate their own wealth.

This chapter also focuses on the fact that working in the U.S. as a man or as a woman can be different especially for making money in the job market.

There are certain guidelines spelled out in this chapter that show how influential an affluent parent can be on their children.

This composed of a list of things showing how important being frugal is and how there are more important things in life than money.

There were two key observations made here including:

  • Never tell your children that you are wealthy was a big one
  • Minimize discussions about money or gifts that each child will receive or inherit

No matter how wealthy the parents become they should teach their children to be disciplined and frugal. They should also take time to point out that there are other important things in life besides money, such as happiness, good health and respect to name a few.

Find Your Niche

This part of the book dials in on the idea that many wealthy people are very good at finding marketing opportunities and focusing on maximizing their income potential in these opportunities.

There has never been as many wealthy individuals as there are now and there is likely to only be more and more in the next decade.

People who become specialists at problem solving for the rich and their families will likely be in great demand for the next twenty years.

Specialists in certain areas who will benefit the most include the following:

  • Dentists providing cosmetic dentistry
  • Plastic Surgeons
  • Dermatologists providing cosmetic surgery
  • Allergists
  • Psychologists giving career counseling
  • Psychiatrists providing treatment for stress
  • Chiropractors

These professions will likely benefit the most from working with rich individuals because of how in demand they will be.

A huge amount of money will be spent by millionaires on their children and grandchildren especially for the medical and dental care expenses.

Pile of money
Jobs: Millionaires versus Heirs

Jobs: Millionaires versus Heirs

This final chapter explains how you can’t really predict if someone is a millionaire by what business they are in or what job they have.

How much each individual plans for their future and works actively to change their situation to build wealth is a much stronger indicator of how likely someone will become wealthy instead of what kind of job they have.

There is a strong push here to convince people to become entrepreneurs because this is the occupation that has been able to produce the most millionaires.

There is a huge amount of freedom to be gained from owning your own business but there is also a big risk too.

The main observation here is that a person should try to find the occupation that best sets them up for building wealth consistently in their lives.

Finding the job that best helps you build wealth does not necessarily mean that you will become wealthy because you need to have an active role throughout your life at living below your means.

To Buy The Millionaire Next Door or Not

I think this book is worth buying because it is a great educational tool for just about anybody.

If you have more wealth already, then this book is likely going to be more helpful to you. This book will provide key insight into what kinds of individuals are wealthy and how they became wealthy.

This book is not really geared toward the under-age 40 generation but could still be a tremendous resource for understanding what it will take to establish wealth in your life.

There is a ton of helpful information for building wealth packed into this book with key observations taken over 2 decades.

The content of this book is a little dated at times but most of the observations still hold true today. I believe there is too much emphasis on making as much money as possible that people forget to develop the skill of saving and managing money well.

A key theme throughout this book is that no matter what your income is you can still build towards wealth if you develop strong money saving habits and live a life that is frugal.

I think many people these days could learn a few helpful tips from this book that could set them up for reducing stress out of their lives right now and help build wealth to set themselves up for the future too.

–>Click here to buy this book!

If you are interested in another great book for managing money well, read The Total Money Makeover Review – New Tips.

My Advice

Try this book out if you are looking for tons of information for learning how to become a millionaire.

A lot of this book could be easy to utilize if you already have some significant assets but there is still a wealth of information available in this book for anyone.

I hope that you liked this post which focused on The Millionaire Next Door Review and found some helpful information about this resource.

If you have any questions, please leave them below and I will answer them as best as I can.

2 Replies to “The Millionaire Next Door Review – Key Info”

  1. Hey Jesse,

    This is a fantastic book review. Each section is filled out with just enough information to get a solid foundation in what each chapter is about, but not too much information to where I still need to buy the book if I want to absorb all of the information.

    You also provide an unbiased reasoning as to why someone should or shouldn’t buy this book, which I think is important for any aspect of reviewing products.

    You did a fantastic job here, and I feel as though I need to go out and add this book to my collection.

    Thanks again.

    Cheers,

    Max

Leave a Reply

Your email address will not be published. Required fields are marked *