The Millionaire Next Door Summary, Review PDF

Quick Summary: The central message of this book is that the average millionaire is not all glitz and glamor from the silver screen. Many of them live far below their means, investing carefully, budgeting their resources, and using them wisely. You too can become a millionaire if you follow these basic rules regularly.

The Millionaire Next Door reminds you that you too can follow in the footsteps of many millionaires if you are dedicated and smart enough to manage your money well.

In this book, you’ll learn why the man who drives a Bentley actually makes less money than you; when you can start investing money; and why lazy kids get the biggest piece of their millionaire parents’ pie.

You may be wondering if you should read the book. This book summary will tell you what important lessons you can learn from this book so you can decide if it is worth your time.

At the end of this book summary, I’ll also tell you the best way to get rich by reading and writing

Without further ado, let’s get started.

The Millionaire Next Door Book Summary

Lesson 1: Most millionaires have budgets and stick to them. 

The vast majority of millionaires amassed their fortunes through careful saving and investing. They decide what they want to achieve financially and then devise a plan to get there. A millionaire couple can invest 25% of their monthly pre-tax income with a million dollars and a plan.

They can outline their monthly spending on necessities such as food and clothing, as well as discretionary items such as travel and entertainment, in this section. The agreed-upon budget is strictly followed. They won’t be able to meet their budget unless they do this.

If you want to become a millionaire like Thomas C. Corley, he suggests cutting costs everywhere you can, including your lifestyle. He recommends sticking to a strict budget and has established guidelines for various types of spending to accomplish this. To be in compliance with this rule, a household’s total housing expenses, whether for a home purchase or rental, must not exceed 25% of its annual income.

When it comes to going out to restaurants, movies, or concerts, the general rule is that this type of entertainment should not exceed 10% of one’s monthly income. Another rule states that car expenses should not exceed 5% of a family’s monthly after-tax income. Even if they have a six-figure annual income, some people find this difficult.

Corley believes that leasing a car is a bad idea because the lessee owns nothing at the end of the contract. Avoid incurring credit card debt at all costs. Another rule of thumb is to save as much as possible in a tax-deferred retirement account provided by your employer.

Many multimillionaires are extremely careful with their money, and as a result, they most likely have their own categories and spending limits for each. Corley’s guidelines are a good starting point for discussions about how much money a family should allocate to various spending categories. Corley understands the importance of budgeting from personal experience. Before they suffered a devastating loss, his family was a multi-millionaire.

Lesson 2: Most millionaires are self-employed.

About two-thirds of the millionaires in the United States own their own businesses. The vast majority of these businesses are not in the high-profile industries of entertainment or cutting-edge technology. They are the kinds of businesses that everyone needs, such as those that fix plumbing and electricity, and those that repair cars and build roads.

Many professionals, such as doctors, dentists, lawyers and accountants, are self-employed, as are owners of “boring businesses,” as the authors of The Millionaire Next Door call them. What these business owners and the self-made millionaires they feature in their book have in common is a desire for autonomy and control over their financial futures.

The new generation of self-made millionaires is known as “millionaire kids.” They are young people, usually teenagers or preschoolers, who have a breakthrough idea, execute it perfectly, and make millions in income before they reach the age of majority. Not surprisingly, many of them run online businesses or sell their goods online.

Ashley Qualis from Detroit is one such person. Ashley had many years of experience in web development. In 2004, she decided to show the world her talents by setting up the WhateverLife.com website. Few people visited her MySpace page until she started giving away free layouts to her fellow middle school students.

Her custom designs quickly became popular due to positive word-of-mouth, and business grew until 2005, when she joined Google’s Adsense program and saw a significant increase in revenue. Google places ads on her website, and she receives a percentage of the revenue generated by those clicks.

As the popularity of the website grew, many companies approached her about placing ads on the website. This allowed it to increase its revenue even more. The website now generates millions of dollars in advertising revenue every year.

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Lesson 3: Most millionaires attach more importance to financial independence than to a luxurious lifestyle.

