The Millionaire Next Door (A Review)

Millionaire Next Door Neighborhood

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What Do Millionaires Do That You Don’t?

One book that undoubtedly changed the trajectory of my life for the better was The Millionaire Next Door, by Dr. Thomas J. Stanley and Dr. William D. Danco. The premise of the book is simple: If you want to be a millionaire, act like a millionaire. If you want to do something and be good at it, study and copy those who are already good at it – this is based on a universal truth. You want to win a marathon? Train like marathon winners train. You want to be an A+ student? Study like A+ students study. The point is this: successful people, regardless of what they’re successful that, got there because they did something right, repeatedly.

Sure, there are expectations – that athlete who can run forever without breaking a sweat, or that student who aces every exam without opening the book – but those people are one in a million, so assume you’re not one to be on the safe side. And hey, if you are, all the better! The point is, I realized that to be out of debt and retire in comfort, I would need to learn how other people got out of debt and retired in comfort.

The Modern Notion of Millionaires is wrong.

So before you say, “but millionaires were born into that lifestyle and inherited their wealth,” or “but I don’t have enough money to act like a millionaire,” The Millionaire Next Door will show just how wrong the modern understanding the average millionaire really is. I’m going to give a few of my big takeaways below, but I strongly recommend you buy yourself a copy of The Millionaire Next Door, because it is full of wisdom that I just don’t have time to cover here.

What Makes A Millionaire?

This book’s authors studied wealthy people for twenty years before writing The Millionaire Next Door, and in doing so they discovered that the average millionaire looks nothing like what the movies or the news typically portray. Instead, the majority of them look just like you or me, and you’d never know how much they were worth.

In fact, successful millionaires share seven major traits:

  1. They live below their means. If they can’t afford it, they don’t buy it.
  2. Their adult children are economically self-sufficient.
  3. They prefer financial independent over high social status. They don’t care about keeping up with the Jones’s (who are probably secretly deep in debt).
  4. Their parents did not give them money or expensive gifts after they moved out of the house.
  5. They are very intentional with the way they spend their time, energy, and money.
  6. They are good at reacting to key opportunities.
  7. Their jobs allow them to build wealth. A hot-shot lawyer needs to maintain appearances with nice watches and cars, but people don’t expect much from electrical engineers.

In fact, these seven factors are how the author’s divvy up their book, talking about each in great detail, with a lot of fun and interesting stories.

It’s Actually Helpful to Have Parents Who are Not Millionaires (thanks Mom and Dad!)

Perhaps one of the most inspiring facts I read was that 80 percent of today’s millionaires are first-generation millionaires.

They weren’t the descendants of millionaires, but they worked hard, showed wisdom in their spending, and then reached millionaire status.


A million-dollar net worth is what defines a millionaire (not how much they make annually). That means adding up how much money you have in the bank, how much your house it worth, and how much you have invested for retirement, then subtracting all of your current debts (mortgage, student loans, etc.).

This obviously made me ask myself what my net worth was, and it was pretty disheartening. Not only is it not high, but it’s negative. And that’s okay, because every pay check, every bonus, every odd job I find here or there, it improves. Some people have started off worse that I and will finish better that I could ever dream, and that gives me hope.

A Little Math, a Lot of Stories

The Millionaire Next Door is rich with interviews and detailed lives of the secretly wealthy, which might be my favorite part of the book. However, I’m also a nerd, so  the few sections where they threw in some very simple math was enjoyable. But don’t worry, the math is easy and you can skip right past it if you’d rather. However, the one calculation that really stuck with me was for determining if you are an Under Accumulator of Wealth (UAW) or a Prodigious Accumulator of Wealth (PAW). Here it is:

Net Worth = (Age x Pretax Household Income) / 10

So for an example, let’s say Mr. Regular Joe is 30 years old and makes $40,000 per year, before taxes are taken out. That means he should have a net worth of (30 x $40,000) / 10 = $120,000.

Or suppose Ms. Jane Doe is 60 years old and makes $100,000, then she should have a net worth of at least (60 * $100,000) / 10 = $600,000.

If either of these two had a net worth below those values, does that make them bad people? Of course not, this is just a guideline. It does however suggest that there is likely room for improvement.

This is my favorite metric for determining wealth because it doesn’t require having a $1,000,000 per year salary to be considered wealthy. The fact is, everybody’s situation is different. If you only make $25,000 per year and accrued $110,000 for retirement by the age of 40, then you have done well. You have saved (and quite impressively) and you have become a prodigious accumulator of wealth. Anyone who can scrimp and save to provide for a secure retirement, regardless of income, deserves a trophy. Unfortunately, they just don’t teach this stuff in school.

Check Out How You Too Can Become The Next Millionaire Next Door By Just Changing Your Lifestyle

If you want to know how 80 percent of millionaires today are self-made, not by inheritance, lottery winnings, or one great idea, then this is the book for youThe Millionaire Next Door will give you the tools you need and show you the habits that millionaires live by. If you adopt these traits and live by them, there’s a better chance you’ll also become a millionaire one day. I sure know that I intend to! Also, one of the big ways keep the wealthy become wealthy is by budgeting and keeping track of their finances (which is also discussed at length in “The Millionaire Next Door”). Check out my seven steps to budgeting easily and effectively!

Have you read The Millionaire Next Door or something similar that helped change your financial outlook? Let me know in the comments below!