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The Millionaire Next Door

by Thomas J. Stanley, William D. Danko

3.89 of 5 stars 3.89 · rating details · 14,340 ratings · 932 reviews

The incredible national bestseller that is changing people's lives -- and increasing their net worth!

CAN YOU SPOT THE MILLIONAIRE NEXT DOOR?

Who are the rich in this country?

What do they do?

Where do they shop?

What do they drive?

How do they invest?

Where did their ancestors come from?

How did they get rich?

Can I ever become one of them?

Get the answers in The Milli

...more

Paperback, 258 pages

Published October 1st 1998 by Gallery Books (first published October 25th 1996)

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The Richest Man in Babylon by George S. Clason

The Millionaire Next Door by Thomas J. Stanley

Your Money or Your Life by Joe Dominguez

Rich Dad, Poor Dad by Robert T. Kiyosaki

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Jul 22, 2008 Jay rated it 3 of 5 stars Recommends it for: Everyone

I learned that there are seven characteristics or common denominators among millionaires in America.

They are:

1.They live well below their means - They are frugal,frugal, frugal. They make more than they can spend. Pretty cool.

2.They allocate their time, energy, and money efficiently, in ways conducive to building wealth - How else did they get there right? Well this goes for those millionaires who didn't inherit their wealth.

3.They believe that financial independence is more important than d...more

36 likes · like · see review

Apr 07, 2011 Kressel Housman rated it 3 of 5 stars

Shelves: non-fiction, personal-finance, economics

According to this book, there are two kinds of people: under-accumulators of wealth (UAWs), who spend everything they earn as soon as they get it (to say nothing of credit cards); and prodigious accumulators of wealth (PAWs), people who live frugally, save, invest, and end up becoming millionaires. So when you see someone who lives in a fancy house and drives a fancy car, chances are, he’s not a millionaire. He may be a high earner, but he’s also a big spender, so he’s a UAW. A real millionaire...more According to this book, there are two kinds of people: under-accumulators of wealth (UAWs), who spend everything they earn as soon as they get it (to say nothing of credit cards); and prodigious accumulators of wealth (PAWs), people who live frugally, save, invest, and end up becoming millionaires. So when you see someone who lives in a fancy house and drives a fancy car, chances are, he’s not a millionaire. He may be a high earner, but he’s also a big spender, so he’s a UAW. A real millionaire lives humbly and isn’t into consumption. He might even live right next door.

Now that’s an inspiring idea, one that made me go into this book with some hope of getting rich someday, but I didn’t have to read very far to realize that I’m in a hopeless UAW rut. That made reading it a pretty unpleasant look in the mirror, especially since I believe that what the authors are saying is completely true. I’ve seen it first-hand. I’ve worked for two estate planning attorneys and a bankruptcy attorney. I’ve seen both sides.

For me, the most painful, shame-inducing part of the book was the analysis of parental “outpatient economic care.” I guess it’s not really news, but parents who bestow too much of their wealth too easily on their children end up providing for them even in their forties and fifties. This was the longest section of the book, and I found it a bit repetitive, but then again, perhaps that’s part of my shame reaction.

Aside from this emotional reaction, I have a few technical criticisms. I didn’t finish the chapter called “You Are Not What You Drive,” since cars just don’t interest me that much. And though the book was full of charts with stats showing the authors’ research, I stopped looking at these about halfway through the book. On the flip side, I would have liked to read more about why the millionaires chose the businesses they did. The authors did give some advice on lucrative careers (estate planner was number one), but I would have liked more.

All of that might have induced me to give the book a rating of 2, but I don’t think that’s fair. Just because the book was mostly a downer for me doesn’t mean it isn’t worth reading. It really has gotten me to look more closely at my spending. I just fear that as the book itself warns, crash budgeting can be like crash dieting. Will the effect really last?(less)

6 likes · like · see review

Sep 16, 2008 David rated it 5 of 5 stars · review of another edition

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....more

9 likes · like · see review

Mar 14, 2008 Renee rated it 4 of 5 stars

The point of this book comes through loud and clear, the people that we think are millionaires are more than likely swimming in debt. Just because you live in a fancy neighborhood and drive an expensive car does not make you rich. In fact it goes as far as to say that most millionaires live in less costly areas because it costs alot of money to keep up with the JONES! In fact their study showed 37 percent of their millionaires bought used cars opposed to new and paid cash of course. Now their us...more

9 likes · like · see review

Mar 06, 2012 Nancy rated it 4 of 5 stars

Shelves: finance, non-fiction

As I read The High-Beta Rich: How the Manic Wealthy Will Take Us to the Next Boom, Bubble, and Bust, this book comes back to me. I read it while my son was in college as a "pre-business" (really "I don't know what I want to do") major. I feared he was developing an unrealistic get rich quick attitude so was pleased to discover this book and give him a copy for Christmas. I wouldn't say it changed his life or mine, but it gave us a framework to talk about work and planning which I found useful.

