The Millionaire Next Door
The Millionaire Next Door just recently released a new edition, and I was sent a review copy. Instead of just giving you an overview of the book I want to take out the specific themes that we all need to be reminded of.
If you want a comprehensive review take a look at these:
- Trent at the Simple Dollar – The Millionaire Next Door
- Get Rich Slowly – The Millionaire Next Door
- Yakezie.com (newest edition review) – The Millionaire Next Door
#1 Not All Millionaires Act Wealthy
The book goes into a ton of statistics. A few really interesting ones:
- Most millionaire’s surveyed don’t drive nice cars. The most common car driven by a millionaire is a Ford.
- 80% of millionaire’s are first generation rich (meaning they didn’t inherit their wealth)
They believe that financial freedom in terms of having more choices is more important than a higher social status.
#2 Not All High Income Earners are Millionaires
I know from experience that earning good money doesn’t mean you are on your way to a million. Specifically a lot of evidence in the book (as well as interviews I have done personally) show that millionaire’s are excellent with personal finance.
They understand that you cannot spend more than you make. While that is an easy rule that most of us know, many don’t follow it. Whether it’s for the car breaking or to go on vacation irresponsibility with your personal finance will never make you wealthy no matter how much money you make.
Sometimes when I see a really nice house or a nice car I step back and ask, I wonder how much debt they might be in? Things look so nice on the surface but you never know what the truth is.
Many high income earners are just like low income earners in debt, trying to figure out personal finances before it’s too late.
To Buy the Book?
I would highly recommend the book for someone who, like me, loves data. My husband thinks I am crazy because when you look through the book all you see are charts and graphs and percentages.
Just as Trent from the Simple Dollar explains in his review, this book has an age bias. It’s calculations are not meant for a younger generation who hasn’t been earning at their maximum potential for awhile. So if you are younger disregard some of the calculations for what your net worth should be.
If you are really interested in the facts and data of a typical millionaire then buy this book. If you are looking for inspiration about becoming a millionaire and what traits made them successful I would recommend The Millionaire Mind by the same author.
Tags: Debt, debt freedom, Finance, Goals, Wealth Building
Categories: Debt Freedom, Finances, Goals
Hi I’m Jaime. Each and every week I bring you the top business advice from the people who know best.
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14 responses
Jamie,
I sometimes hear that being a millionaire just ain’t what it used to be. That is, we’ve been talking about millionaires for a long time, but our goal hasn’t changed with inflation. What’s your take on that? Do we need to be shooting for 5 million instead of a measly one? 🙂
So true about high income earners being in as much debt as low income earners. It may be the best explanation of why income alone won’t make you happy (or stuff, for that matter). It’s shocking really how pervasive it is. The data does sound juicy.
Thanks for the review!
If we need some empirical evidence, I volunteer to be the guinea pig ant try making it on “only” one million! 😉
My goal of a million comes closer every year with inflation! Unfortunately it’s just worth less. I wrote a post about it last year.
The year I was born (’82) if you were a millionaire you would essentially have 2.3 million in today’s dollars.
After talking to a lot of millionaires too, they think that one million isn’t much anymore. You need about 3 million today to consider yourself a “millionaire”. Funny huh?
Ford? Wow. I’m curious where in the chart from millionaire to billionaire the trends shift from Ford to Bentley. Would be interesting 🙂
Yeah it would. In talking with the 10 or so I’ve interviewed it seems most of them over 5 million have the nicer cars. The ones closer to the one million mark are just like you and me 😉 Set your goals higher everyone! Maybe I should rename the site to eventual billionaire? 😉
I think you should 🙂 Aim high!
I just motivated myself with new (slightly used) vehicle purchase. Driving a Ford sounds ghastly to me!
Anyway, great work on the podcast Jaime, you’re doing amazing work.
Hi Jaime,
In Stanley’s other book, Stop Acting Rich, he suggests that the average deca-millionaire spent $41,000 on his last car. Most of my friends spent more than that. And most of them aren’t millionaires. I, too, often look at people with expensive houses, cars, and high salaries, and wonder the same thing: are they rich? And if their salaries dried up, how long could they maintain their standard of living without a job.
Wealth will always be relative. Some people could be considered very wealthy with a million dollars, I think. My acid test is this one: if you could maintain your standard of living perpetually, without a salary, have health care for life, a place to live, healthy food to eat…then you’re wealthy. Sure, there will always be wealthier people who might suggest otherwise, but honestly, they’re living in a world where they allow relative benchmarking to categorize wealth, instead of something tangible
This book does do an excellent job of showing that those who you think to be millionaires probably aren’t, and those who are millionaires are probably not the people you’d think.
Flashy things like nice cars do have a “hey, look at that rich guy” element to them, but very often these superficial investments are the lowest yielding places to put your money. Millionaires don’t invest in those kinds of things, at least not the everyday millionaire.
I enjoyed the “Millionaire Next Door” as well. It removes some myths for most people about millionaires.
They also don’t take into account freelancers whose income varies from year to year 🙂
There’s actually a new code amongst my peers, and that is to do everything possible to hide our wealth and look as poor as possible. I’ll be highlighting a post in the future, that maybe you’ll appreciate.
In fact, I’ve come up with a book idea on this! Whoo hoo!
Best, Sam
I’d love to talk more about this- recently I was talking with a millionaire and they had the issue of coming on my podcast because they don’t want anyone to know. Tell me more why you feel you need to be secretive?
(and I know crazy people might be one reason, since being on Yahoo again I’ve had crazy people come out of the woodwork, but still I don’t think I’d keep everything secretive)
This is really interesting Sam. I can’t wait to read your post. I’ve spoken to a few millionaires so far that don’t want to say they are millionaires. Even if it’s public knowledge that they sold a company for tens of millions. Why oh why? I want awesome people for my podcast! Maybe I should change the title to “Really Successful People that aren’t necessarily millionaires!”
I am not a fan of charts and graphs, so thanks for your useful suggestion.
Hows your blog growing up? Great job with whole lot of those interviews!