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The Millionaire Next Door, Surprising Secrets of America's Wealthy (Audio CD)
by Thomas J. Stanley, Ph.D., William Denko, Ph.D.
| Category:
Personal finance, Personal wealth, Success, Self help |
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¥ 388.00
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| MSL Pointer Review:
A personal finance must read to achieve prosperity through frugal lifestyle and improved financial planning. |
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Author: Thomas J. Stanley, Ph.D., William Denko, Ph.D.
Publisher: Simon & Schuster Audio; Unabridged edition
Pub. in: September, 2000
ISBN: 0743517849
Pages:
Measurements: Personal finance Personal
Origin of product: USA
Order code: BB00032
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- Awards & Credential -
This phenomenal #1 National Bestseller on wealth has been on the New York Times Bestseller list for more than 3 years and over 2 million copies have been sold. |
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- MSL Picks -
Most people have it all wrong about how one becomes wealthy in America. It is seldom inheritance or advanced degrees or even intelligence that build fortunes; more often it is the result of hard work, diligent savings, and living below your means. Most of America's truly wealthy do not live in Beverly Hills or on Park Avenue - they live next door! From keynote presentations to after-dinner talks, or very informal "wine, cheese, and conversation" receptions, Dr. Danko shares insights that extend the research found in The Millionaire Next Door. The basic theme includes:
Why the book is successful: the strength of convergent validity.
Building self-sufficiency in the next generation through appropriate uses of wealth: tuition, extraordinary medical expenses, and seed money versus vacations, cars, and housing.
Ben Franklin's advice: "… do not depend too much on your own industry, and frugality, and prudence, though excellent things, for they all be blasted without the Blessing of Heaven..."
The practical wisdom of many self-made millionaires: seek competent advisors.
The virtues of frugality and stability: the RAND study on wealth.
Making it rain: how to be a proactive sales professional (if audience appropriate). Implications: how much is enough?
If someone asked you to pick a millionaire out of a crowd, how would you identify him? Would you look for expensive clothes, jewelry, late model foreign luxury cars, a big house in a posh neighborhood, all the "toys"? Guess again.
In this high-consumption society, many have bought into the lie that we must look the part before we can afford it. Just because someone looks the part, doesn't mean that they have accumulated any significant wealth. Rather, it could very likely mean that they are spending far beyond their means.
One of the key messages in this book is that wealth and income are not the same. It's not how much you make - or spend - that is important, but rather how much you keep. Authors Stanley and Danko's research reveal how a large portion of society is setting itself up for financial ruin, all in the name of social status. They paint a profile of what a real millionaire looks like - and it will probably surprise you.
Successful wealth builders value financial independence over social status. They live well below their means. The life of a millionaire is not the life today's media would have you believe. It is a life of sacrifice and discipline. It is a life of hard work. Many millionaires own their own businesses, drive modest vehicles and live in modest homes.
This book is a much-needed wake up call for all of us who have been seduced by the media's idea of the "millionaire lifestyle". It's time to break the conditioning and realize that financial independence is available to all - it just comes in an unexpected package. Would you rather look like a millionaire, or be one? The Millionaire Next Door reveals what it takes to be one. The choice is up to you. (From quoting Tim and Larry Hehn, USA)
Target readers:
General readers
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Thomas J. Stanley, Ph.D., is an author, lecturer, and researcher who has studied the affluent since 1973. His work is frequently cited in the national media. He is the author of Marketing to the Affluent, a bestselling book selected as one of ten outstanding business books in America by the editors of Best of Business Quarterly.
Dr. Stanley was formerly a professor of marketing at Georgia State University, where he was named Omicron Delta Kappa Outstanding Professor, and was on the faculty of the University at Albany, State University of New York. He lives in Atlanta.
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From the Publisher:
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 Millionaire Next Door, the never-before-told story about wealth in America. You'll be surprised at what you find out...
In this phenomenal bestseller, Stanley and Danko reveal surprising secrets about America's millionaires - and provide a valuable blueprint for improving anyone's financial health.
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Chapter One: Meet the Millionaire Next Door
These people cannot be millionaires! They don't look like millionaires, they don't dress like millionaires, they don't eat like millionaires, they don't act like millionaires - they don't even have millionaire names. Where are the millionaires who look like millionaires?
The person who said this was a vice president of a trust department. He made these comments following a focus group interview and dinner that we hosted for ten first-generation millionaires. His view of millionaires is shared by most people who are not wealthy. They think millionaires own expensive clothes, watches, and other status artifacts. We have found this is not the case.
