Book Review – The Millionaire Next Door

This past month, I had the opportunity to read the Millionaire Next Door.  This book by Thomas Stanley is a best seller and has been touted by some as a much read for folks interested in personal finance.  I thought I would throw in my own two cents and whip up a quick book review on it.

Book Review – The Millionaire Next Door – What I Loved About The Book

Overall, I thought The Millionaire Next Door was just kinda “blah.”  I had pretty high hopes for it, and I felt a little let down after finishing it.  There were a couple of good things about it that I did find helpful though…

The book covers the following seven main characteristics of millionaires in detail:

1. They live below their means
2. The allocate their time, money, and energy into building wealth
3. They believe that financial independence is more important than flashing around their wealth
4. Their parents did not financially support them
5. Their adult children are economically self-sufficient
6. They are proficient in targeting market opportunities
7. They chose the right occupation

I found most of these insights to be pretty obvious.  However, the ones that stood out the most to be were #4 and #5.  These two were the biggest insights I will take away from  The Millionaire Next Door.  The basic conclusion is that kids that receive a lot of money from their parents are actually less “wealthy” than kids that do not!  “How can that be,” you might ask?  Well, kids that are used to “riding the gravy train” come to depend on the money.  Because they didn’t work hard to earn it, they usually end up wasting it on material things vs. saving/investing it.

Also, many times parents will place their adult children into situations that end up costing the kids more money in the long run.  The perfect example of this is parents partially or fully paying for their adult children’s homes or partially paying for their grandchildren’s private school education.  Because of this “subsidy”, the adult children end up paying more than they would have if there had been no parents money in the first place!  It also breeds a generation of “free-loaders” if the parents are not careful to ensure their kids learn for themselves how to earn a living.

This is a key insight that I think I’ll take with me to my grave.  It has made me totally rethink my whole outlook on paying for our kids college education (if they even choose to go).  Sorry kids, but it’s for your own good 🙂

Book Review – The Millionaire Next Door – What I Disliked About This Book

OK, as I said above, I had really high hopes for The Millionaire Next Door.  Besides the key insight I mentioned above, most of the rest of the book was common sense stuff that you’ve probably heard hundreds of times before: live below your means, don’t waste money on cars, invest as much as you can, buy used stuff, plan your field of study carefully, etc.

It’s not that I actually disliked this part of the book per se – I guess I was just looking for something a little more insightful than all the normal stuff we have all heard over and over again…  While there isn’t much to getting rich other than working hard for a decent wage, saving as much as one can, and investing it, the book seemed to take ~300 pages to tell us this  😡

I felt like most topics had gone beyond the point of beating the dead horse to actually trying to squeeze the blood out of a stone!  The whole point about most millionaires don’t spend much on their vehicles was a good one.  Many people may not realize this.  But, between the countless stories, tables, figures, etc. just to explain this one topic, I kinda wanted to blow my brains out.  Do we really need 40 pages to get just this one point across?!?  IMHO, much of the book follows this formula of taking a concept, presenting it, then giving you 40-50 pages of fluff to re-illustrate the point another five times.  It gets pretty annoying after a while, and I would like to think that most of us are smarter than that 🙂

Book Review – The Millionaire Next Door – Rating

3/5 Stars – You may want to pass this one over unless you’ve read just about every other financial book out there.

Book Review – The Millionaire Next Door – Final Thoughts

Overall, I thought  The Millionaire Next Door was just pretty average.  It’s not a bad book by any means, but you won’t really get a good “bang for your buck” or good return on your investment of time reading this one.  If I were you, I’d stick with something a little more concise and actionable such as Ramit Sethi’s I Will Teach You to Be Rich.