W...more

2 likes · like · see review

Jan 03, 2011 Chad Warner rated it 3 of 5 stars · review of another edition

Recommended to Chad by: Robert Kiyosaki

Shelves: non-fiction, self-help, finance

Most Americans believe "wealthy" and "high-income" are synonymous. Surprisingly, most high-income earners are not wealthy; although they earn a lot of money, they don't keep much of it. To be wealthy is not to amass material possessions, but to increase net worth by collecting appreciating assets.

The book categorizes people as PAWs or UAWs; Prodigious Accumulators of Wealth (PAWs) achieve, create wealth, become financially independent, and build from scratch. Under Accumulators of Wealth (UAWs)...more

7 likes · like · see review

Jul 08, 2010 Lawrence rated it 4 of 5 stars

This book has helped me have a better perspective on saving and thrift. Not that I want to apply everything because I think taken to the extreme you could become greedy and money focused. But being financially independent from debt gives you freedom to be generous and to affect change in other peoples lives. I think one thing that stuck out is that rich people spend more time managing their money. Not an exorbitant amount of time, but a reasonable amount. Plus they are actually willing to pay a...more

1 like · like · see review

Jan 22, 2012 Angela Alcorn rated it 3 of 5 stars

Shelves: money, personal-mba, business-entrepreneur-career, gtd-lifehack-self-help, 1990-1999, 20th-century, young-adult-educational-material, we-own, read-2012, ange-recommends

There's a lot to say about this book, both positive and negative. It had some great ideas in it, some which are possibly quite revelatory for some people, and some really useful information which I would love to ensure certain people I know read. However, it was also a very dry read, somewhat repetitive and dwelled on some things I didn't think were all that fascinating (like what sorts of cars millionaires drive). It also had a lot of charts, which is fun from a stats perspective and lends cred...more

6 likes · like · see review

Jul 20, 2008 Viraj rated it 3 of 5 stars Recommends it for: Those who have little to no clue about personal finances / overall economics of finance

Shelves: finance-etc

Main message is: Be Frugal, invest.
One driving a Benz is quite likely less worth than one driving a Ford F150 (since the Benz owner has already spent money). Max price paid by 75% millionaires for: Suit $600, Shoes: $200, watch $235 (50%)! JCPenney has toughest quality control amongst all stores. Millionaires' wives are all frugal too. They save coupons etc...
1. All have annual household budget
2. All have accountant
3. All have investments in stocks, real estate, business etc
4. Shopping method...more

4 likes · like · see review

May 16, 2008 Craig rated it 4 of 5 stars

Getting rich is most often done by being frugal, not by making outrageous, Trump-like gambits. The last 10 years or so have been marked by periods of investment euphoria (tech & housing), followed by terrible hangovers that have destroyed the wealth of millions within a few years or even months. The latest bubble (George Soros actually thinks 2 bubbles popped simultaneously last year -- the housing bubble and the 20 year credit bubble) could potentially be much more devastating than the tech...more Getting rich is most often done by being frugal, not by making outrageous, Trump-like gambits. The last 10 years or so have been marked by periods of investment euphoria (tech & housing), followed by terrible hangovers that have destroyed the wealth of millions within a few years or even months. The latest bubble (George Soros actually thinks 2 bubbles popped simultaneously last year -- the housing bubble and the 20 year credit bubble) could potentially be much more devastating than the tech bubble, because the bubble was based on leverage and credit, and so participants often risked everything they owned (and more), and a mere 20% decline in home prices wiped away their entire wealth, and left them without the means to even pay the mortgage once it reset. There have been many foreclosures in the past year. Look for more, and soon a flood of bankruptcies. Bankruptcies will be especially devastating because of recent legislation modifying bankruptcy laws.

