Reviewed by Angela Mutiso
Title: The Millionaire Next Door
Authors: Thomas J. Stanley Ph.D and William D. Danko Ph.D
Category: Finance and investment
Publishers: Longstreet Press, Inc.
This captivating book delves into the comprehensive research conducted by two authors on the profiles of American millionaires. Through extensive studies and detailed analysis, it explores the habits, lifestyles, and financial strategies that have enabled these individuals to accumulate significant wealth. It also offers readers valuable insights into the principles of growing wealth and financial success.
For over 20 years, they examined more than 1,000 millionaires in the United States to understand who these successful individuals are and how they amassed their fortunes.
Their study revealed some interesting facts; It became clear that most people focus on income rather than wealth accumulation. Wealth is what you save and invest, not what you are paid. Over 80% of America’s current millionaires are first-generation; they earned their wealth rather than inheriting it. Despite having substantial incomes, many households live paycheck to paycheck without significant financial assets.
They found that many people who seem wealthy with beautiful homes and luxury cars need more money. In contrast, many genuinely rich people live simply in less upscale places. This discovery changed their perception of wealth. They realized that it is not how much you earn but how you save and invest that makes you wealthy. Wealth is built through hard work, discipline, and thoughtful planning, not luck or high salaries. The authors point out that many people need to understand why they are not wealthy despite high pay. The book makes a strong case that wealth is more likely the result of prudent spending and saving habits rather than high income or inherited wealth.
When you read this book, you discover that your lifestyle choices can affect you adversely. You might think you have a lot of money if you spend everything you have. However, this does not build true wealth. The people who become rich are business owners who have lived in the same communities throughout their adult lives. They might own a small factory, many stores, or a service business.
Most are self-made, and their lifestyles are characterized by habits that promote financial growth. Many have married once and remain married. They often live in neighbourhoods alongside people with far less wealth and are dedicated savers and investors. We discover that there are two types of people in the world: those who spend their money, and those who deliberately save and build wealth
The authors identified seven key traits shared by those who successfully accumulate wealth: living well below their means; efficiently allocating their time, energy, and money to build wealth; prioritizing financial independence over social status; not receiving economic aid from their parents; ensuring their adult children are economically self-sufficient; excelling at targeting market opportunities; making wise occupational choices.
In “The Millionaire Next Door,” you will explore these seven characteristics of the wealthy and learn how to develop them in yourself.
The Millionaire Next Door gives you an interesting perspective on how you can build your wealth. It proves that anyone can attain financial independence and build long-term wealth if they follow the habits and mindset of the next-door millionaire.
You will realize that the foundation of any wealth accumulation program is defence—focusing on budgets and planning to ensure the entire household consistently spends less than its income, which requires the cooperation of every household member.
This book provides the tools and advice, on how to be better at managing and understanding our finances and economic situations.
The millionaire next door is available in leading bookstores, online, and from some street vendors.
