Book Review: The Millionaire Next Door (Stanley & Danko)

One-liner: You can either look rich or be rich, but not both.

The Meat: Quick, conjure up the image of a rich person in your head – they’re wearing a Rolex, driving a 2014 Mercedes, and living sandwiched between Tom Cruise and that girl from the Hunger Games. The Millionaire Next Door, albeit it a bit dated, systematically breaks down this stereotype by detailing the average spending by millionaires on a variety of consumer goods.

The results? Millionaires in the U.S. (the non NFL-contract/ movie star kind who actually earn a reasonable salary or small business income) don’t…really…look…like…millionaires. They drive vehicles with a low cost-per-pound (not kidding, picture Buffett’s Lincoln Town Car!), wear inexpensive clothing, live in blue-collar neighborhoods (because many millionaires, the authors point out, are in fact successful “dull-normal” small business owners such as plumbers) and prefer Budweiser to Glenlivet.

So who’s driving those new Mercedes off the lot? CPAs, lawyers, business professionals – people who may earn an upper-middle class income, but are always spending just beyond what they bring home. The authors claim this is partly due to the demands of their chosen careers, in which stereotypical clothing, vehicles, and housing situations are much more expensive than the Budweiser variety mentioned above – people are more comfortable choosing a plumber who drives a beat up Chevy than a doctor or lawyer who owns that same car.

It all goes back to image: we’re used to classifying people based on their possessions and chosen image, without realizing that’s only a sliver of someone’s life. Entire industries even exist to fool this judge-a-book-by-it’s-cover mentality, such as rent-to-own stores and counterfeit luxury goods.

Remember, the ‘rich’ guy in the Porsche was richer before he bought the Porsche.

Take Aways:

  • Examine your motivations for purchasing aspirational goods – are you spending for the sake of impressing strangers who are likely consumed with their own self-image or not people you’d ever want to spend time with in the first place?
  • Realize that possessions stereotypically adorning the rich likely consume a high percentage of their income, furthering the earn-to-consume treadmill and stifling financial freedom.
  • Read the Mexican Fisherman Story HERE. The finer things in life likely aren’t things, but the freedom to spend time with friends and family, enjoy nature, and be free from stress and tension. Cultivate passions and hobbies that nurture these goals and you’ll slowly realize the lure of the shopping mall fades as nothing they’re selling can replace quality time in the present moment.
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