I first read The Millionaire Next Door by Thomas Stanley and William Danko before starting law school in 1997, and it blew me away. The book demolishes the myths about who the wealthy really are in America, and more importantly, shared their spending and planning habits so we could learn from them. It’s my first choice whenever anyone asks for a personal finance book recommendation.
The spending stats are dated, and Stanley wrote a follow-up book in 2011 Stop Acting Rich:…And Start Living Like a Real Millionaire that provided some updates. However, the points come across loud and clear and are based on research about millionaires and surveys of them.
It presents formulas like how to determine if you’re on track to becoming wealthy and how much home you can afford.
It shares data on what the average millionaire spent on things like cars, watches, wine, meals, and haircuts.
The Millionaire Next Door also highlighted seven traits shared by wealthy Americans:
Living well below their means.
They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
They believe that financial independence is more important than displaying high social status.
Their parents did not provide economic outpatient care.
Their adult children are economically self-sufficient.
They are proficient in targeting marketing opportunities.
They chose the right occupation.
Others have shared these insights, but never this clearly and well-organized. This is the original, and I strongly encourage you to check it out if you haven’t already.
Suggested Further Reading:
Review: The Psychology of Money by Morgan Housel