The Millionaire Next Door

Who’s the millionaire next door? According to the research, the truly affluent in America has seven unique characteristics common to all of them. Here are some excerpts and some commentary from the book, Millionaire Next Door. This is a must-read book for any aspiring millionaire.

• The millionaire next door lives well below their means: Contrary to popular belief, frugality is the foundation of wealth. Mundane consumption habits, void of luxury automobiles, boats, and fancy clothes don’t impress the neighbors, but then, impressing the public isn’t the goal of most first-generation millionaires. Financial independence is. In many cases, it’s the high five and low six-figure earners that buy the luxury cars and living beyond their means

• The millionaire next door allocate their time, energy, and money efficiently, in ways conducive to building wealth: The wealthy know how to budget their time and money. They anticipate and plan their incomes and expenses — often as much as a year in advance. They spend significant time researching their investments. They spend time examining ways to increase their unrealized income; i.e., tax-advantaged investment accounts. They don’t spend much time researching and purchasing do-dads like a big screen TV.

• The millionaire next door believes that financial independence is more important than displaying high social status: The wealthy aren’t interested in status vehicles or other showy products. After all, it is much easier to appear wealthy than it is to be wealthy.

• The millionaire next door has parents that did not provide economic outpatient care: Statistics demonstrate that the more financial assistance an adult child of affluent parents receives, the less likely it is that that adult child will become financially responsible or especially wealthy. Generally speaking, the more dollars adult children receive, the fewer they will accumulate. After all, it’s much easier to spend someone else’s money than your own.

• The millionaire next door  has adult children that are economically self-sufficient: “The role of enlightened parents,” the authors write, “is to strengthen the weak.” They found that cash gifts from affluent parents to their adult children serve dual outcomes: They act to increase the children’s dependence upon the parents for continuing financial support, and they continuously deplete the parents’ financial position.

• The millionaire next door is proficient in targeting market opportunities: Finding specific niches and exploiting them is often the key to generating an above-average income. Most don’t act quickly and seize opportunities when it comes along. Many get wrapped up in paying the bills and bogged down in the routines of life rather than looking for a business that will create a fantastic future.

• The millionaire next door chose the right business or occupation: Profitable industries abound. But just because a business is profitable doesn’t mean its owners and employees will become wealthy and affluent. Wealth is generated through talent, desire, and discipline. There are about four times as many millionaire entrepreneurs as there are millionaire employees. Maybe it’s because:

Many employees are working jobs that they don’t like. But even employees can create a millionaire mindset. Maybe part of the true measure of success is when you love what you do every day, you don’t try to impress others with status symbols, and your favorite restaurant is not TGIF.