The Millionaire Next Door

The Millionaire Next Door

“The Millionaire Next Door” is a personal finance book that debunks the myth that all millionaires live a lavish lifestyle. Instead, the authors argue that most millionaires accumulate wealth through frugality, hard work, and smart investments. They offer insights into the habits and behaviors of these “everyday millionaires” and provide practical advice for anyone looking to build wealth.

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The Millionaire Next Door Summary

“The Millionaire Next Door” is a best-selling personal finance book written by Thomas J. Stanley and William D. Danko. The book challenges the widely-held belief that all millionaires live extravagant lifestyles and instead provides evidence that most millionaires have accumulated wealth through frugality, hard work, and wise investment decisions.

The authors conducted extensive research and surveys of millionaires in the United States to gather insights into their habits and behaviors. They discovered that many millionaires prioritize financial independence over consumption and are often self-employed business owners.

The book provides practical advice for individuals looking to build wealth, including tips on budgeting, saving, and investing. It emphasizes the importance of living below one’s means and avoiding unnecessary expenses.

Overall, “The Millionaire Next Door” is an eye-opening and informative read for anyone interested in personal finance and building wealth. It challenges common misconceptions about millionaires and provides actionable advice for achieving financial success.

The Almanack of Naval Ravikant Quotes

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The Almanack of Naval Ravikant Quotes

The Almanack of Naval Ravikant:

Many people who live in expensive homes and drive luxury cars do not actually have much wealth.

Many people who have wealth do not even live in upscale neighborhoods.


Wealth is not the same as income.

Wealth is what you accumulate, not what you spend.


80% of America’s millionaires are first-generation rich.


The Seven Factors

  1. Live below your means
  2. Allocate time, energy, and money, efficiently in ways conducive to building wealth
  3. Believe that financial independence is more important than social status
  4. No economic outpatient care from parents
  5. Self-sufficient adult children
  6. Proficient in targeting market opportunities
  7. Choosing the right occupation


These studies included personal and focus group interviews with more than five hundred millionaires and surveys of more than eleven thousand high-net worth and/or high-income respondents.


Building wealth takes discipline, sacrifice, and hard work.


Only a minority of millionaires ever lease their motor vehicles.


Self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires.


Millionaires making more than $500k/yr account for 13% of the millionaire population.

6% of millionaires have a net worth over $10M.


97% of millionaires are homeowners.


80% of millionaires are first-generation affluent.


Millionaire women are a lot more conservative with money than men.


Millionaires tend to save at least 15% of their income.


On average, millionaires invest nearly 20 percent of their household realized income each year.


Men in general, have the deck of economic cards stacked in their favor. They should not need subsidies from their parents.


To be wealthy you should consider providing affluent people with some valuable service.


About 95% of millionaires in America have a net worth of between $1 million and $10 million.


Only 19% of millionaires receive any income or wealth of any kind from a trust fund or an estate.


Fewer than 20% of millionaires inherited 10 percent or more of their wealth.


More than half of millionaires never received an inheritance.


Fewer than 25% of millionaires ever received “an act of kindness” of $10,000 or more from their parents, grandparents, or other relatives.


91% of millionaires never received, as a gift, ownership of a family business.


Nearly half of millionaires never received any college tuition from their parents or other relatives.


Fewer than 10% of millionaires believe they will ever receive an inheritance in the future.


Most American millionaires are manager-owners of businesses.


Millionaires often live in self-designed environments of relative scarcity.


The “next generation” is often less productive economically than the last.


Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement.


Most never become millionaires until they are fifty years of age or older.


A couple cannot accumulate wealth if one of its members is a hyper consumer.


The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning.

All too often people allow their income to define their budgets.


Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.


Millionaires create an artificial economic environment of scarcity. More than half of non-budgeters invest first and spend the balance of their income.


It’s much easier to budget if you visualize the long-term benefits of this task.

Q: Does your household operate on an annual budget?

Q: Do you know how much your family spends each year for food, clothing, and shelter?

Q: Do you have a clearly defined set of daily, weekly, monthly, annual, and lifetime goals?

Q: Do you spend a lot of time planning your financial future?


Small expenses become big expenses over time. Small amount invested periodically also become large investments over time.


To build wealth,

minimize your realized (taxable) income

and maximize your unrealized income

(wealth/capital appreciation without a cash flow).


Income tax is the single largest annual expenditure for most households.


The average American millionaire realizes significantly less than 10 percent of his net worth in annual income.


