The Millionaire Next Door
Ratings50
Average rating3.7
Lots of good advice on how on how to safe and live within your means. Great look at how most millionaires are not driving flashy cars, but purchasing used vehicles with research.
Lots of good advice on how on how to safe and live within your means. Great look at how most millionaires are not driving flashy cars, but purchasing used vehicles with research.
Not a bad book, but it did have a tendency to beat a dead horse to make a point.
The authors sort everyone into two categories - either you're a PAW (prodigous accumulator of wealth) or a UAW (under accumulator of wealth). I tend to disagree with this binary categorization of people but can look past it for the point of the book. PAWs save money (play good offense, play good defense), UAWs are posers who want to look rich (play good offense, play terrible defense).
The book does present a neat and tidy formula:
(Income * 10%) * age = expected net worth
Actual Net Worth / Expected = % of scale
0 to 1 you're UAW
1 to 2 you're average
2+ you're a PAW
Sounds good, but as many people online have pointed out, it's really only good for people in their 50s+
The authors do seem to have some credibility, having performed most of the polling themselves, they are just a bit too number heavy in their presentation and it lead them to belabor the very simple point that if you live below your means and invest you'll accumulate wealth.
Another salient point the book seemed to beat home is that most millionaires are entrepreneurs and own their own business and play good defense, or are high wage earners (doctors, lawyers, etc) who play great defense with their money. Clearly for most people entrepreneurship is the way to go.
The book kind of meanders on, and spends way too much time on how millionaires shop for cars, how they provide too many gifts for their children, etc. It's pretty worthless information and just seemed to be trying to pad out the book.
Spend less than you make, live below your means, don't fall for high status symbols, and try to start a business.
A good reminder that appearances can be deceptive, but I didn't particularly enjoy the book, and it's not really helpful as, say, a guide to personal finance.
Updated review in 2021:
Funny how much difference 2 years can make. It reeks of survivorship bias, incorrect inferences and the studies do not meet necessary modern standards.
Still has some good ideas though, so yes people should still pick it up.
Original review in 2019 : I don't normally recommend books on Personal Finance, but this time I would like to make an exception. I urge everyone to read this book. The insights provided by the authors are invaluable.
Everything it mentions goes against what popular media tells us. Even though it does not give a point by point strategy to become a millionaire, the study they conducted is so comprehensive that you're sure to find at least one point that sticks with you till the end and helps you towards your own financial goals.
