The Millionaire Next Door – Thomas J. Stanley [Book Summary]

by Nick

The book The Millionaire Next Door is based on personal interviews and shows that the daily lives of many millionaires are far from the stereotypes of expensive cars, mansions, and private jets. At the same time, this book breaks the stereotype that it is difficult to become a millionaire – anyone can learn not only how to get rich, but also how to keep this wealth with them.

Thomas Stanley is a researcher, author of several award-winning wealth books, including Millionaire Women Next Door, Marketing to the Affluent, and Selling to the Affluent.

William Danko is a professor and professor of marketing at the School of Business at Albany State University of New York.

Your ideas about the life of millionaires are wrong

Millionaires flaunt their wealth. They live a luxurious life, they have private jets and expensive cars hidden in huge mansions in the Hollywood hills.

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Or is it all fantasy?

The truth actually lies far away. Most millionaires in America live a life that most people would consider most ordinary. What is even more interesting is that it is a modest way of life that primarily makes them millionaires.

This book shows you how, with wise, proper and careful planning of your finances, you too can embark on the path of the rich, trodden by many millionaires in front of you.

From this book you will learn:

  • why the guy on the Bentley most likely earns less than you;
  • how to start saving money;
  • why lazy children get the sweetest piece from their parents’ wealth.

Many Millionaires Live a Very Ordinary Life – They Wisely Manage Their Budget in Order to Maintain Their Capital

If you were a millionaire, you would wear Prada, and every morning you would start with champagne, right? But, despite the stereotypes, many real millionaires buy less expensive things than you – and they are happy, too.

If you want to become a millionaire, you need to responsibly approach the issue of saving money from the moment you start to earn a little more money than you need to live.

Most of the millionaires who have made their own fortune live very modestly, as their wealth is the result of a monthly saving of savings and avoidance of unnecessary expenses. This simple rule is the only way to become a millionaire without even actually earning a million dollars a year.

People become millionaires through a balanced approach to budget control and the preservation of their wealth. They also know how to think for the long term and carefully plan the future.

Surveys showed that for 100 millionaires who did not plan their financial future and did not distribute the budget, there are 120 millionaires who do this.

Planning and structuring expenses is a key skill that you need to develop in yourself if you want to become a millionaire. To begin, set a goal, for example, to set aside a certain amount of money each month, say, for retirement. Then budget your expenses, vital expenses and investments.

The Rule family are millionaires, and their main goal is to achieve financial independence when they both retire. By that time, they want to accumulate about 5 million dollars.

To do this, the couple allocates their time and money in such a way as to be able to continue how to invest in their own business, and at the same time receive and save money to buy real estate or repair a house.

Real Millionaires Care More About Financial Independence Than Social Status

Many millionaires are actually more interested in achieving financial independence than in owning several Rolls-Royce cars.

Financial independence plays an important role in achieving well-being. If we consider the same category of income – people who have financial independence feel much happier than those who earn the same amount but do not have financial independence.

But what does the concept of financial independence generally mean? If after retirement you can maintain the same standard of living that you have now, and are also able to survive any financial crisis, then you are a financially independent person.

People who have secured financial security have clear goals for the future that help them organize their own budget in accordance with their life priorities.

Let’s go back to our heroes – the Rule family. Mrs. Rule is happy and financially secure. Even if she receives serious physical trauma, she will still not depend on anyone financially. Moreover, she has the opportunity to create a financial reserve for her grandchildren so that they can someday go to college.

Many people pretend to be “typical millionaires” – they drive expensive cars, but at the same time, they have average incomes. And even if they receive some kind of additional income, it is quite difficult for them to keep it.

In other words, these millionaires do not have as much money as you think. To calculate the approximate level of a person’s state, one can use this equation: a person’s age, multiplied by his average annual income and divided by ten.

For example, Mr. Friend earns 221 thousand dollars a year. He is 48 years old, therefore, his condition is about 1 million 60 thousand dollars: 48×221000 / 10.

But, spending most of his money on luxury goods, Mr. Friend has at his disposal less than 260 thousand dollars. He is not a millionaire! Simply put, he did not achieve what he could achieve!

Millionaires Know Where and How to Spend Money. Invest in Something You Are Familiar With.

How do millionaires decide where to invest money? The smartest of them know that the most suitable solution is to invest in medical care for your family and invest in productive business development.

