Title: The Millionaire Next Door
Author: Thomas J. Stanley and William D. Danko
In The Millionaire Next Door, authors Thomas J. Stanley and William D. Danko take readers on a journey across America to discover exactly what makes the difference between the wealthy and those who are ‘just about getting by’, and in doing so they come across some enlightening and interesting facts about the very nature of wealth and entrepreneurship.
Both authors are well-respected researchers in their field, having gained PhDs in the areas of Marketing and Business Administration before embarking on careers in education and research, and they have combined the might of their knowledge into conducting one of the most ground-breaking studies into the lifestyles of the wealthy in modern times. Their initial study was undertaken in an attempt to research how millionaires use the money they have earned by examining the supposed lavish lifestyles that they are surely living. However, it was after conducting many hundreds of interviews with Americas rich that the authors discovered an incredible truth. Most millionaires are not in fact driving around in Ferraris and living in massive penthouses in exclusive beach-side resorts. The reality is that these people are much more likely to be living in a modest house and driving an average car whilst going about their business in much the same way that the rest of us are. As the title of the book suggests, there is likely to be a millionaire living next door to you, and you don’t even know it!
There’s a secret to having wealth, and it’s not so secret at all
The fascinating conclusion of the in-depth millionaire study is that there is a reason that these people have got to where they are today and are maintaining their levels of wealth, even in times of economic turmoil when the rest of us are struggling. The secret of these millionaires isn’t really much of a secret at all, but instead it’s a combination of simple common sense advice which everyone should, but sadly doesn’t, live by.
It was shown time and time again by the research, that to build wealth the best route is through building and developing your own business, with the remainder of millionaires saving wealth from very high paid, high-powered jobs. The one thing that each of these secret millionaires have in common is that they bring real value to the world, whether that’s through offering a product or service that no-one else is providing, or from being at the pinnacle of their careers in their respective professions. However, the reason why there are so many more millionaire plumbers and builders than there are millionaire doctors and lawyers is that those people who have come from nothing are much more likely to live a lifestyle that maintains their levels of wealth.
Both Stanley and Danko discovered that a highly paid job does not necessarily lead to a high net worth, because many people are attempting to live the millionaire lifestyle each and every day without considering the consequences. So instead of investing excess money into wealth generating assets and investments, they buy fast depreciating luxury cars and take on debt to buy lavish houses which they don’t really need. This method of expenditure invariably leads to bankruptcy if for any reason they should lose their job, whilst the high levels of doubt slowly build up to unmanageable levels. What might appear to be proof of wealth to you and me is actually the product of merely living paycheck to paycheck and spending what they can’t afford.
Simple lives and big rewards
In contrast the millionaire next door is quietly building up his or her business whilst re-investing any earned income back into their wealth generating endeavours. At the same time they invest any excess money into stock markets, property and other income producing assets, whilst living simple, and some might say frugal lives. These people are unlikely to buy a new car unless they have first calculated the economics benefits of doing so, and they are likely to be living mortgage free in small houses that they have managed to pay off years before. In effect they have given up their immediate pleasures for the promises of a wealthy and worry-free tomorrow.
I wonder how many people in the world today would be so much happier if they took a leaf out The Millionaire Next Door book. In times of mass amounts of easy credit, and huge quantities of personal debt, there are real lessons that can be learned from the study carried out by Thomas J. Stanley and William D. Danko. It’s my personal opinion that if you too want to become a millionaire, there is no better route to get started than by studying the methods of those who are already there.