As a matter of fact, our trust officer friend spends significantly more for his suits than the typical American millionaire. He also wears a $5,000 watch. We know from our surveys that the majority of millionaires never spent even one-tenth of $5,000 for a watch. Our friend also drives a current-model imported luxury car. Most millionaires are not driving this year's model. Only a minority drive a foreign motor vehicle. An even smaller minority drive foreign luxury cars. Our trust officer leases, while only a minority of millionaires ever lease their motor vehicles.
But ask the typical American adult this question: Who looks more like a millionaire? Would it be our friend, the trust officer, or one of the people who participated in our interview? We would wager that most people by a wide margin would pick the trust officer. But looks can be deceiving.
This concept is perhaps best expressed by those wise and wealthy Texans who refer to our trust officer's type as
Big Hat No Cattle
We first heard this expression from a thirty-five-year-old Texan. He owned a very successful business that rebuilt large diesel engines. But he drove a ten-year-old car and wore jeans and a buckskin shirt. He lived in a modest house in a lower-middle-class area. His neighbors were postal clerks, firemen, and mechanics.
After he substantiated his financial success with actual numbers, this Texan told us:
[My] business does not look pretty. I don't play the part… don't act it... When my British partners first met me, they thought I was one of our truck drivers... They looked all over my office, looked at everyone but me. Then the senior guy of the group said, "Oh, we forgot we were in Texas!" I don't own big hats, but I have a lot of cattle.
PORTRAIT OF A MILLIONAIRE
Who is the prototypical American millionaire? What would he tell you about himself?
I am a fifty-seven-year-old male, married with three children. About 70 percent of us earn 80 percent or more of our household's income.
About one in five of us is retired. About two-thirds of us who are working are self-employed. Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants.
Many of the types of businesses we are in could be classified as dull/normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.
About half of our wives do not work outside the home. The number-one occupation for those wives who do work is teacher.
Our household's total annual realized (taxable) income is $131,000 (median, or 50th percentile), while our average income is $247,000. Note that those of us who have incomes in the $500,000 to $999,999 category (8 percent) and the $1 million or more category (5 percent) skew the average upward.
We have an average household net worth of $3.7 million. Of course, some of our cohorts have accumulated much more. Nearly 6 percent have a net worth of over $10 million. Again, these people skew our average upward. The typical (median, or 50th percentile) millionaire household has a net worth of $1.6 million.
On average, our total annual realized income is less than 7 percent of our wealth. In other words, we live on less than 7 percent of our wealth.
Most of us (97 percent) are homeowners. We live in homes currently valued at an average of $320,000. About half of us have occupied the same home for more than twenty years. Thus, we have enjoyed significant increases in the value of our homes.
Most of us have never felt at a disadvantage because we did not receive any inheritance. About 80 percent of us are first-generation affluent.
We live well below our means. We wear inexpensive suits and drive American-made cars. Only a minority of us drive the current-model-year automobile. Only a minority ever lease our motor vehicles.
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We have a "go-to-hell fund." In other words, we have accumulated enough wealth to live without working for ten or more years. Thus, those of us with a net worth of $1.6 million could live comfortably for more than twelve years. Actually, we could live longer than that, since we save at least 15 percent of our earned income.
We have more than six and one-half times the level of wealth of our nonmillionaire neighbors, but, in our neighborhood, these nonmillionaires outnumber us better than three to one. Could it be that they have chosen to trade wealth for acquiring high-status material possessions?
As a group, we are fairly well educated. Only about one in five are not college graduates. Many of us hold advanced degrees. Eighteen percent have master's degrees, 8 percent law degrees, 6 percent medical degrees, and 6 percent Ph.D.s.
Only 17 percent of us or our spouses ever attended a private elementary or private high school. But 55 percent of our children are currently attending or have attended private schools.
As a group, we believe that education is extremely important for ourselves, our children, and our grandchildren. We spend heavily for the educations of our offspring.
About two-thirds of us work between forty-five and fifty-five hours per week.
We are fastidious investors. On average, we invest nearly 20 percent of our household realized income each year. Most of us invest at least 15 percent. Seventy-nine percent of us have at least one account with a brokerage company. But we make our own investment decisions.
We hold nearly 20 percent of our household's wealth in transaction securities such as publicly traded stocks and mutual funds. But we rarely sell our equity investments. We hold even more in our pension plans. On average, 21 percent of our household's wealth is in our private businesses.
As a group, we feel that our daughters are financially handicapped in comparison to our sons. Men seem to make much more money even within the same occupational categories. That is why most of us would not hesitate to share some of our wealth with our daughters. Our sons, and men in general, have the deck of economic cards stacked in their favor. They should not need subsidies from their parents.
What would be the ideal occupations for our sons and daughters? There are about 3.5 millionaire households like ours. Our numbers are growing much faster than the general population. Our kids should consider providing affluent people with some valuable service. Overall, our most trusted financial advisors are our accountants. Our attorneys are also very important. So we recommend accounting and law to our children. Tax advisors and estate-planning experts will be in big demand over the next fifteen years.
