Book Summaries

The Millionaire Next Door

By Thomas Stanley and William Donko

A list of characteristics of the wealthy: 

• They live well below their means.
  • Three words for style of their living: frugal, frugal, frugal.
  • You can support a lavish lifestyle only when you continue having the big income, but what happens when the income changes.
  • Most people are debt prone and spend all their earnings today.
  • You cannot accumulate wealth if you are a high spender.
    1. Does your house run on a budget?
    2. Do you know how much your family spends each year on food, clothing and shelter?
    3. Do you have a series of weekly, monthly, and annually life goals?
    4. Do you spend a lot of time planning your financial future?
    5. Too many people live from paycheck to paycheck.
• They allocate their time, energy, and money efficiently.
  • Learn to save.
  • Do not let your children think it’s your job to pay for all they do. Teach them about finances and how to both make and use money. 
  • The majority of millionaires do not watch the stock every day. They place it, have time to watch it, and let it be.
• They believe that financial independence is better than displaying high social status.
  • Many people spend money before they have it — they want to look good.
  • If you make money to spend money, you will not obtain financial security or financial independence.
  • Money should not change your values. Money is only your report card, it shows how you are doing.
  • Live below your means 
  • Parents that subsidize their children’s lifestyles will hurt them in the long run. 
• Their adult children are economically self sufficient.
  • Many adult children that were unemployed earlier still depend on their parents to subsidize their living.
• They are proficient in targeting marketing opportunities.
• They chose the right occupation.
• Here are some things that millionaires have told their children to make them successful: 
  • They never told them that they are wealthy.
  • No matter how wealthy you are, teach your children to be disciplined and frugal.
    • Waste not want not. Close the front door, Don’t let the heat out. Say yes to help those in need.
  • Be sure that your children do not know you are affluent until they are grown and disciplined. If your children are to make a good purchase, they should find a good portion of it themselves.
  • Minimize the discussion of what your children and grandchildren will inherit.
  • Never give financial gifts to your adult children as a form of negotiation or agreements, give out of love and because you want to.
  • Stay out of your adult children’s family matters. 
  • Don’t try to compete with their children. Don’t post about your achievements. Don’t start any conversation by saying, “when I was your age I already had…”
  • Always remember that your children are individuals, they will differentiate in many ways.
  • Teach your children to achieve, not just consume. Don’t chase money.
  • Tell your children that there are many other things better than money; family, health, happiness, etc.