(This is a guest post from one of my friends, Jill. Visit her blog here for her personal finance blog posts. Thanks for the awesome post, Jill!)
It was the catchy title that did it for me: “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy” by Thomas J. Stanley and William D. Danko.
We were in the middle of battling wedding related debt and were trying to make ends meet in light of the 2 month salary delay of my new job, but I still couldn’t resist picking up this book. And although that was technically the worst time to buy a new book, I’m still glad I made the investment and took the plunge.
The Millionaire Next Door was written by two academics who were commissioned by a trust company to poll a thousand millionaires, since the trust company wanted to know how they could better penetrate the millionaire market. The results were very surprising, as it appeared that the typical millionaires in America had their own businesses which provided basic services to the community, never got a divorce, did not own an expensive watch, did not drive a European car and exercised frugality. Definitely not sexy stuff worthy of Lifestyles of the Rich and Famous or Entertainment Tonight.
|The Millionaire Next Door|
The tone is very antiseptic and findings are backed with a lot of graphs. It wasn’t personality based like Suze Orman or Robert Kiyosaki, nor did it have any of the catchy phrases that are meant to reel you in. Instead, it was a quiet and somber book which basically says: This is what we found out after years of research.
It really resonated with me because I knew I wanted to be rich, yet at the same time, I was uncomfortable with flagrant displays of wealth and couldn’t fathom spending a huge chunk of money on designer goods. But if that’s how it was to be really rich, then maybe that’s what I should also aim for right? This book thus set me straight on how being rich was more about having a huge income, but of having a net worth that’s 10 or 20 times more than your income. And how do you do that? By being frugal and spending wisely.
To wrap-up, the authors discovered seven common denominators among the successful wealth builders, and these are:
- They live well below their means.
- They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
- They believe that financial independence is more important then displaying high social status.
- Their parents did not provide economic outpatient care.
- Their adult children are economically self-sufficient.
- They are proficient in targeting market opportunities.
- They chose the right profession.
Notice that none of the common denominators involved being born to riches or winning the lottery, making this a very doable and realistic list for all of us average joes and janes.
Instead of sharing secrets and get rich quick tips, The Millionaire Next Door shows us how to have the mindset of a millionaire, which in the long run is the real secret in attaining wealth.
Do you believe in simple millionaires?
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