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- Book Name: The millionaire next door
- Authors: Thomas J. Stanley
- Pages: 272
- Publish Date: 1996
- Language: English
- Genre: Personal finance, entrepreneurship, business, investing, economics
We all want to be rich. We all want to know the one secret that all the rich share. But would you believe that in reality, it is simple habits that lead us to a huge bank balance?
The Millionaire Next Door by Thomas J. Stanley, In this book, the author examines the general characteristics of millionaires, debunks the myths associated with millionaires and gives us a detailed view of what a real millionaire is like.
The Millionaire Next Door was published in 1996 and has sold over 3 million copies to date. Dr Stanley wrote more than 40 published articles dealing with America's wealth.
His work has been discussed in The Wall Street Journal, The New York Times, Forbes, Fortune, Time etc. as well as in the national media. As for William, he is the co-author of this book. Bill Danko earned emeritus status at the State University of New York, Albany, in 2007 after serving 31 years as a marketing faculty.
What is it that makes someone a millionaire? Most of us consider the number of material possessions to be the basis of one's wealth. However, to be a millionaire one does not have to have a plethora of material possessions.
Rich people don't show their money. What car they drive, how they dress or what watch they have on their wrists, you cannot tell that they are rich. As far as this book is concerned, the author considers those with an annual income of 1 million US dollars as 'rich. For India, after adjusting for purchasing power, this number comes to Rs 1.8 crore.
The reason this number was chosen is that it is capable of being achieved, it can be achieved by many people and can also be achieved in only one generation. These are the millionaires who live among us. But what makes them different?
Let's take a look at some of his good habits. Economy and Budget Planning We all meet someone or the other who spends his money on things that he thinks will make him look rich.
Whereas, the reality is that it is their purchase of these things that prevent them from becoming a millionaire. Another observation put forward by the authors is that people who can be considered wealthy always make budgets.
Even with money in the account, an average millionaire is more likely to buy $10 worth of shoes than $100 worth of shoes. When Thomas and William were surveying millionaires for this book, it was found that less than 7% of the net worth of most 'millionaires' came under income tax.
So, another lesson to learn is to reduce your taxable income and maximize your income to make money that can increase money/assets without cash flow.
A high spending life, regardless of your high income, can lead to a low net worth at home. How can all these mistakes be avoided? Does the 'plan' give any indication? Good planning is the foundation of making money This book considers the most common traits prevalent among rich people, dexterity and good planning ability.
To become rich people have to learn how to use their time, energy and money in the most efficient way. It would be very difficult to earn any money without efficiency. People who understand how to plan their wealth have the ability to put money aside for investments and so on.
Keeping at least 15% of your income for investment can be a good goal for you. Ask yourself how much do you spend in a year, and are you aware of your expenditure which comes in different forms like groceries, petrol, bills, loans etc.
"The Millionaire Next Door" takes you through the first step of the planning process i.e. to record your spending and savings, to understand where your money is coming from and going. You can also take the help of an accountant and prepare an achievable budget.
Do you usually recognize a millionaire by his car? After reading this book, your confusion will be shattered. Not every millionaire rides a Ferrari A research in "The Millionaire Next Door" uncovers some interesting facts about car buying among millionaires.
1. Almost a quarter of the people surveyed had not bought a car in the last 4 years.
2. Only less than a quarter of people have new cars.
3. The rest buy or lease used cars. This breaks the perception associated with the rich that they always buy new, shiny and top-of-the-range cars.
The lesson from this is that you can still buy a normal second-hand car even if you have the money. So how does your life change?
Now, when you are born into a millionaire family Thomas and William will show you how. Millionaire Family Family is an important part of anyone's life. The children of millionaires are high-class consumers but are rarely wealthy themselves.
These children start spending money to raise their status, buy expensive comfortable cars, buy flashy houses in wonderful places and send their children to expensive private schools.
The authors call this 'economic outpatient care' or EOC. In common parlance, it means money that children inherit from their wealthy parents or even grandparents. Thomas and William found that it is common for EOC recipients to spend more than they earn.
It is difficult for them to see the difference between the money they earn and the money deposited by their parents who may have given them too many gifts. They have a habit of relying on credit and loans.
A common characteristic of this type of people is that they invest less than those who do not get any kind of economic outpatient care.
The author wants parents to understand how important it is for children to earn their livelihood and live life without being dependent on anyone. Otherwise, it becomes a huge problem when EOC recipients become undisciplined, irresponsible and have no means of earning money on their own.
So, as has been made clear, giving your children money too often does little for their well-being and more in harm's way. But how can wealthy parents stop it?
Here are ten rules for rich parents that will help them make their kids worth it: Don't let your kids know how rich you are. Emphasize teaching discipline and the art of economy when it comes to money.
Try from your side that until the children are adults, disciplined, businessmen and able to maintain themselves, they do not have full knowledge of your money.
Do not discuss inheritance with children. Do not use the money to persuade children, especially adult children. Keep yourself away from children's family matters.
Do not compete with children. Remember that each of your children has a personality of its own and they are different from each other. Recognize your children's achievements and encourage them to succeed.
Don't pay attention to or celebrate simple successes. Explain to the children that there are many other things in life besides money and show them how these things are more important than money.
Your profession decides many things for you. You can earn a lot of money in return for working for a millionaire.
Let us take a look at some of the opportunities given in this book. Workforce When this book was written, the author had calculated that money would grow rapidly in the coming 10 years.
Opportunities to work for the wealthy will also be more than before. The demand for specialists who meet their needs and understand their concerns will also increase.
Experts with the most skills will benefit most from specialists in general. Hence, they have put together a list of experts who will benefit from this trend.
This list includes: Medical and Dental Care Specialists Asset Liquidators, Facilitators and Appraisers Specialists in Educational Institutions and Professional Professional Services Housing Specialists/Living Goods/Services
Fund-raising Counselors Travel Agents/Consultants and Bureau Writers Individual With the help of examples and case studies, let us show that there is no magic spell to get rich. Simply put, most millionaires don't really pretend.
They don't spend their money on things they don't need and they follow simple strategies to make money. This is how they start to become rich.
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THANK YOU SO MUCH
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