The Next Millionaire Next Door
Thomas Stanley
Summary
Great lessons on the habits millionaires use to achieve the wealth they have
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Notes
Financial success is achievable for anyone willing to work for it
Take care of money responsibly and it will take care of you later
There is direct correlation b/w patterns of behaviour and wealth accumulation
Don’t be impressed with what people own, be impressed with what they achieve. Always strive to be the best in your field. Don’t chase money because if you are the best, money will find you
Select neighbourhoods that have the best public schools in your area
Discipline is one of the key factors
Millionaires spend half as much time as average people playing video games yet twice as much on exercise and reading for pleasure
There is more variation within a group than between groups
Wealth = net worth, not income
For millionaires total annual realized income is 8.2% of net worth
Don’t buy a fancy car for a long time, never worth it
Minimize your realized/taxable income and maximize your unrealized income (wealth/capital appreciation without cash flow)
Learned helplessness is a huge deterrent to building wealth
80-86% of millionaires are self made
Always be sincere, honest, forward thinking and future forward
Encourage your children to work and save their own money
Parental frugality is positively correlated to children’s net worth
Never tell you’re children you’re wealthy, ever
Finding a spouse on the same page is extremely key to economic success
Stable and long term marriages run alongside millionaire status
Always be honest with your spouse with your finances
Never judge the true quality, the calibre of a person, by what can be bought
Not giving away attention and focus is critical to building wealth
The pursuit of wealth in and of itself is a hollow one
Don’t live around high-income, high-consuming people because you will tend to follow their habits
Never purchase a home more than 3 times your annual income
- Mortgage payments need to be less than 3x your annual income
Never get in a relationship with a consumer focused partner
Accessories are important when trying to portray wealth
High satisfaction in life abounds those who focus on what is inside a person rather than what they driver, wear or where they live
Every house needs a household CFO who manages the budget
Discipline/frugality, hard work and perseverance are factors in economic success
Conscientiousness is directly correlated with wealth, not intelligence
Never let anyone put limitations on what you can achieve
Millionaires rate discipline, getting along with others, integrity and hard work, resiliency and perseverance as critical to their success
The more economically successful you become, the more critics you attract
Early career experiences and early failures provide fuel for long term success
Money isn’t about being rich. Money is about giving you choices
Moonlighting: supplementing your income through other revenue streams
Self-employed millionaires make 1.5x more than those who work for others
People are sheep. Never follow the crowd
Successful investors: confident but not over-confident, happy to sit tight, willing to take risks and future oriented
Invest in vanguard’s low fee index fund
Seek not advisers who view themselves as coaches in the long term game of success
Develop quantitative decision-making guidelines, diversify and re-allocate as necessary
Always ask as advisor: do you act in my best interest? ‘Fiduciary financial advisor’
Experience the constant joy of being in control of your life and not allowing consumption to control you
Recognize the influences others may have on your financial attributes
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