The Millionaire Next Door

“The Millionaire Next Door” by Thomas J. Stanley and William D. Danko was first released in 1996, and just re-released in 2010.  The information is just as timely now as it was originally published.   This edition is a reprint of the 1996 edition with a new forward by Thomas.  I wish they would update the statistics for today, and do an update on some of the profiles mentioned in the book.  Inquiring minds want to know, where are the millionaires profiled now in today’s economic environment?  Though Thomas Stanley did also release in 2010 “Stop Acting Rich and Start Living Like a Real Millionaire“.   The latest book builds upon the first book and goes into other topics not discussed in the first book.  If you haven’t read either book I still suggest you do so.  I recommend both these books as some of the best finance books to read.

The book is based upon years of research and statistical analysis of the data from millionaires.  The authors then make some conclusions based upon the data.  While it’s possible some of the data could be interpreted differently (correlation does not imply causation), most of the conclusions logically make sense.  Although the book isn’t perfect, it is a good book to help understand the mind of a millionaire.

Keep in mind it really isn’t a how-to book, and you must derive how you personally can become the “Millionaire Next Door”.  For this review instead of giving away all details of the book,  I will summarize things I found interesting after first reading it 10 years ago, compared to today when I just re-read the book.  In my 10 years I have modeled many of the items mentioned in the book.  In my case, especially the fact that many millionaires own their own business.

What’s Real Wealth?

The book discusses what it means to be wealthy, and as I’ve aged I’ve found it interesting that most of the general public still does not understand what this means.  It’s interesting to see many people in society, our tax code, senators and friends think high income equals wealth.  Nothing can be further from the truth.  A high net worth is what makes you wealthy (assuming you generate income from your investments).

How many public tails have we seen – from movie stars to sport heroes lose it all once their source of income has dried up?  I came from parents who where what’s the book calls UAW (Under Accumulators of Wealth), but for the time reasonability high incomes.  I can see the mistakes my parents made, and hopefully I’ve learned from their hyperconsumption ways.

Minimizing Taxes

Despite the recent political rhetoric, the rich are experts at minimizing taxes no matter what is the current tax rate.  Re-reading this section of the book speaks volumes to me today, more than it did previously.  Studies have shown more than 1/3 of your income during your lifetime goes towards taxes.  It’s akin to having another mouth to feed in the family. Unfortunately this family member has a never ending appetite for more money.

It’s important to become an expert in taxes. I now completely understand this, and taken it to task.  With applications like Quicken, it’s just a few mouse clicks to figure out how much in taxes you are paying annually.  It’s astounding how much my family payes coming when living in a high taxed state.  I’ve setup my strategy for tax efficient investing, and with my business legally minimize the amount of taxes we pay.  As I just mentioned, our progressive tax code is designed to tax more high income earners, than wealthy individuals who make most of their income from passive investments.

Economic Outpatient Care

It’s especially interesting to note the chapter economic outpatient care.  It is more relevant to me now than ever.  As I have written on my blog, I had some family matters with my brother.  It’s interesting to re-read this book, and see discussed the financial aid my mother has given to my brother and his wife.  My wife and I have received very little financial support from my mother over the years.  I’m not complaining nor am I jealous.  Personally I would rather get more emotional and general help, but is a topic for another time.

My wife and I are financially independent, but interesting to note the differences in my family’s finances compared to my brother’s.  My brother seems to be following in the footsteps of my parents, while I’ve tried to go down a more frugal path.  The book outlines this in great detail and matches perfectly with what I observe in my family.  The child with less economic support is more self supportive, and unfortunately the opposite of what’s the parent intent.


The book is an interesting read into the daily life of a millionaire.  Although the book isn’t perfect, it is a good book to help dive into the mind of a millionaire.  The book isn’t a specific how-to. It’s not do these steps you’ll become a millionaire, but rather from statistics shows a summary of the typical millionaire.  How you get there specifically is unique to you, just like your fingerprint.

Rating: 3.5 out of 5 stars


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