Nagel Family Website

My notes from The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko

The book opens with an overkill of stats & figures which I feel could have been summarized more. The lengthy opening does, however, provide some key tidbits of information, starting with Wealth.

• Wealth is what you accumulate, not what you spend
• Wealth is the result of hard work, perseverance, planning and self-discipline.
• Wealth is accumulated by minimizing taxable income, and maximizing non-taxable (unrealized) income

So who is wealthy? Does it require $x in the bank? If you’re making $5mm / year and have $1mm in the bank, are you wealthy? If you’re making $25k / year and have $300,000 in the bank, are you wealthy? See the difference? The magic number isn’t the same for everyone, but the formula generally is.

Wealthy = (age * annual income) / 10

So take a 30-year old making $65k / year. You’d be considered “wealthy” if your net worth (assets - liabilities) is greater than or equal to $195,000.

Your time, energy, and money must be allocated efficiently.

There’s this analogy about joggers. Goes something like:

Those who do not need to run do so, and that is why they do not need to run

Related to finance, those who do not have to worry about money spend time managing it, while those who worry about money do not manage it. How much time do the “wealthy” spend on managing their finances? On average, 8-1/2 hours per month.

There’s a long chapter about buying cars, which I mostly skipped. The gist of it is to buy a 2-3 year old car, pay cash, and keep it for a long time.

I also skipped the chapter about how to target the rich and what services they do spend money on, and only skimmed the chapter about businesses the rich own. Those really didn’t apply to me. In fact, the rest of the book I just skimmed through. I lost interest, as it was all about habits & demographics of existing millionaires.

If you’re looking to build wealth, this book is not for you. If you’re looking to identify and market to millionaires in America, then you’ll get something out of the book.

I’m just happy I got it from the library, and saved the money.

This entry was posted on Saturday, January 12th, 2008 at 12:34 pm and is filed under Books. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.