The Millionaire Next Door: The Surprising Secrets of America's Wealthy

The Millionaire Next Door: The Surprising Secrets of America's Wealthy

by Thomas J. Stanley, William D. Danko

The Millionaire Next Door is full of simple tips and tricks to help you spend less and save more. By analyzing the financial habits of many millionaires, the authors of this book managed to identify the exact behaviors that led them to their financial success. We have organized these behaviors into actions and habits that you can implement in your life, starting today!

Summary Notes


If you are willing to make the necessary trade-offs of your time, energy, and consumption habits, however, you can begin building wealth and achieving financial independence.

Wealth and income are entirely different things—you could be earning a high income, but if you spend it all, you certainly won’t be wealthy. Most people have the wrong idea about accumulating wealth; it has little to do with luck, advanced degrees, or intelligence. Rather, it’s about following a lifestyle of hard work, perseverance, planning, and self-discipline.

The key factors differentiating wealthy people from the rest are:

  1. They live well below their means.

  2. They allocate their time, energy, and money efficiently, in ways that are conducive to building wealth.

  3. They believe that financial independence is more important than displaying high social status.

  4. Their parents did not provide economic outpatient care.

  5. Their adult children are economically self-sufficient.

  6. They are proficient in targeting marketing opportunities.

  7. They chose the right occupation.

The most important thing to remember if you want to accumulate wealth is that discipline, sacrifice, and hard work are absolutely necessary.

Meet the Millionaire Next Door

They think millionaires own expensive clothes, watches, and other status artifacts. We have found that this is not the case.

Wealth is determined by owning a substantial amount of appreciable assets, such as investments, land, stocks, etc. Simply displaying a high-consumption lifestyle, such as driving an expensive car or owning a mansion, does not mean one is wealthy. 

Essentially, wealthy people will be able to maintain their current lifestyle for many years even if they stop working. Furthermore, they have confidence in their abilities to achieve and remain wealthy—they do not believe the false narrative that you must be born into wealth to achieve it.

Frugal Frugal Frugal

Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement.

The average millionaire has rarely spent more than $399 on an article of clothing—and even then, it is only for special occasions. This frugality is reflected across all their spending habits. Essentially, millionaires simply do not spend their money on lavish and unnecessary items, which is why they have so much of it. Instead, they budget appropriately, spend on necessities, and have long-term plans to ensure their financial independence.

Actions to take

Time, Energy, and Money

The earlier one starts investing one’s income, the greater the opportunity to accumulate wealth.

Begin earning and investing early on in life and you will accumulate more wealth, simply because you have given yourself more time to do so. Many people give in to the notion that wealth is measured by the material things you own, rather than your net worth, investments, and other assets. However, when you spend your money on material things, you will be left with little to invest and you will be unable to achieve sustainable wealth.

Additionally, many high-income earners assume that because they are earning a lot each month, they don’t need to budget. This is entirely false, as a solid financial plan and budget is essential to ensure you are living below your means so that you can accumulate wealth and become financially independent.

Actions to take

You Aren’t What You Drive

Money should never change one’s values… Making money is only a report card. It’s a way to tell how you are doing.

Your motivations behind your desire for wealth play a huge role in whether you achieve it or not. If you are motivated by the desire for financial independence, you will succeed. However, if you are motivated by the desire to live the good life, you will end up spending far more than you ever save—and you will not accumulate wealth. In general, those who are wealthy tend to lead lifestyles similar to when they were not wealthy. They don’t live a high-consumption life by spending on expensive cars, giant mansions, etc. After all, if you’re spending, you’re not saving—and if you’re not saving, you will not achieve financial independence.

Essentially, most financially independent and wealthy people have one major belief system in common—being frugal. They remind themselves that those who have expensive clothes, jewelry, houses, cars, etc., have little wealth.

Family Style

In general, the more dollars adult children receive, the fewer they accumulate, while those who are given fewer dollars accumulate more.

Economic outpatient care refers to the gifts that some parents give to their children and grandchildren to enable them to live a lavish lifestyle. While this is often done out of a desire to help, more often than not, this practice leads to the children and grandchildren living a high-consumption lifestyle and thereby never achieving financial independence. 

Furthermore, adult children who are used to receiving gifts from their parents tend to be reliant on them. Instead of assessing their wealth based on their incomes and spending habits, they count these gifts as part of their wealth and continue to lead lifestyles that are far out of their budget. Basically, recipients of economic outpatient care end up with poor financial habits and parents who only mean well are doing more harm than good.

Of course, there is nothing wrong with giving out gifts—if the recipient is disciplined and has demonstrated their ability to generate a decent living without relying on others for money.

Actions to take

Find Your Niche

Opportunities to serve the wealthy will be greater than ever.

There are many opportunities to become wealthy when you target the affluent and their families. This may sound like the total opposite of everything that’s been said before—after all, if the wealthy are frugal, wouldn’t you be better off targeting those who lead high-consumption lifestyles?

While the wealthy are certainly frugal when it comes to purchasing material things, they are not very price-sensitive when it comes to purchasing investment advice and services, accounting services, tax services, etc. Furthermore, the children of the wealthy who have received substantial gifts from their parents tend to be big spenders. Therefore, targeting them by providing the services that they spend big money on is a good way to accumulate wealth.

The main businesses and professions that wealthy people spend money on are:

  1. Specialized attorneys such as those who specialize in estate law, tax law, and immigration law.

  2. Medical and dental care specialists such as cosmetic dentists, plastic surgeons, dermatologists, allergists, psychologists, psychiatrists, and chiropractors.

  3. Asset liquidators, facilitators, and appraisers such as appraisers and auctioneers, coin and stamp dealers, pawn brokers, and real estate management professionals.

  4. Educational institutions and professionals such as proprietors and teachers either at private schools or those in specialized areas such as music, drama, the arts, special education, career counselling, private tuition, etc.

  5. Accountants

  6. Housing specialists such as contractors; mortgage lenders; real estate developers and agents; retailers of paint, wall coverings and home decor; marketers of home security systems; and interior designers.

  7. Fund-raising counselors such as those who conduct philanthropic research, develop targeting strategies, and offer counsel to foundations and educational institutions.

  8. Travel agents and consultants

Jobs: Millionaires vs. Heirs

There are no sure steps one can take to become wealthy.

If you feel like money is an easily renewable resource, you may be a spender and never an investor. However, if you are frugal, a conscientious investor, and you own a profitable business, you are highly likely to become wealthy. 

Regardless, there is no strict formula to become wealthy, there is only a pattern amongst the wealthy—which is, that much of their success depends on their living a frugal life while building their businesses. Plus, a certain degree of luck is always involved.

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