Adrian Horning's Blog

My review of 'The Millionaire Next Door'

April 25, 2020

The Millionaire Next Door written by Thomas J. Stanley, PhD

I have heard many people recommend this book, so picked up a copy. It is worth the hype.

Summary

  • Most millionaires are just regular people with a normal looking house and cars, but are PAW’s (Prodigious Accumulator’s of Wealth)
  • Most people with expensive houses and cars are actually UAW’s (Under Accumulator’s of Wealth)
  • People making under $100,000/year can be millionaires by saving and investing
  • The secret to wealth building is living off much less than you earn
  • Its easier to accumulate wealth if you don’t live in a high status neighborhood
  • Wealthy people keep a budget, which includes setting aside 15% for investments
  • Offense = earning a high income, Defense = saving. “The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning”
  • Many PAW’s get much more pleasure from owning substantial amounts of appreciable assets than from displaying a high-consumption lifestyle
  • Big Hat, no cattle. “I don’t own big hats, but I have a lot of cattle”

Most millionaires don’t have houses and cars that look like this. They are the exception and not the rule.

rich

Photo by Matt Lamers on Unsplash

My Takeaways

  • Don’t take on bad debt (buying liabilities with debt)
  • Don’t buy the fancy stuff just to look cool or wealthy
  • Save at least 30% of my income every year
  • Starting a boring business is probably the faster way to wealth than sexier higher profile one