I am a tightwad. That's one of the main reasons I completed a long questionnaire for a crispy $1 bill. Why else would I spend two or three hours being personally interviewed by these authors? They paid me $100, $200, or $250. Oh, they made me another offer - to donate in my name the money I earned for my interview to my favorite charity. But I told them, "I am my favorite charity."
"WEALTHY" DEFINED
Ask the average American to define the term wealthy. Most would give the same definition found in Webster's. Wealthy to them refers to people who have an abundance of material possessions.
We define wealthy differently. We do not define wealthy, affluent, or rich in terms of material possessions. Many people who display a high- consumption lifestyle have little or no investments, appreciable assets, income-producing assets, common stocks, bonds, private businesses, oil/gas rights, or timber land. Conversely, those people whom we define as being wealthy get much more pleasure from owning substantial amounts of appreciable assets than from displaying a high-consumption lifestyle.
THE NOMINAL DEFINITION OF WEALTHY
One way we determine whether someone is wealthy or not is based on net worth - "cattle," not "chattel." Net worth is defined as the current value of one's assets less liabilities (exclude the principle in trust accounts). In this book we define the threshold level of being wealthy as having a net worth of $1 million or more. Based on this definition, only 3.5 million (3.5 percent) of the 100 million households in America are considered wealthy. About 95 percent of millionaires in America have a net worth of between $1 million and $10 million. Much of the discussion in this book centers on this segment of the population. Why the focus on this group? Because this level of wealth can be attained in one generation. It can be attained by many Americans.
HOW WEALTHY SHOULD YOU BE?
Another way of defining whether or not a person, household, or family is wealthy is based on one's expected level of net worth. A person's income and age are strong determinants of how much that person should be worth. In other words, the higher one's income, the higher one's net worth is expected to be (assuming one is working and not retired). Similarly, the longer one is generating income, the more likely one will accumulate more and more wealth. So higher-income people who are older should have accumulated more wealth than lower-income producers who are younger.
For most people in America with annual realized incomes of $50,000 or more and for most people twenty-five to sixty-five years of age, there is a corresponding expected level of wealth. Those who are significantly above this level can be considered wealthy in relation to others in their income/age cohort.
You may ask: How can someone be considered wealthy if, for example, he is worth only $460,000? After all, he's not a millionaire. Charles Bobbins is a forty-one-year-old fireman. His wife is a secretary. They have a combined annual income of $55,000. According to our research findings, Mr. Bobbins should have a net worth of approximately $225,500. But he is worth much more than others in his income/age category. Mr. and Mrs. Bobbins have been able to accumulate an above-average amount of net worth. Thus, they apparently know how to live on a fireman's and secretary's income and still save and invest a good bit. They likely have a low-consumption lifestyle. And given this lifestyle, Mr. Bobbins could sustain himself and his family for ten years without working. Within their income and age categories, the Bobbinses are wealthy.
The Bobbinses are quite different from John J. Ashton, M.D., age fifty-six, who has an annual income of approximately $560,000. How much is Dr. Ashton worth? Is he wealthy? According to one definition, he is, since his net worth is $1.1 million. But he is not wealthy according to our other definition. Given his age and income, he should be worth more than $3 million.
With his high-consumption lifestyle, how long do you think Dr. Ashton could sustain himself and his family if he were no longer employed? Perhaps for two, at most three, years. (Chapter One: Meet the Millionaire Next Door)
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| View all 16 comments |
The Boston Globe (MSL quote), USA
<2007-01-22 00:00>
A primer for amassing wealth through frugality. |
San Francisco Business Times (MSL quote), USA
<2007-01-22 00:00>
Offers a valuable message to today's spendthrift baby boomers. |
Forbes (MSL quote), USA
<2007-01-22 00:00>
The implication of The Millionaire Next Door...is that nearly anybody with a steady job can amass a tidy fortune. |
J. Brown (MSL quote), USA
<2007-01-22 00:00>
This was one of the first financial planning books I bought, and with each additional financial book I read I can always trace its wisdom to something stated in the Millionaire Next Door. Being frugal and saving isn't always about depriving yourself of the finer things. I bought a 2000 Navigator for more than $30,000 less than I would have bought it new. It still runs like new and has all of the bells and whistles that I like except for the Navigation system. So instead of going to Best Buy and buying one for $1200, I went to eBay and bought the one I wanted for $400. Now that is saving and being frugal but also enjoying life and its finer things. I have plenty of more stories like these after I decided to enjoy life and the finer things without breaking my bank account. Being frugal is simply making better financial decisions. This is what the authors were stressing. With each time I listen to the audio book I get more enlightened. I am well on my way to being the Millionaire Next Door and enjoying life in the process. |
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