Book Report on Millionaire Next Door

The Millionaire Next Door

Andrew Fremer

The book, The Millionaire Next Door by Thomas J. Stanley and William D. Danko reveals how the normal, average individual can become wealthy through seven principles. The book makes it very clear that most millionaires live a very simple lifestyle. The authors base their information on a 20 year study on people whose net worth, salaries and age defined them as millionaires. Their data created a detailed profile of who the typical millionaire is in today’s society. The authors believe that people who earn a lot are not always millionaires because they are the people that tend to spend the money as fast as they earn it. Those are the people who fail to accumulate a lasting wealth. They are considered the hyper consumer. In order to become rich, an individual must earn a lot and play what Thomas and William call “good offense” and develop frugal habits which they call “good defense.” This book focuses on spending less and earning more. I am going to outline the seven principles the authors suggested using to become the millionaire next door.

The first principle is “they live well below their means”. Generally speaking millionaires are frugal which means they drive cheap vehicles, clip coupons, and shop thrifty. Not only do they self-identify as frugal, but they actually live the life as a frugal person. They also take extraordinary steps to save their money like keep a strict budget of all the money they spent. They don’t live lavish lifestyles like most millionaires in Beverly Hills. They pay for quality not for the image of an item. They are also budget people they buy off the rack instead of custom-made products like suits, rings, and shoes. For example, Johnny Lucas the most he paid for a suit was $399 because he bought off the rack. Only one in ten millionaires paid more than $1000 for a suit. Only about one in one hundred millionaires paid more than $2800. On the other hand, about 1 in 4 millionaires paid $285 or...