Name: The Millionaire Next Door - Book Review
Uploaded: 2016-11-08T01:39:30.000Z
Duration: 9 min 55 s
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Hey there everybody. Phil Smy again, with a book review.

Present continuous

This week I am looking at a book that recently seems to be gaining, regaining, popularity

It's called 'The Millionaire Next Door'. This book was written by Thomas Stanley and

Bill Danko and was based on a lot of surveys they sent to people who were 'the hidden wealthy'

as I like to call them. People who were financially secure or indeed

very secure or well off. But weren't visibly so. Some were of course.

It was supposedly the widest survey of it's kind of wealth in America.

They went through the results and like good little researchers they distilled it down

into seven points. That they felt that the majority of these hidden wealth shared in

common. Now of course not every millionaire shared

the same points but these were the points that they felt were the key indicators that

you were going to be, or could be, wealthy or not.

So I meant to just give you a quick summary so you could stop watching, but I didn't do

that.I'm sorry. So I'm going to do that now. Here are the 7 traits, factors, that Stanley

and Danko believed led people to be wealthy. First, they live well below their means.

In other words, they don't buy shit that they don't need.

That's the number one thing that you can learn from this book.

Don't spend money on pointless things. And you'd be surprised how much is pointless.

So number 1, they live well below their means. Number two, They allocate their time, energy,

and money efficiently, in ways conducive to building wealth. They learn about investing,

they invest, and they spend their time doing it. Their hobby is building wealth.

Number three. They believe that financial independence is more important than displaying

high social status. See point number 1. Don't buy shit you don't need. You don't need to

have a McMansion in the suburbs. You don't need to have a flash car. You don't need to

have a TV in every room. Gold plated toilet fixtures or whatever it is you're into.

You don't need it. You don't need to show other people you're

rich. Number four: Their parents did not provide

economic outpatient care. In other words, their parents were either assholes, or poor,

or both. Or they just said to their kids, you stand on your own two feet. A surprising

number of these hidden wealthy did not get any assistance from their family.

Number five. Their adult children are economically self-sufficient. In otherwords they are assholes

or poor or both. It trickled down. Their parents didn't give them help so they don't give help

to their children. And that seems to be the best things to do.

Number six. They are proficient in targeting market opportunities. What the hell does that

mean? It means, they get their money from people who already have it.

So if you're going to be an accountant, be an accountant to wealthy people. If you're

going to be a lawyer, be a kind of lawyer that makes money. If you're going to do, as

Graeber says, bullshit jobs, make sure you get the money from wealthy people. Or target

the higher end. Go somewhere where the profit margin is high. You can be in any sector,

and indeed the people in this book are from A-Z for their occupation. In fairness I don't

there's someone who's occupation starts with a Z. But they're in every kind of occupation

so it's not about which occupation you choose, it's about how you practice that occupation.

But number seven is They chose the right occupation. They found something that makes money, but

doesn't require status. An interesting thing is that there's not so many doctors on this

list. Or dentists. Because doctors and dentists tend to spend their money on status. So they

don't have the money in the bank that you probably think they do.

So those are the seven points. I'm just going to whip over them again, without

any peanut gallery comments from me. 1. They live well below their means.

2. They allocate their time, energy, and money efficiently, in ways 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 market

opportunities. 7. They chose the right occupation.

Those are the seven things. You do those seven things, you keep them in

mind, and you too can be wealthy. I honestly believe that.

But what I did learn from this book is that this methods works best if you start early.

If you think about this in your 20s or maybe, maybe your 30s.

So, if you're my age, you're pretty much screwed as far as 'The Millionaire Next Door' process

goes. So, as I was reading this book, I was thinking

oh that's a good idea, too bad I didn't do that 30 years ago. That's a good idea, too

bad I didn't do that 20 years ago. This kind of thing.

And I think that, um, if I'm totally honest, it was pretty depressing reading for me.

So, yeah, I hope you're young and I hope you just follow these things and you too can be

wealthy. Don't chase the easy money. And don't buy the flash car.

But they come up with a couple other things I want to chuck in here.

They came up with this idea of an accumulation ratio. Or wealth ratio.

How much money you should have. And their formula is, you take your age, multiplied

by your realized annual pretax income for all sources except inheritance, in other words,

you take your age, you multiply that by how much money you make a year, and then you divide

it by ten. This is what your net worth should be. So

take your age, let's say you're 20. Let's say you make $30,000 a year. So your net worth

should be 60 grand. Is that right? Something like that.

And if you are under that if you've accumulated less than that you are a UAW. Which is not

United Auto Worker. You are an under accumulator of wealth.

If you have about that much you are an average accumulator of wealth. AAW.

And if you have more than that, double at least, or more, you are a PAW. A Prodigious

Accumulator of Wealth. And it's words like that that make you think the book was written

a lot earlier than 1996. Prodigious. You uses the word prodigious any more?

I would have said SAW. Super accumulator of wealth!

But anyway. Also this job talks about a good job being

a travel agent, which makes me wonder. This book, one of the downsides of the book

apart from the fact that it's depressing if you're old, is that the book is filled with

anecdotes. Filled and filled and filled with people with their pseudonyms and all the rest

of it. And a lot of them don't hold up over time. And just unnecessary. It felt like padding

to me. I think the goal of the book was really to

say to people that you can be wealthy. Do these seven things and they're things that

are not genetic or hereditary, or based on your circumstance, they are based on action.

And if you do these things you too can be wealthy.

But other than that, my thing is, I would say don't read the book. I've given you the

seven tips. That's all you need. I read it, so you don't have to.

You're welcome. General idea is good, it's backed up by data.

I totally believe that those 7 things are the key but don't read the book.

All right, that's all for now, see you soon. Thanks.