Lessons From The Millionaire Next Door

Dear friend,

I love talking about finances because its my one of my core areas of expertise as a consultant, entrepreneur & investor. I have read loads of books on money management, attended countless number of seminars and have advised thousands of people on how to live and plan their life well if they want to attain financial independence.

One of the books have read that have shaped the course of my financial journey is The Millionaire Next Door with by Stanly and Danko. They duo interviewed over a thousand self-made millionaires and found that they had seven common traits among them. Over time these millionaires have accumulated so much wealth beyond what the ordinary man can comprehend. How did they do it? I found out from the book that they do things differently from you and me. What is it that they are doing better?

Stanly and Danko list seven common traits that show up again and again among those who have accumulated wealth:

1. They live well below their means. This is a key finding and allows for wealth accumulation. The author note “Wealth is what you accumulate, not what you spend.”

2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth. In other words, they consciously pursue the course that will build their savings as a top priority.

3. They value cash over flash. They believe that financial independence is more important than displaying high social status.

4. They did it on their own without the help of their parents. Their parents did not provide “economic outpatient care. Since they tend to be first generation wealthy, there may not even have been an inheritance.

5. Their adult children are economically self –sufficient. This means they’re not providing a steady check to their children every month to help with expenses, etc.

6. They are proficient in targeting market opportunities. The authors emphasize that a great path to becoming wealthy is by providing services – they mention remodeling – to the wealthy.

7. They choose the right occupation. With 20% of the wealthy are retirees, more than 2/3 of the rest own their own business. The self-employed “are four times more likely to be millionaires than those who work for others, note the authors.

So those are the seven traits, but this quote from the book sums up what they like perfectly:

“wealth is the result of a lifestyle of hard work, perseverance, planning and, most of all, self-discipline. Usually the wealthy individual is a businessman who has lived in the same town for all his adult life. This person owns a small factory, a chain of stores, or a service company. He has married once and remains married. He lives next door to people with a fraction of his wealth. He is a compulsive saver and investor. And he has made his money on his own.”

Great lessons from a great book. It is my hope that as you get a copy to read yourself, your life will be transformed and you will be able to build wealth simply by changing your existing behaviors and adopting some new habits.

The key to success is education. Your wealth grows when your knowledge expands. Personal commitment to long-term financial education can make you wealthy.

Cheers