“The Millionaire Next Door” is thought provoking!
I got the millionaire next door
It basically reaffirmed my thoughts on getting ‘rich’… “Earn a lot, spend a little. Avoid debt, build wealth!”
I did like how the entrepreneurs and business owners described in “The Millionaire Next Door” had a hidden advantage over the high-income “professionals” such as accountants, lawyers, doctors etc etc. That hidden advantage was that the professionals were under social pressure to live an expensive lifestyle… they were expected to be seen, in their professional capacity, in suits, ties. They were expected to live in a “wealthy” neighborhood, with expensive cars. Their children were expected to go to private school. Whether they desired these things or not, the social pressure was there to fit in with what was expected. After all, if your accountant meets with you wearing jeans and a T-shirt, you’re not going to be impressed, are you?
On the other hand, entrepreneurs can wear pretty much what they want, when they want. I certainly do! 
Business owners, on the other hand, have the reverse pressure. If they wear sharp suits and drive luxury cars, their employees could very well resent their display of wealth. So it’s better for the business owners to act like one of the employees.
That “hidden” benefit may help explain why the high income professionals struggle to accumulate wealth whereas the entrepreneurs and business owners seem to succeed.
To accumulate wealth, you need to earn a relatively high income and spend wisely. Know the value of a dollar. Make each one work for you.
The book is well worth reading, but after the initial point is driven home (to accumulate wealth you have to earn a relatively high income, spend frugally and live quite a long time) along with another good point (minimize your taxable income and grow your non-income producing assets) I felt the book ran out of steam. It talks about “how the wealthy buy their cars” and “inter-generational transfers of wealth and what it means to the recipients” for what seemed like most of the second half of the book.
November 13th, 2006 at 6:10 pm
Neil,
A personal observation. What separates the average pedestrian from the wealthiest has less to do with lifestyle than attitude toward money. The observations made in “The Millionaire Next Door” are a by-product of attitude rather than a contribution toward wealth.
People with ‘old money’ see money as a tool. As any good carpenter will tell you take care of your tools and your tools will take of you. The average person sees money as a means to an end. Give a typical kid a hand full of cash and he see an iPod. He won’t see the potential of that money and he certainly won’t see that money as a responsibility.
It took me a long time before realizing what was meant by seeing wealth as a responsibility. I’m still not sure that I grasp the whole subject.
November 13th, 2006 at 6:28 pm
Hi Rick,
Interesting comments, thanks. You’re right, attitude to money will play a huge role in whether or not we end up wealthy. If we respect money, we’re likely to have it work for us. If we don’t, we’ll likely work for it.
Regarding The Millionaire Next Door, I think it’s important not to turn into Scrooge overnight. The trick is balancing spending some money without being frivolous and saving money without being overly tight. I guess that comes down to getting value for money and not buying “status symbols”.
November 21st, 2006 at 1:11 am
“Status Symbols.” Exactly! When you’ve got it there is no reason to flaunt it. Bling is for the wannabes or the nouveau rich.
November 26th, 2006 at 7:08 am
I loved the book the millionaire next door. It seemed like it was more common sense than being brilliant. I too have moved from the corporate world to the working for myself world. But overall, we still work for the customer in my mind. No customers, no business.
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