Thursday, January 27, 2011
Book Review - The Millionaire Next Door
Do you know that most millionaires don't look like millionaires? That's right. Most millionaires drive regular cars, live in regular homes and you would never guess they had a million bucks or more in the bank!
"Its not what you earn, its what you save." This is the overall theme of The Millionaire Next Door by Dr Thomas Stanley and Dr. William Danko .
There are so many people with luxury cars, designer clothes and fancy homes that are living in a fantasy. Its all on credit or loan. No real cash in the bank, just material items for everyone to see.
The Millionaire Next Door is NOT a get rich quick plan, but a disciplined practice of saving and investing wisely over a lifetime.
One section I found interesting was about the difference between children who are given large sums of money throughout life and those who earned money large sums of money on their own (regardless of their families net worth). It is amazing how much smarter people are with money they personally make themselves as opposed to those who are given many "gifts" year after year. For example, some wealthy families give their children $10,000 annually because the family can give it tax free. Most children who receive this gift live a lifestyle beyond their means and the money is gone often before or as soon as its received.
The book's research finds that the only financial gift that doesn't seem to affect spending habits of children is the gift of a debt free college education.
I did find a few of the facts and figures to be a little boring and overkill at times, but the stats did prove the authors overall theme of the book, "It's not what you earn, its what you save!"
Regardless of an up or down economy, this is a great book to learn the principles of saving and how it can greatly impact your financial future. You might also develop a new outlook on budgeting and feel more comfortable with an attainable lifestyle!