And although these millionaires often live quite modestly in other aspects of life, the price is not significant for them when it comes to investment tools, tax advice or medical care for themselves or their loved ones. In addition, they always know that it is necessary to buy products and services that will help improve their business – for example, additional office space or computer software.

Take a millionaire named Sauf. He will never buy a Rolls-Royce because in his most ordinary neighborhood there are too many extra eyes. Instead, he is willing to spend a decent amount so that his children can be examined by a good dentist.

Reasonable spending always involves rational planning. Millionaires spend a lot of time planning their investments and expenses and often get a huge advantage over those who neglect this kind of planning.

Moreover, if you want to increase your wealth by creeping into specific enterprises, you also need to plan your own awareness in one area or another. Each person has a significant amount of knowledge in at least one, or even several areas, so use this knowledge as your own advantage when choosing an investment object.

For example, Mrs. Smith is an auctioneer. She specializes in commercial real estate – so in what area will she invest money? Of course, in commercial real estate.

Mr. Long is a specialist in antique furniture. Will he invest in the development of the latest security and alarm systems? It is unlikely that he should work in a direction that is familiar to him.

Many Millionaires Share Their Wealth With Children, Even if It is Not Always Good for Them.

We figured out how millionaires live – and what about their children?

Although many millionaires are quite economical, they spend a huge amount of money on financial support for adult children. This means that their children receive a certain amount of money every month, in addition, they are paid the costs of medicine and education – and so on.

But the more money adult children receive from wealthy parents, the less they save – and vice versa.

By providing financial support to their adult children, some millionaires make them financially dependent and unable to plan their own budget.

Just imagine – more than 46% of American rich people regularly give their children about 15 thousand dollars a year!

Take a girl named Mary. After she got married, her parents send her 15 thousand dollars every year. She and her husband have expensive cars, an apartment in a prestigious area, and active social activities.

From the outside observer, they look like millionaires, although they never earned more than 60 thousand dollars a year.

The amount of money you spend and save affects your children’s attitude toward money. Each family has its own budget rules, and these rules affect children who copy the financial habits of their parents.

Therefore, teach your children to invest correctly and spend money wisely! Imagine a man named John. Every time he receives a salary, he spends money on some design things that he does not need at all – it’s just a habit inherited from his parents to go shopping every Saturday. They made purchases just for the sake of shopping – and John does the same now.

Financially Dependent Children Receive Most of the Family Inheritance

Who will get your money after your death? Most millionaires are sure that the money will be divided equally between their children. But in fact, some people are more likely to inherit than others.

This group includes housewives. Wealthy parents are aware of the fact that women usually earn less than men, so they are usually given more money. This is especially true for “daddy’s daughters.” They are much more likely to receive a significant inheritance.

Take a girl named Alice, who has always been daddy’s favorite. When she married a man with a modest income and dropped out, staying at home with two children, her rich father began to help her with money, because he could not allow his daughter to live in modest conditions, which she was not used to at all .

Unemployed adult children can also receive more money and, consequently, inheritance than their working brothers and sisters.

In many cases, the children of millionaires are either unemployed or “eternal students” who constantly study somewhere. Parents encourage this “learning desire” by giving these children more money than their brothers and sisters who go to work.

Money Deferred May Be Money Deferred for Education if Such a Child Drops Out of College.

Take Paul and Peter, brothers who grew up in a family of millionaires. Paul became an entrepreneur moved to live separately from his parents, and soon achieved financial independence, as he refused to receive money from his parents.

Peter, however, after graduating from college, moved to live back with his parents, because he did not want to get a permanent job. And now his parents give him money for life, food, clothes, and transport.

And there will be nothing surprising in the fact that after the parents die, the financially dependent Peter will receive most of the inheritance.

The Final Words

A typical millionaire does not necessarily live in the glamorous glitter of Hollywood.

Many of them live much more modestly than their means, spending money wisely and regularly saving them.

If you constantly adhere to these simple standards, you too can become a millionaire.

Money looks better on a bank account than with you!

The next time you get a bonus or an increase in salary, do not be tempted to buy a new gadget or brand item immediately. Set aside this money and enjoy how it will gradually grow in your bank account.

Why You Should Read “The Millionaire Next Door”

  • To get rich following the right path;
  • To keep your fortune and spend money wisely;
  • To find out about the habits of wealthy people.

This book is available as:

 Audiobook eBook | Print