The next book that I wanted to suggest as part of my holiday gift series for people looking to buy something for someone interested in personal finance or reaching FIRE, is The Millionaire Next Door by Thomas Stanley and William Danko. It is definitely one of the top books on my personal finance bookshelf, which probably has more than 30 books on it in all.
Stanley & Danko researched the lives of American “high net worth individuals” – millionaires looking for the clues that made them so financially successful. What they found was a bit of a surprise – they weren’t glitzy, materialistic, show-offs. Most live relatively plain lives in sharp contrast to less wealthy Americans that wish to appear wealthy on the surface – borrowing money for expensive houses and automobiles – but who actually have very little wealth that is saved. This is what Texans call “Big Hat, No Cattle” – Stanley’s original title for the book.
I read The Millionaire Next Door many years ago (it was published in 1996), when I was about 30 years old. I was captivated by the quiet success which enabled millionaires were to amass high net worths. They didn’t always have glamorous careers (many owned small businesses), many lived in their starter home, and they often drive late model (but high quality) used cars. Most important was that they lived significantly below their means and didn’t feel the need to impress anyone with their success.
What I like best about the book is that the authors show you the actual data tables from their study. The truths about America’s millionaires are set out in a very fact-based way. A friend of mine (JJ) wisely observed recently that we are all different in how we read books and which ones influence us. This one is written in a way that I find very convincing and credible.
His book helped frame my view on wealth and spending at a time when I started making significant gains in my income. The authors wrote other books studying millionaires including The Millionaire Mind and Stop Acting Rich. My wife and I have greatly benefited from the message of their work.
Here is a link to the most up to date version of the book on Amazon. Again, I don’t benefit financially if you order it or not. I include the link only to make it easier if you might want to get it or read other reviews. The Millionaire Next Door, Stankey & Danko