The higher one’s net worth, the better one is at minimizing one’s realized income. The fact is that the super-affluent got to that position by being masters at minimizing their realized income.


Most millionaires measure their success by their net worth, not by their realized income. For the purposes of wealth building, income doesn’t matter that much.

It matters less how much more you make than what you do with what you already have.


People accumulate significant wealth by minimizing their realized/taxable income and maximizing their unrealized/nontaxable income.


Being a well-educated, high-income earner does not automatically translate into financial independence. It takes planning and sacrificing.

Sacrifice high consumption today for financial independence tomorrow.


It’s easier to accumulate wealth if you don’t live in a high-status neighborhood.


If you’re not yet wealthy but want to be someday,

never purchase a home that requires a mortgage that is more than

twice your household’s total annual realized income.


People who become wealthy allocate their time, energy, and money in ways consistent with enhancing their net worth.


There is a strong positive correlation between investment planning and wealth accumulation.


Parents should not suggest that their children drop out of college and start a business. Most businesses fail within a few years of their conception. Only a small minority of business owners ever earns a six-figure income. But those who do tend to accumulate more wealth than others in the same income cohort.


Begin earning and investing early in your adult life.


Wealth is blind. It cares not if its patrons are well educated.


Planning and controlling consumption are key factors underlying wealth accumulation.


Large allocations for homes and automobiles can have a dampening effect on wealth building.

Only those clients with considerable wealth want to know exactly how much their family spends on each and every category.


Time, energy, and money are finite resources, even among high-income generators.


Penny-wise, pound-foolish.


European luxury automobiles depreciate rapidly during the first three years following their initial purchase.


Is the pride of new car ownership – and that’s all it is, pride – worth $20,000?


What do you spend time worrying about? Are your concerns congruent with wealth accumulation? Or do you spend time thinking about issues that are impediments to becoming affluent?


Having a set of stated goals does not necessarily mean that one is committed to achieving them. Most of us want to be wealthy, but most of us do not spend the time, energy, and money required to enhance our chances of realizing this goal.


Planning and wealth accumulation are significant correlates even among investors with modest incomes.


Employees are too often fully dependent on their employers. Thus they tend to be less self-reliant when it comes to planning their investments in a way that will facilitate accumulating wealth.


Your ability to hire high-grade financial advisors is directly related to your propensity to accumulate wealth.


Money should never change one’s values… Making money is only a report card. It’s a way to tell how you’re doing.


Many status artifacts can be a burden, if not an impediment, to becoming financially independent.


The fact is that two out of three purchasers or leasers of foreign luxury motor vehicles in this country are not millionaires.


Successful entrepreneurs judge each expenditure in terms of productivity.


Most millionaires are deal shoppers as opposed to dealer loyalists.


Frugality translates into wealth.


It’s much easier in America to earn a lot than it is to accumulate wealth.

Why is that the case? Because we are a consumption-oriented society.


Great offense and poor defense translate into under accumulation of wealth.


Economic outpatient care refers to the substantial economic gifts and “acts of kindness” some parents give their adult children and grandchildren.


Adults who sit around waiting for the next dose of economic outpatient care typically are not very productive. Cash gifts are too often earmarked for consumption and the support of an unrealistically high lifestyle.


The giving of economic gifts is the single most significant factor that explains lack of productivity among the adult children of the affluent.


Gift receivers… the adult children of the affluent feel that their parents’ wealth/capital is their income… income to be spent.


Unfortunately, a growing portion of adult children are not being taught the value of being emotionally and economically independent of their parents.


The most frequently mentioned gift that millionaires received from their parents was tuition.


Teach your own to live on their own. It’s much less costly financially, and, in the long run it is in the best interests of both the children and their parents.


The more dollars adult children receive, the fewer dollars they accumulate, while those who are given fewer dollars accumulate more.


Is a rent-free environment ideal for a young entrepreneur?

We don’t think so. Nor is the gift of a business. The most successful business owners are the ones who put much of their own resources behind their ventures. Many succeed because they have to succeed. It’s their money, their product, their reputation. They have no safety net. They have no one else to rely upon for their success or failure.


The more economically successful offspring are likely to receive smaller levels of economic outpatient care and inheritance.


Being in business for myself… When I wake up, every day is a challenge… I plan my work… work my plan. It’s why my business is a good one.


Very often those who supply the affluent become wealthy themselves.


Self-employed people are four times more likely to be millionaires than those who work for others.


You can’t predict if someone is a millionaire by the type of business he’s in.