The Millionaire Next Door: The Surprising Secrets of America's Wealthy

This book was so difficult to get through.
I have been trying to read one financial book a week. I love Suze Orman, Dave Ramsey. I enjoyed the Millionaire Mind; I found it inspiring. I did not enjoy the Millionaire Next Door.

This book is heavily recommended on so many of the financial online forums and blogs I read, so I borrowed it from my library this week.

I found the first chapter very interesting, and then they lost me. I think the premise of this book could be summarized into one chapter. But then, you can't sell a book on one chapter!

I do not think the writing is good. The authors are annoyingly repetitive. I think they bored their editor so much that the editor didn't catch that they repeat sentences over, and over, and over. The book is fluffed out with tons of boring, didactic charts. The writing is not organized - at times, it seems like streams of conscientiousness writing- jumping around too much.

I think they completely lost my interest on page 75 when they write: "How else does one explain why two experts on wealth are not wealthy? in part, because they spent a combined total of nearly 20 years pursuing higher education."

So on page 106 they tell a great story of Mr. Martin who won't hire advisers who don't have personal accounts of at least $200,000, because otherwise they are "full of baloney." But back on page 75, they admit they are poor themselves! So why should I listen to their advice??

They spend a lot of time on topics that completely lose my interest. To spend pages showing how rich guys typically buy cars by the pound, and then to review how many pounds each car weighs ...this really put me to sleep. They list the cars millionaires typically buy, and then to go on to list pretty much every car in existence. Or to review for pages and pages the ancestral backgrounds of the 3,000 millionaires they happened to pick from geocoded neighborhoods proves nothing to me.

But then the authors lose confidence, and slap a disclaimer- quietly- on page 228. "we have gone out of our way to emphasize that there are no sure steps one can take to become wealthy." . But wait. Then what are the other 254 pages about? I am lost again. Because they spend a whole lot of time enumerating some pretty sound steps that millionaires take to get wealthy (1. they live well below their means. 2. they allocate...)

Most importantly, there were 5.3 million households in America in 1997 (when the book was written) that were millionaires. Yet they only interviewed 3,000 households. To put forth statistics as "typical" based on the low percentage they interviewed can't possibly be accepted as statistical or fact.

On page 249, they review that they chose the millionaires they surveyed based on geocoded neighborhoods- but this goes against what they spent 248 pages proclaiming! They spend the entire book professing that millionaires don't live in certain neighborhoods, then go on to say they only know this because they surveyed certain probable high-net-worth neighborhoods.

With all this said, I am not disagreeing with any of the tenants of wealth accumulation they advocate- I follow them myself, and highly, highly recommend them! So I reluctantly recommend people read the book just to glean that bit, but with hesitance because I understand they will have to sort through boring charts, stereotyping, and bad writing to get advice. Readers would be better off reading a Ramsey book, which is captivating and not doesn't drown out the message with boring stats. There is some good insight in here - live below your means, don't spend 10 years in advanced education with hundreds of thousands of dollars in student loans to hold you back, invest your money at an early age, don't cripple your children by making them economically dependent, teach your children to fish, don't get caught up with keeping up with Joneses, work hard, plan, pick a compatible spouse, use a budget, track your spending, etc. All of this is great advice.

According to .05% of the millionaires in America.

The Millionaire Next Door is a summary of the research of two men who have come to some surprising conclusions about the wealthy in America. For instance, they found that almost two-thirds of America's wealthy are first-generation rich. They also talk about a number of the characteristics of those who become wealthy. It turns out that attitude toward money has a much greater impact on wealth than income or occupation.

The book is filled with lots of fascinating facts and statistics. The authors describe two general classes of people: under-accumulators of wealth, and prodigious accumulators of wealth. They also provide a pretty safe metric to determine which one you are: "Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be."

The book is dry at times, and could probably have been slimmed down to about half its size without losing any meaningful content. The authors tend to repeat themselves a lot. But the conclusions that they come to are fascinating, and provide an interesting look at how the wealthy become wealthy -- and why their children usually aren't.

Eye-opening and thought-provoking!


Very eye-opening and insightful. Reading this book really gets you thinking; among other things, it's motivated me to modify my savings & investment approach.

RANDOM STREAM OF CONSCIOUSNESS NOTES AND OBSERVATIONS (and noteworthy passages):

--FROM THE PREFACE (written by Dr. Thomas J. Stanley in 2010): "Since 1980 I have consistently found that most millionaires do not have most of their wealth tied up in their stock portfolios or in their homes....Not at any time during the past thirty years have I found that the typical millionaire had more than 30 percent of his wealth invested in publicly traded stocks." I don't blame them; at least a savings account, shitty though the interest rate may be, is FDIC-insured.

Seiko #1 brand of watch among millionaires! Hmmm, somebody tell that to some of my former Quixtar biz partners (the same ones who hate dogs).

"Even most multimillionaires in America don't live in expensive homes." Yeah, I wouldn't need a big-ass mansion myself...just a decent-sized garage to store my excess packrat stuff.

I'm reminded of that 2015 study that showed that people who spend money on "experiences" are happier than those who spend money on "things."

"America is still the land of opportunity. Over the past 30 years I have consistently found that 80 to 85 percent of millionaires are self-made."