It should be noted that there are many so-called self-help finance books out there that are very dangerous for the common man, among them the "Rich Dad" series. They encourage normal people, uneducated in finance, to make such risky leveraged investments like buying second homes with no money down. Such books and advice should be avoided like the plague. Robert Kiyosaki (Rich Dad author) has absolutely no shame in not only misrepresenting himself and his so called Rich Dad (a figment of his imagination), but tickling man's inclination to gamble. Except that when people lose playing his game, they can lose literally everything.

Turning attention to the actual book being reviewed, a large part of the book is devoted to profiling the "typical" millionaire. Some common qualities are:

a) Most millionaires are married couples, never divorced. This should make sense for several reasons. First, there are no alimony/child support bills to weigh down expenses. Second, married people tend to be more emotionally stable, and thus are less prone to spending sprees or other extravagance. Third, married people don't feel they need fancy things to impress others. Although children do indeed cost a lot of money, the reality of parenthood encourages people to change their goals to be more far-sighted, which usually encourages saving.

b) Most millionaires aren't extravagant, nor do they have a desire to live like rock stars. Money provides security to them and their family, and often their tastes and needs are as simple as the rest of ours. I remember the story of the husband in the book who, after selling his business for millions of dollars, gave his wife a check for a large chunk of that money while she was clipping coupons at the kitchen table. She said "Oh thanks honey, that's very nice of you," and went right on clipping coupons.

c) It is true that a disproportionate number of millionaires are business owners. This makes sense though -- although most businesses fail, the ones that succeed are bound to rise in value (it costs much more to buy a successful business than to start a new one). So the sale of a successful business is often likely to generate a one-time windfall that blue/white collars are unlikely to experience. The main point of this section was to point out that certain cultures -- I think Irish and certain sections of Eastern Europe -- encourage members to open businesses and "make their own way". That is reflected in the statistics.

I like this book because it brings together common sense with hard data to present a convincing argument that the best way to attain wealth is to a) save, b) be frugal/tame your desires, c) work hard, d) become a self starter, and e) get married and don't divorce. Common sense all of them, and all of which have happy side effects beyond the monetary ones.(less)

3 likes · like · see review

Mar 13, 2008 B rated it 4 of 5 stars · review of another edition Recommends it for: Everyone, especially young people

While this was an older edition, many of the principles discussed are timeless. This book discusses a number of studies of thousands of the country's wealthiest people from all walks of life. It examines who they are, what they do, how they live, how they see the future, what their values are, and generally how they got to the point where they are now. Perhaps just as interestingly, the authors discuss how _you_ can do the same.

Hopefully this won't spoil the book, but here are some interesting s...more

2 likes · like · see review

Feb 03, 2008 Jared Smith rated it 3 of 5 stars

Thomas Stanley and William Danko teach the average American about the elusive habits of the wealthy upper-class in The Millionaire Next Door. Although they didn’t tell me anything I felt like I didn’t already know, I appreciated that they conducted research and presented hard data that backup up the intuition about the wealthy.

You should guess that small business owners compose the largest group of millionaires in America. Also, it has always been obvious to me that the people who save and inve...more Thomas Stanley and William Danko teach the average American about the elusive habits of the wealthy upper-class in The Millionaire Next Door. Although they didn’t tell me anything I felt like I didn’t already know, I appreciated that they conducted research and presented hard data that backup up the intuition about the wealthy.

You should guess that small business owners compose the largest group of millionaires in America. Also, it has always been obvious to me that the people who save and invest their money are far wealthier than those who consume. Stanley and Danko over-simplify that assumption. The perception that big spenders are also rich isn’t wrong, as Stanley and Danko somewhat mildly point out. When anyone understands the difference between income and wealth—not too difficult of a concept—then a clear springboard is that people who spend their money on consumable goods are not consistently wealthy. That is, of course, unless they make ridiculous amounts of income and can still save a significant amount while spending more in one year than I will make in a lifetime. This point shouldn’t be undervalued. There are significant amounts of millionaires that do spend their money – they have high income, high wealth, and high consumption. Stanley and Danko do explain the majority of millionaire’s habits, as an average. But remember that there still are 46% of millionaires who drive a car newer than two years old.

I have been interested in personal finance for years, which is why I appreciated reading a book full of reputable data extracted from university research projects. While working as an intern financial advisor for UBS (the large Swiss bank) I was able to look into a few of the habits of the wealthy (one million or more of net worth excluding real estate). And I found that they were heavy savers and not necessarily big income earners.