Millionaires usually don’t put much stock in flaunting their wealth or caring what other people think of them. They don’t care about the nice things in life that money can buy, like furniture, cars, and clothes. They see the potential for the present and future comforts it can bring them, and that makes it very important to them. The plan is to have enough money to live comfortably for a lifetime, even in old age. That’s what money needs to be spent on.

In contrast, the vast majority of people care about how they appear in front of their friends, family and colleagues. This requires spending money unwisely on things like expensive houses, cars and clothes.

Many people who’ve amassed a million dollars don’t spend nearly as much of it as the common stereotype suggests. There are some extremely wealthy people who choose to spend very little. Facebook co-founder and CEO Mark Zuckerberg lives in a mansion in Palo Alto, California, that’s worth $7 million.

With a net worth of $33 billion, Zuckerberg could easily afford a much more expensive home in California than the average price of $7 million. Zuckerberg also owns a $30,000 Volkswagen. And he never strays from his uniform of gray T-shirt and hoodie. Warren Buffett, the second or third richest person in the world, has lived in the same middle-class neighborhood in Omaha in a modest house for decades.

At restaurants, he always orders a hamburger. People like Zuckerberg and Buffett, who’re among the richest people in the world, invest their wealth rather than spend it. The majority of the world’s millionaires try to emulate them.

Lesson 4: Most millionaires did not receive financial assistance from their parents to start their businesses.

Most millionaires did not get their parents to pay for their higher education, even though many of them have degrees from prestigious institutions. Their parents either did not have the financial means to support their children while they were studying or starting a business, or they chose not to.

There were cases where parents offered financial support to their children so that they could pursue higher education or start a business, but the children declined the offers. The reason was that the parents expected too much in return for their financial support, such as telling their children what career path to take, what kind of business to start and how to run it.

Poverty-stricken teen John Paul Dejoria now lives at PAW Los Angeles. His mother was a single mom who worked hard to make ends meet. He and his brother began working to support their family when they were just nine years old, selling newspapers and Christmas cards.

Even though the refrigerator was full of food, she lied to the boys and said she only had 27 cents. Dejoria realized he could not use his family’s wealth to start a business. After a series of hopeless jobs, he joined the Navy and, in 1980, co-founded Paul Mitchell Systems with hairdresser Paul Mitchell. Shampoo was one of the many items he sold from his RV.

Dejoria and Mitchell’s business grew and became a major player in their field. A few years later, Dejoria co-founded Patron Spirits Tequila Company and made numerous investments in other businesses.

Over time, he amassed a fortune of several billion dollars. The realization that he had to take everything into his own hands was the driving force behind his early success. He became a major benefactor to children’s charities such as orphanages and food banks after reflecting on his own difficult upbringing.

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Lesson 5: Most millionaires are big investors.

Most millionaires invest 20% of their annual income in various investments such as savings accounts, stocks and real estate. True millionaires often invest their money in the stock market. Although this involves some effort, they conclude that the end result is worth the effort. One of the main goals of saving and investing is to ensure a comfortable retirement.

People want to make sure they have enough money to live comfortably in retirement, but to do so, they may have to give up some comforts or keep their job when they should be enjoying themselves.

For this reason, wealthy people are always on the lookout for promising new investments, especially in the stock market and real estate market. They study the situation thoroughly, consult with experts, and then act. And instead of selling their investments after a year or two, they hold on to them for a long time.

Warren Buffett is a prime example of successful investors around the world. The billionaire has achieved his wealth by owning several companies and investing heavily in others. He invests his money in companies with which he is familiar. Many of them produce or supply goods or services that are used by everyone, such as Coca-Cola, or companies that have little competition, such as railroads, which dominate certain regions of the United States.

He also invests his money in companies that provide services or goods that he values, such as Dairy Queen franchises. He keeps his stocks for a long time unless there are major changes in the company, industry or economy. Buffett especially stays away from technology stocks, which he considers a fad and does not fully understand.

Investors made fun of Buffett when he resisted buying technology stocks during the dot-com bubble of the late 1990s and early 2000s. They felt that he was missing out on huge profit potential. When the technology bubble burst on March 10, 2000, many investors lost a lot of money.

