7 Money Lessons from The Millionaire Next Door

The millionaire next door by Thomas Stanley, and William Danko, is one of the most impactful wealth building books ever written.

It has helped countless people build better lives, through money secrets not taught to the masses.

Want to know the secrets to finally building that millionaire lifestyle you desire?

Here are 7 key lessons about money from the millionaire next door.

Spend Less Than You Earn

Many people find it difficult to say no to unnecessary purchases.

A part of this is driven by the desire to buy status objects or living a luxurious lifestyle.

Choosing a life of status over a life of success, is what has led to high levels of consumer debt.

It’s almost impossible to accumulate wealth with the constant need to pay off debt.

The solution? Don’t try to fund a lifestyle you can’t afford.

Income Doesn’t Always Equal Wealth

The assumption is that a higher income means more wealth.

But, that’s the complete opposite of the findings from the book.

Someone earning $100k can be less wealthy than someone earning $50k.

It’s all down to your habits, and financial knowledge.

When it comes to income, what counts is where that money goes.

The average millionaire invests over 20% of their income.

Learn to Invest

Millionaires use investment strategies focused on increasing nontaxable income.

They also spend more time dedicated to financial planning and investments.

On average, millionaires spend 83% more time planning their finances, compared to poorer classes.

This doesn’t imply that they’re day traders.

But, that they’re more thoughtful about investing, and more willing to give that money time to grow.

Choose The Right Career Path

The professions likely to lead to a millionaire lifestyle are what we think of as prestigious.

• Doctors.

• Lawyers.

• Dentists.

They spend a lot of time learning, and in the process end up accumulating a lot of student debt.

When they start working, they want to live a consumption focused lifestyle. That’s what society expects of them.

They can become accumulators of wealth. But, they need to make a very conscious decision to live below their means.

Parents want their kids to have the best education and to pursue this type of career. But, it’s key to teach the idea that you need strong financial habits to build wealth.

Also, their level of education is not correlated to their level of wealth.

Live With Intention

When asked the question…

Do you know how much your family spends each year on food, clothing and housing?

…two thirds of millionaires could answer in the affirmative.

But, only one third of low wealth households could answer it.

A similar number of millionaires also had a yes answer when asked the question:

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

It shows that millionaires plan their lives, and allocate resources intentionally.

They don’t let life happen to them, and aren’t caught up in situations where they’re forced to borrow money.

Choose Carefully The Car You Drive

Cars today represent independence and freedom.

It’s one of the most expensive purchases after your home. It has recently become a status symbol where more money is allocated to.

According to the book, poorer people will spend countless hours researching, and shopping for a new car.

They end up driving the latest model, with the latest upgrades and most likely financed.

But, millionaires rarely drive new luxury cars, and usually have older models a few years old.

It’s all about priorities and where you choose to spend your time and resources.

Beware of Generational Wealth Destruction

According to Stanley and Danko, children that grow up in a poorer household, are more likely to stay poor.

There is also a high possibility that they’ve never been taught about money, budgeting and investing by their parents.

Kids may become entitled and grow up believing the lifestyle they’re used to is their birthright.

They expect to lead the same lifestyle regardless of their income in future.

This is completely false. A large part of breaking out of your family’s cycle, is personal accountability.

Rather than accepting that you have no choice but to stay in the same wealth class for your entire life.

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