The book is insightful, and it has reiterated and confirmed some important concepts that I have thought about in the past. One concept that was new to me was how damaging “economic outpatient care” is to families and the financial independence of rich kids. It seems a good idea for parents to help their kids out, but it usually is damaging. Rich kids need to learn to live within their means before getting economic outpatient care. In addition, I didn’t know what careers wealthy parents push their kids into. It makes sense after Stanley and Danko explain it, but it was still surprising that they tell them to be Accountants, Dentists, Lawyers, Doctors, etc. It seems like wealthy parents would want to encourage their kids to be entrepreneurs instead, which is where the “real money” is. But because the risk of earning real money is high, they want their kids to have consistent streams of income. Especially considering the ability the parents have to pay for expensive graduate education.

I grew up in a wealthy area of Orange County, California. Many of my friends’ parents were big spenders. But I learned important lessons when I found that some of the seemingly more wealthy families turned out to be in financial distress. Big spending doesn’t mean big bank accounts—they are inversely proportional.
(less)

1 like · like · see review

Dec 22, 2007 Jared rated it 3 of 5 stars

Shelves: non-fiction, finance

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...more

3 likes · like · see review

Jun 21, 2007 Sierra rated it 3 of 5 stars

We're all snoops. That's why I'm sure Thomas and William made bank off this little New York Times "Phenomenal #1 Bestseller" which promises to cough up "the surprising secrets of America's wealthy." Overall, this was an interesting read with some surprising statistics and anecdotes, although it was far too repetitive. I could come to two conclusions after reading this book: 1) I'll never become wealthy because my income is currently pathetic and I don't want to become the owner of a meat process...more

1 like · like · see review

Jan 04, 2009 Amy rated it 5 of 5 stars

Shelves: self-improvement

A seriously great book. Makes you realize that the people who have a lot of things, are usually the people that don't have very much money and are generally living on credit cards, buying too many things. The people who you would never expect to have money, are usually the millionaires. It has a lot of statistics, which both of us "numbers" people loved!

2 likes · like · see review

Apr 08, 2008 Kat rated it 4 of 5 stars

Actually, a really interesting book. Warning: it is written (especially in the beginning) in a more statistical fashion than in a story like I was expecting, but some good food for thought. The big theme of it was not necessarily "how to get rich", but more "how not to spend your money" - maybe that's over-generalized, but that's what I got out of it.

A very large portion of it focused on how handicapped the children of some of the wealthy become due to their parents lifestyle or the VERY genero...more

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Dec 20, 2008 Terry rated it 3 of 5 stars · review of another edition

MIllionaires can be tremendously dull; this book isn't. It is thought provoking and unexpected, if a touch dry. With so many people fascinated by glitz and bling, it is worth considering the relationship between appearing rich and being wealthy. This book has lots of great nuggets, but the upshot is that rich people often work doggedly at some fairly mundane businesses while living frugal and unpretentious lives (they generally don't divorce, move, or consume conspicuously). Certainly, this isn'...more

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Jul 30, 2009 shannon rated it 4 of 5 stars Recommends it for: anyone trying to make sense of their finances

When you think about it, it's obvious that the more you spend the less you'll have and the less secure you'll be, but it takes a slight paradigm shift to become aware that most people who live in wealthy neighborhoods and drive expensive cars probably don't have anything close to the wealth they should; the more artifacts of status one purchases, the more one needs to consume in order to make one's outward appearance consistent.

The key message from this book is that materialism is at odds with g...more

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Jul 09, 2012 Julia rated it 2 of 5 stars

The book points out that many millionaires do not look rich, they are frugal people who live below their means and save money. I feel like I was convinced after the first few chapters, and was annoyed to find the rest of the book just rehashing its main thesis over and over again.

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Jun 03, 2007 Ken rated it 1 of 5 stars · review of another edition Recommends it for: people needing a laugh

Rubbish.
It is not written about the majority of us. It is written FOR the majority of us to make us believe that wealth is everpresent and easily accessible in our society.

The numbers are often listed in a manner that does not acknowledge any actual analysis. Nor is inflation considered with any degree of seriousness. As most cheerleading books for market boosterism it gives its sideways genuflection to supply siders by completely ignoring the operating differences between income and wealth.

2 likes · like · see review

Mar 23, 2007 stephanie rated it 5 of 5 stars · review of another edition Recommends it for: anyone planning on having a future worth living

Shelves: worthwhile-non-fiction

I re-read this book, it may be the only one. That is how much I love it. Whenever our status-conscious, materialistic society starts to convince me that I need to buy more, drive a better car, living in a bigger home...I read this book.

