The Millionaire Next Door - The Surprising Secrets of America'a Wealthy.
This is a great book by Thomas J. Stanley and William D. Danko first published in 1996.
The basic premise is that the two authors were recruited to study the spending habits of millionaires so that they could market to the affluent. What they found was surprising in that most millionaires don't fit the typical stereotype of what the average person thinks a millionaire is.
The typical media presentation of the ultra rich sports start, hollywood actor, or heiress is by far the exception to the rule. Most wealthy people in America got there by hard work and being frugal. As a result the average millionaire does not live in a mansion, in fact they typically live in normal neighbourhoods (hence the title). Usually they will drive a modest car and don't buy status symbols (eg Warren Buffet the second richest man in America still lives in the modest Omaha house he bought for $31,500 in 1958 and drives a Cadillac he bought "about 6 or 7" years ago). Interestingly, two out of three purchasers or leasers of foreign luxury motor vehicles in America are not millionaires. Now when I pass a nice car on the street I think of the 2 different people that could be driving it. Most likely it is someone that has purchased the car as a status symbol (even though they probably have less net worth than me, driving my 15 year old hatch back) and I feel sorry that they haven't realised that they are wasting their money buying a flashy car. However it might be someone who does have a lot of money saved and they are enjoying their retirement and I give them a quiet congratulations on their success.
The book goes on to talk about high income earners (and often high spenders), vs high net worth individuals and analyses their occupations and spending habits. They also look at the spending habits of the children of high income (low net worth) households. By providing their children with everything they want it creates a problem when the children become adults as they are accustomed to a lifestyle that they cannot afford, unless they also become high income individuals.
I really enjoyed reading this book (even though it is a little outdated and is based on American incomes). If you don't wish to read the whole book there is a summary of it on wikipedia, but I don't feel that the summary has the same impact.
It is a book that changed my outlook on becoming wealthy. If you are wealthy how can, or how should you spend your money?
To become wealthy you need to spend less. Spending less does not mean you are denying yourself life's pleasures. In fact it is the opposite. The money that you save is buying you something priceless - freedom.
Being frugal can be a challenge but it should still be an enjoyable one. I hope to see you all become "PAW's". Then join me when we retire early.
This is a great book by Thomas J. Stanley and William D. Danko first published in 1996.
The basic premise is that the two authors were recruited to study the spending habits of millionaires so that they could market to the affluent. What they found was surprising in that most millionaires don't fit the typical stereotype of what the average person thinks a millionaire is.
The typical media presentation of the ultra rich sports start, hollywood actor, or heiress is by far the exception to the rule. Most wealthy people in America got there by hard work and being frugal. As a result the average millionaire does not live in a mansion, in fact they typically live in normal neighbourhoods (hence the title). Usually they will drive a modest car and don't buy status symbols (eg Warren Buffet the second richest man in America still lives in the modest Omaha house he bought for $31,500 in 1958 and drives a Cadillac he bought "about 6 or 7" years ago). Interestingly, two out of three purchasers or leasers of foreign luxury motor vehicles in America are not millionaires. Now when I pass a nice car on the street I think of the 2 different people that could be driving it. Most likely it is someone that has purchased the car as a status symbol (even though they probably have less net worth than me, driving my 15 year old hatch back) and I feel sorry that they haven't realised that they are wasting their money buying a flashy car. However it might be someone who does have a lot of money saved and they are enjoying their retirement and I give them a quiet congratulations on their success.
The book goes on to talk about high income earners (and often high spenders), vs high net worth individuals and analyses their occupations and spending habits. They also look at the spending habits of the children of high income (low net worth) households. By providing their children with everything they want it creates a problem when the children become adults as they are accustomed to a lifestyle that they cannot afford, unless they also become high income individuals.
I really enjoyed reading this book (even though it is a little outdated and is based on American incomes). If you don't wish to read the whole book there is a summary of it on wikipedia, but I don't feel that the summary has the same impact.
It is a book that changed my outlook on becoming wealthy. If you are wealthy how can, or how should you spend your money?
To become wealthy you need to spend less. Spending less does not mean you are denying yourself life's pleasures. In fact it is the opposite. The money that you save is buying you something priceless - freedom.
Being frugal can be a challenge but it should still be an enjoyable one. I hope to see you all become "PAW's". Then join me when we retire early.