My Review 4/5

Book focuses on how PAWs (prodigious accumulators of wealth) build their fortunes over a lifetime. Author offers a new measure of wealth: not the showmanship of flash purchases, but the expected net worth value based on age and income. Flashy spenders tend to have low reserves of money, or as a Texans says “All hat and no cattle”. (UAW) under-accumulator of wealth

Book originally published in 1996 so fiscal data seems dated. Also their studies are biased towards the type of thrifty millionaires that would accept money to take an hours long survey. Heavy emphasis on frugal, thriftiness and living within means. Having a “go to hell fund” that can last the individual 10 or more years without any additional earned income.

7 factors of PAW:
1. live well below their means (save at least 20% per annum)
2. Allocate time, energy, money efficiently. Planning, budgeting, cash flow.
3. Believe in financial independence more than displaying wealth. Shop at JCPenney for off the rack suits
4. Parents did not give them lots of money
5. Children are not dependent as adults
6. Proficient at targeting opportunities. Business and stock
7. Choose the right occupation

First few chapters in and have noted that while bread-winners (typically men) play great offense at building wealth. Many report that their wives are more frugal than they. This great defense keeps the money and builds wealth. Another note is the “dull-boring” nature of much of the wealth building strategies: discipline, frugality, dedication, hard-work.

Book heavily focuses on how accumulating wealth is primarily a lifestyle focus. Stay away from luxury brands and you’ll do better. Another interesting observation is that many first-generation wealthy individuals started their own business, but they do not want that hardship for their children. So they pay for higher education and encourage their kids to enter professions of service. Think CPA/Finance, Lawyer, Dentist/Doctor. In the words of one millionaire who survived the Holocaust: “They can take your equipment, land, and money, but they cannot take your intellect”. Or as I’ve heard “Knowledge never burdens you and you can give it away and still retain it”.

Not as many ‘hard’ facts for a finance book. The section I found most interesting was how to transfer wealth from one generation to the next. The single most important investment is an education. After that children of wealthy individuals would do better to foster an independent life, free of economic outpatient care (EOC). Children who grow up and cannot see the difference between their parents wealth and their own set up for lifelong fiscal sustenance problems.

This book reminded me a lot of advice that my grandfather had given me over the years. Several times I swore it was him speaking and not the narrator. Later focus good on disseminating wealth obtained by being a PAW in the later chapters of the book. It’s certainly worth reading and recommending, but the heavy injection of 1996 finance dates the book.

Date Read

2016/01/27

Date Added

2016/09/27

Goodreads book information

The Millionaire Next Door: The Surprising Secrets of Americas Wealthy by Thomas J. Stanley

https://www.goodreads.com/book/show/1735043

Bookshelves: business

Author’s Note

Initial md Generated using https://github.com/jsr6720/goodreads-csv-to-md

Thomas J. Stanley, The Millionaire Next Door: The Surprising Secrets of Americas Wealthy, William D. Danko Simon Schuster Audio 2000 (Audio CD)1

Significant Revisions

tags: 2016, book, review, Stanley, business

  • Apr 22nd, 2024 Converted to jekyll markdown format and copied to personal site
  • Jan 27th, 2016 Originally published on goodreads

EOF/Footnotes

  1. ISBN: =”0743517822” ↩