This book reaffirms those of us who have chosen a lifestyle of living way below our means and making decision with our personal finances to meet personal life goals. If you have ever had an interest in learning more about how the truly wealth live, read this book...more

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May 10, 2013 Ngan rated it 3 of 5 stars

This book relies on data from the early to mid-1990s. This is a bit outdated, especially with the number of technology-made millionaires floating around today. However, the basic ideas behind wealth accumulation can be found here. The major ideas are that prodigious accumulators of wealth (millionaires) become that way because they live well below their means and because they save and invest the income they don't spend. In addition, they believe in financial independence for themselves and their...more

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Mar 19, 2013 heidi rated it 5 of 5 stars

I'm glad I read this book at an early stage in my life. I flipped through this book at my uncle's house; I had just graduated from high school at the time. The lessons in frugality has stuck with me since.

Having gone through my entry-level working phase I'm observing how some friends fell into the trap of accumulating credit card debts, failing to pay their student loans, buying a bigger mode of transport than necessary, shunning public transportation, going on lavish vacations with their bonus...more

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Mar 17, 2013 Maura rated it 3 of 5 stars

The book seems to laud wealth accumulation for the sake of accumulation itself. The author seems to have assumed that we'd all want to be millionaires if possible. Many of us would rather spend the money on things that give our lives meaning. What's the point of having 7+ digits of net worth if you aren't happy?

I did, however, appreciate the statistics on the offspring of millionaires and inheritance. It was very interesting that giving your kids money, especially early in life, tends to lead to...more

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Feb 16, 2013 Hector Chicas rated it 4 of 5 stars

Shelves: financial

This book is about statistics. It proves once and again that being wealthy is not about having a high income, but about accumulating it. In others words you save and then save and then save some more.
My attention span for statistics is not great but I did get the point.
The conversation between the taxman and other man made me look into tax management and this is why I picked "Tax Insight: for tax year 2012". Also a good book to plan before the year and save in taxes as well.
At points the book f...more

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Jan 12, 2013 Doreen rated it 4 of 5 stars · review of another edition Recommends it for: everyone

Recommended to Doreen by: saw it at the library

Shelves: specific-goals-tasks-time-constrain

Mindful purchasing, delayed gratification, living below one's means, saving and investing money...new concepts?! Of course not! Actually, I love the information provided in this book and I am impressed with how well that information is presented here. The facts and advice are sound and necessary to every income-generating, merchandise-acquiring, bill-paying person alive!

And the title is so true...the person driving a new, luxury car every two years, taking the most extravagant and frequent vac...more

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Jan 09, 2013 Anton Klink rated it 5 of 5 stars

Having read the book about 10 years ago, I still remember sections of if quite vividly - and that, in my opinion, is the hallmark of a great book in and by itself. The book was eye-opening in many respects. The author had spent a great deal of time researching the millionaires of America and was thus able to give some excellent insights into who are the real millionaires. My take-away from the book was the fact that the truly rich are not the ones throwing around money and driving fancy cars. On...more

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Nov 23, 2012 Chhun rated it 4 of 5 stars

Never judging the book by its cover is what I realized as I was spending time with its content, and it is the same to the chapter of this book, You Aren't What You Drive. Many people spend as millionaire, they eat as millionaire, they dress and look like millionaire, but who are the true millionaires?
With the hard effort of research on millionaires, Stanley have pointed out the real millionaires were totally different of what you used to think. If you see a guy riding a luxurious car, wearing...more

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Oct 07, 2012 Susan Devy rated it 4 of 5 stars

the first time i read about the title : millionaire next door....i thought this book was about boring motivating people to get rich again, but no, i was totally wrong ! actually this book was done with very sophisticated method, both of the writers provided with actual data and did some surveys to those REAL rich people in there.

the main thing that i like about this book that it can motivate us and open our mind with conveying facts and data about what those rich people actually do and what real...more

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Sep 24, 2012 John Jeffcoat iii rated it 5 of 5 stars

Dr. Thomas Stanley has done a great job here in examining the statistics behind the most affluent 4% of our society in the USA. You might be surprised to learn that the vast majority of millionaires are not in glamourous fields of work. Most of them are not Wall Street Investment Bankers, or professional sports athletes, or movie stars, or CEOs of Fortune 500 companies... those people represent only a tiny minority of the millionaires. Many millionaires are men in their 50's who own a boring lit...more

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