The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J Stanely Ph.D & William D. Danko Ph.D.: is an interesting read about how the average American Millionaire can be found living right next door. This book is for you if you are interested in a 20-year study on millionaires and their behavior that was published in 1996.
Pairs With: any type of milk chocolate because you don’t hate it but it could be better.
Overview
The Millionaire Next Door by Thomas Stanley and William Danko is about how most American Millionaires are everyday people living right next door to you. People that you would never guess are millionaires because they don’t drive flashy cars or live in big homes.
Stanley and Danko collected data and conducted various surveys over 20 years and found that there were seven common factors for millionaires:
- They live well below their means.
- They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
- They believe that financial independence is more important than displaying high social status.
- Their parents did not provide economic outpatient care.
- Their adult children are economically self-sufficient.
- They are proficient in targeting market opportunities.
- They chose the right occupation.
Choosing the “right” occupation sounds fairly vague.
The Average Millionaire
The authors were also able to form a picture of what the average millionaire in America looked like in 1996 when this book was published.
They found that most likely they were:
- 57-year-old males, married with 3 children who earn 80% of the household income.
- 1/5 of them were retired.
- 2/3 were self-employed.
- “Interestingly, self-employed people make up less than 20% of the workers in America but account for two-thirds of the millionaires.”
- About 50% of their partners do not work outside of the home.
- The number one occupation for wives who do work is teachers.
- They live on less than 7% of their wealth.
- 97% are homeowners.
- 50% have occupied the same home for more than 20 years
- “We live in homes currently valued at an average of $320,000.” Which is roughly equivalent to $607,700.13 today… that sounds like a nice size home to me!
- Most drive American-made cars
- 55% of their children are currently attending or have attended private schools.
- 2/3rds work 45-55 hours/week
- Average invest 20% of their household income each year.
- They would recommend accounting, law, tax advising, or estate planning as career fields to their children.
Suspicious Discrepancies
I found the authors of this book stated one thing but then their data showed something else.
For example, they stated, “Only 23.5% of millionaires own new cars (see Table 4-1).” But then on Table 4-1, we see that 23.5% own current-year cars, 22.8% own last year’s model, and 16.1% own a 2-year-old model… So 62.4% are driving vehicles that an average American would consider “like new.” The millionaire next door is NOT in an old beater like the authors implied.
Examples like this made me feel as though the authors were trying too hard to spin the data to show that millionaires live an average lifestyle. Which isn’t really the case when we look into the data further.
I do believe most millionaires are hiding out right next door and that they aren’t all driving Lambos or living in mansions. However, that’s not to say they’re living like the average American either.
They’re still living in homes in nice areas and driving either new or 1 to 2-year-old cars.
Conclusion
At times, the picture that the authors were trying to paint and push their readers into was just too much for me. That’s not to say I hated the book because I didn’t.
I enjoyed reading all of their data and looking at the various charts they provided throughout. It gave me plenty to think about. Like how most millionaires are self-employed but how only a small amount of Americans go that route with their careers. But I also glanced over some parts because they were outdated or I felt like they didn’t share an honest picture.
Have you read this one or another one that’s similar? I’d love to know what you thought or if there’s a different one I should check out instead! Let me know in the comments below!
P.S. If you enjoyed this one you may also like Dark Money by Jane Mayer. Mayer follows the money trail of the ultra-wealthy and takes readers on a ride while showing them how the elite take advantage of tax loopholes. All roads seem to lead to the Koch brothers in this one.