In 2011, however, Buffett invested in technology companies for the first time. In September of that year, his company owned more than 68 million shares in International Business Machines.

Although most investors will never match Warren Buffett’s success, they can still learn from his strategy by buying less exciting stocks that offer products or services that everyone needs and holding them for the long term.

Lesson 6: Most millionaires have lower income tax rates

Millionaires pay lower income taxes because their income is good but not spectacular and they rarely sell investments to avoid income taxes.

A high tax rate can limit people’s investment options because it eats up a large portion of their money. The average millionaire pays only 7% of his or her income in taxes, according to the authors of The Millionaire Next Door.

One reason is that most millionaires own their own businesses, which reduces their taxable income. Another reason is that millionaires generally do not sell stocks, real estate or other assets that would increase their tax liability.

Much has been written about large corporations in the United States using dubious strategies to pay little or no taxes. Much has also been written about wealthy individuals using tax havens like the Cayman Islands to avoid paying taxes in the United States. The majority of Americans are outraged by these practices, which they view as unethical and immoral. In the United States, typical middle-class earners pay up to 30% of their income in taxes.

One reason is that they do not have the same deductions for business expenses as a typical millionaire. And unlike millionaires, many people who buy stocks, bonds, and real estate sell them quickly rather than keep them.

When they sell, they must pay income tax on the difference between the price they paid for the investment and the price they sold it for. Many taxpayers mistakenly believe that they have no control over their tax bill and that whatever happens will happen. Millionaires are smarter than that. They plan their finances so that they can reduce their tax burden.

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The Millionaire Next Door Review

The Millionaire Next Door is entertaining because it is easy to understand. The authors provide a wealth of data on millionaires, including demographics, occupations, and spending habits. Yet they do not overwhelm the reader with numbers.

The book consists mainly of the authors’ inspiring anecdotes about their encounters with millionaires and would-be millionaires. The juxtaposition of two people with the same or similar professions, one with a high net worth and the other not, can make for very interesting reading.

The authors examine the lifestyles and choices of these millionaires in depth to identify the key factors that led to the success of one and the failure of the other. The narratives were not chosen at random. The authors deliberately selected each example.

The life of the average millionaire isn’t as glamorous as it’s portrayed in the movies. Many people successfully keep their expenses down through careful planning, budgeting, and saving. You, too, have a chance to become a millionaire if you follow these guidelines diligently.

The next time you get a bonus or a raise, don’t buy a bunch of expensive new stuff right away but save the money. Put it aside and watch it grow over time.

About The Author

According to Stanley and Danko, when they first started researching millionaires, many of their findings surprised them. They were business professors at the time, and their research could have been used to write an academic book. Instead, they decided to write The Millionaire Next Door, a book for a general audience. It was a best-seller, as was Stanley’s second book, The Millionaire Mind.

Dr. Thomas J. Stanley was a business theorist who taught at the University of Tennessee and The University of Georgia. He spent the majority of his career studying the wealthy in the United States and authored or co-authored numerous books on the subject. On February 28, 2015, Stanley was killed in a car accident.

Dr. William D. Danko has spent 31 years at the State University of New York’s University at Albany. He made a career out of teaching marketing while also researching consumer spending, particularly as it relates to wealth accumulation. As a result, he collaborated on The Millionaire Next Door with Dr. Thomas J. Stanley. The book, which was first published in 1996, was on the bestseller lists for three years.

Quotes

“If your goal is to become financially secure, you’ll likely attain it…. But if your motive is to make money to spend money on the good life,… you’re never gonna make it.”

 

“Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that’s why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.”

 

“Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.”

 

“One of the reasons that millionaires are economically successful is that they think differently.”

 

“Most people will never become wealthy in one generation if they are married to people who are wasteful. A couple cannot accumulate wealth if one of its members is a hyperconsumer.”

View our larger collection of the best The Millionaire Next Door quotes.

Buy The Book

If you want to buy the book The Millionaire Next Door, you can get it from the following links:

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