| 
  • If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.

  • Buried in cloud files? We can help with Spring cleaning!

    Whether you use Dropbox, Drive, G-Suite, OneDrive, Gmail, Slack, Notion, or all of the above, Dokkio will organize your files for you. Try Dokkio (from the makers of PBworks) for free today.

  • Dokkio (from the makers of PBworks) was #2 on Product Hunt! Check out what people are saying by clicking here.

View
 

The Millionaire Next Door

Page history last edited by Byron Woodson II 13 years, 1 month ago

The Millionaire Next Door

Thomas J. Stanley and William Danko

 

3.5% of America’s 100,000,000 households have a net worth of $1,000,000+. 80% of America’s millionaires are first-generation rich. The way to become rich is through discipline, sacrifice, and hard work.

 

There are seven common denominators among these Prodigious Accumulators of Wealth:

 

1. They live below their means

      a. Most have never paid more than $400 for a suit or $27,000 for a car

      b. Millionaires operate on an annual budget, have clearly defined goals, and plan for the future.

2. They allocate time, energy and money efficiently, in ways conducive to building wealth

      a. PAWs allocate twice as much time per month to planning their investments—but still only spend 8.4 hours a month doing so (vs. 4.6 hours per month for UAWs). Most are buy-and-hold investors who supplement a broadly diversified portfolio with investments in areas of expertise.

3. They believe that financial independence is more important than displaying high social status

4. Their parents did not provide economic outpatient care

      a. Children who receive gifts tend to spend them. Giving precipitates more consumption than saving and investing.

5. Their adult children are economically self-sufficient

      a. Parents foolishly strengthen the strong child and weaken the weak with assistance. If your child was physically weak, you would not do everything for them and encourage them to eat and exercise less.

     b. The way to raise economically self-sufficient kids is the following:

          i. Never tell them that their parents are wealthy

          ii. Teach your children discipline and frugality

          iii. Don’t give them money until they have established a mature, disciplined, and adult lifestyle and profession

          iv. Minimize the discussion of what children and grandchildren will inherit

          v. Never give cash or gifts to adult children as part of a negotiating strategy

          vi. Stay out of your adult children’s family matters. Let them run their own lives, and ask permission even to give advice.

          vii. Don’t compete with your children.

          viii. Always remember that your children are individuals (so don’t try to equalize inequalities of result)

          ix. Emphasize your children’s achievements, no matter how small, not their or your symbols of success.

          x. Tell your children that there are a lot of things more valuable than money.

6. They are proficient in targeting market opportunities

     a. Find the right niche

7. They chose the right occupation

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

     b. Millionaires encourage their children to become self-employed professionals. These professions are lower risk and more profitable (if limited in scalability). They can take your business, but they can’t take your intellect.

     c. Dull-normal business consistently perform well for their owners.

 

Are you wealthy? Multiply age by pretax household income. Divide by 10. This, less inheritance, is what your net worth should be. A PAW has more than 200% the expected net worth. A UAW has less than half the expected net worth.

 

Comments (0)

You don't have permission to comment on this page.