It's rare that you can find a book that is as boring as it is sanctimonious. But they pulled it off!

In a nutshell, millionaires aren't made by extraordinarily high incomes (those people's spending tends to increase as well), in fact they're typically people with merely very good incomes who are zealous about frugality and long term investments. Not a huge surprise actually, but its nice to have numbers to back up the story and they do. Many are small business owners, many don't spend much on cars or suits and 80% are first-generation millionaires (not those who happened into big inheritances).

And that's it.

The rest of the book is filled with awkward, pedantic number-twisting to prove that people who spend less on houses and cars will have more left for retirement. What's maddening is the constant tone that people who choose to spend now instead of when they're 65 are "hyperconsumers". Can you believe this doctor, he makes $700,000 per year and spent a whopping $7000 of it on a vacation! What a dope! Wouldn't the $65,000 he spent on a Porsche have felt just as good in an IRA account?

They constantly fawn over blue-collar superstars who drive around in F-150s while their wives clip coupons. They start with the assumption from the very beginning that money is pre-ordained to end up in a retirement account and anything you do to interfere with that is stupid and indicative of poor discipline.

I can't wait for the next book about how Rock and Roll is too loud and women's skirts are too short.

Когато чуем "милионер", разбира се, си представяме това, което филмите ни показват - луксозни коли, огромни къщи с прислуга, частни полети до скъпи дестинации. Само че много често хората, които живеят така изобщо не са милионери, луксозният им живот често е само назаем и приключва в момента, в който изгубят престижната си работа, бизнесът им тръгне надолу или просто парите от наследството свършат.

The Millionaire Next Door е статистическо изследване на "богатите" в САЩ, но е популярно написана, което я превръща едновременно в книга за финансов здрав разум за всеки.

Авторите събират финансови и социални данни за горната прослойка от населението, а също така провеждат и множество интервюта с хора, които притежават повече от 1 млн. долара, за да видят какви аджеба са те, какво са направили, за да са милионери, как живеят и какво можем да научим от тях.

Това, което откриват с изследването си, е доста изненадващо - образът на средния милионер няма много общо с частните самолети, дизайнерски костюми и богато наследство. Не само, че 85% от милионерите са първо поколение (т.е. направили са сами парите си), но и начинът им на живот е доста... незабележим.

Средният милионер е на 55 години, притежава малък до среден бизнес (2-3 магазина, фирма за услуги или нещо такова), живее в нормална, обикновена къща, кара кола, произведена преди 10 години, има щастлив брак и деца, които не глези, работи по 10 часа на ден и обича да спестява и инвестира парите си.

Ще оставя сами да си направите изводите.

This was a great audio and text book (yes, I got both versions) - I especially enjoyed the chapter that had "Working for the Tax Man" and "The Martin Method."

95% of the millionaires own stocks - most have 20% or more of their wealth in publicly traded stocks.

Build a good money team: accountant, attorney, financial advisor, and you (and spouse).

Looking to build your money team? Ask your CPA. If you do not have CPA... get one.

Be frugal, know your financial picture, and have goals with your money.

The good millionaires know how much their costs are in life - how much they spend shopping, traveling, etc.

You heard of emergency fund, car fund, retirement fund, etc. well I am adding the "Go to Hell Fund."

The typical millionaire has a "Go to Hell Fund" which allows them to quit their job and not work for like 10 years or more. So when you quit your job or get fired, you can say to your employer "go to hell" and walk out the door and not worry about working.

I like this part in the book about UAWs and PAWs. You got three categories to millionaires.
UAW = Under Accumulator of Wealth (1/2 of AAW)
AAW = Average Accumulator of Wealth
PAW = Prodigious Accumulator of Wealth (2 * AAW)

To figure out what category you are in - do the following formula: Age/10 x Income

Example: Age 30, Income $45,000
30/10*45000 = $135,000

This person should have net worth of $135K.

UAW = $67,500
AAW = $135,000
PAW = $270,000

To figure out your actual net worth - do the following formula: Assets - Liabilities

Example: Age 30, Income $45,000, Credit Card Debt $12,0000, Car Loan $20,000

45000-(12000+20000) = $13,000

This person has Net Worth of $13K.

I can't believe I didn't write a review for this book when I first read it. TMND is one of the best books I've ever read and will go into the elite pantheon of books I won't stop recommending. The authors showcase the real millionaires in this country -- not the celebrities or heiresses or CEOs with golden parachutes that we think of. Using comprehensive data, they reveal that true millionaires and those with true wealth, are average, unassuming people like you and me. They work hard (usually for themselves), save, invest, spend wisely, and don't try to keep up with the Joneses. The people we think of as rich are little more than living paycheck to paycheck. It's an eye-opening book that will change the way you think.

I genuinely do not understand the hype around this book. As someone who makes it a routine practice to read a variety of personal finance books, this was on my list for a long time to read. It fell totally flat for me - examples were outdated and mostly just irrelevant. All of the examples of wealth were males, most (if not all) who were married with stay-at-home wives. The examples were incredibly homogenous and lacking in variety. It would’ve been marginally better if the examples were more diverse and also took into account wealth through a variety of different lived experiences. Save your time & skip this one. :)