Do you know how to recognize a millionaire? So you must have already imagined that these people's lives are full of luxurious cars, mansions and jewelry, right? Wrong! In "The Millionaire Next Door" authors Thomas Stanley and William Danko teaches how true millionaires live and what their secrets are.
For this reason, we have gathered, in this PocketBook4You, the main characteristics of this book so that you can apply them in your daily life, and, who knows, maybe not become the next millionaire.
So, let's go!
Published in 1996, the book "The Millionaire Next Door" by Thomas Stanley and William Danko seeks to present the key secrets about American millionaires and how they got rich.
All content is based on over 20 years of research, interviews, and data on what millionaires are like and how they live.
With this analysis, the authors discovered the 7 common secrets that millionaires have. In addition, case studies on them are presented.
Thomas J. Stanley is a lecturer, writer, and researcher. He has extensive marketing experience and is also the author of the book "Marketing to the Affluent".
William D. Danko is a professor of marketing at New York University and has had major publications in leading magazines. In addition, he is Stanley's assistant in studies of the rich since 1973.
The content of the book is ideal for you who are curious about millionaires, want to learn financial lessons to become richer and really understand who a millionaire is and how a millionaire act.
From the content presented in the book, we've put together the best strategies for you to understand all about millionaires.
Do you have no time to read now? Then download the free PDF and read wherever and whenever you want:
The authors begin with the following question: Why are a few people rich? According to them, many even receive a rich digit income, but spend all their money, besides living in debt, all because they want to display their valuable material goods.
Millionaires know how to be frugal. They have a totally simple life: they don't pay dearly for clothes and accessories, they don't have luxury cars and they don't live in mansions.
Still, during the survey data, the authors concluded that most millionaires have an annual income of less than 7% of their wealth. But then what is the secret to that?
The first point made is about budgeting and controlling expenditures, and its objectives are to minimize your revenue and maximize your unrealized income, that is, to value your wealth.
In addition, they plan all their purchases very well, trying to get discounts and promotions.
Lastly, they spend less than they earn and invest that difference.
Throughout the book, the authors use two acronyms: PWA (Prodigious Wealth Accumulators) and WSA (Wealth Sub-Accumulators). This is how they differentiate true millionaires from those they just want to flaunt.
The great start to becoming a millionaire is to keep a good record of all your spending. If necessary, you can even ask your accountant for help setting up your budget. Take advantage, and consider a tip from the authors, which is to set aside at least 15% of your income for investments.
In addition, they have clearly defined what their daily, weekly, monthly, yearly and lifetime goals are.
With this planning done, you can analyze where you can allocate your time, energy, and money so that they bring more value and wealth to you. After all, these features are limited.
During the studies, the authors concluded that while PWAs invest in fast-return stocks and are constantly moving, WSAs spend twice as much time planning and managing, investing more in the long run and conserving their stocks.
Thus, there is much more than the positive correlation between combination and planning, between investment and wealth accumulation.
In this part of the book "The Millionaire Next Door", the authors Thomas Stanley and William Danko tell us a bit about the millionaire vehicle buying habits. This gives us a lot of insight into rich people.
Thus, research shows that only 23% of them buy new cars, and most have not bought cars in the last two years. They buy used cars at a much lower price compared to new and luxury cars.
So the strategy is simple to understand: the difference in value between the simple vehicle and the luxury vehicle is the value they invest in their business.
Oh, and make no mistake thinking that there is no happiness who leads such a simple life because, in research, most PWAs love what they do and how they live and have great financial security.
A very interesting fact that the authors present is that 80% are rich first generation, that is, those who have not received inheritances or help from their parents.
And the idea of this concept prevails in the minds of millionaires, causing their children to receive less, invest more, and consequently accumulate more. After all, when parents help their children financially, they tend to invest less and are more dependent on credit.
Although parents have these attitudes, they end up spending a lot with their children on medical and educational expenses.
If you want your children to become productive adults, you need to follow some recommendations from the authors; they are:
In this lesson, we will share with you the 10 rules the authors listed so that you, the millionaire, will have productive and economically self-reliant children; they are:
According to the authors Thomas Stanley and William Danko, in the very near future, the world will possess more wealth. This also increases the opportunities to excel in solving the problems of the rich and their heirs. After all, you have to follow the money.
Thus, the main functions that should be highlighted were listed in the book and are presented below:
When it comes to occupations, millionaires have several characteristics in common; the main ones are:
Moreover, another interesting fact that the authors present is that married people accumulate more wealth. But pairs have to be frugal, as wealth cannot be accumulated when one of the couple's members is a hyper consuming person.
For Robert Kiyosaki, bestselling author "Rich Dad, Poor Dad", the journey to enrichment should begin as early as possible, and it involves assessing your finances, setting personal goals and finding the knowledge you need to achieve your goals.
For Jill Schlesinger, author of "The Dumb Things Smart People Do With Their Money", people should not invest their money in what they do not know. Good planning and in-depth knowledge of where to invest is required. Also, it is important that the investment makes sense for your life purpose in some way.
Finally, in the book "The Total Money Makeover", author Dave Ramsey gives the following tip: While you know you need to adjust your financial situation, you can't change everything at once. So, one step at a time; this way you will make gradual progress and stay motivated without radical changes in the short term.
With the completion of the presentation of the 7 lessons, we can conclude that it is possible to become a WSAs even if you have a low income. But for this, it is necessary that you invest correctly the money earned.
Lead a life with perseverance, hard work, planning, and discipline. All of these behaviors combined with the lessons presented will lead to a change. It may not be the fastest, but we will reach the destination.