millionaire next door book review

Title: The Millionaire Next Door: The Surprising Secrets of America’s Wealthy

Originally Published: 1996

Author: Thomas J. Stanley

TDB Rating:



I used to work in an upscale restaurant located near several affluent neighborhoods. During my time as a server, I noticed that some of the most generous tips I received came from t-shirt and jeans guests. I almost felt guilty when an ostensibly blue collar visitor was so benevolent with their hard-earned money. But then I wondered, “What if the reason these folks in Walmart outfits were able to be so generous was because they were much wealthier than they appeared?” And what about the man with the fine suit and Corvette? Was it possible that he wasn’t nearly as wealthy as he appeared. Maybe he had maxed out all his credit cards to live the high life and was strapped for cash.

I didn’t know it at the time, but the answers to these questions already existed in The Millionaire Next Door. In his best-selling book, Thomas J. Stanley presents a new perspective of what wealth in America really looks like. And I’ll give you a fair warning, it’s not what you’d expect.

About the Author

Tom Stanley’s storied career includes time serving as a business professor, corporate advisor, and finance author. He carved out his most prominent role as an author by devoting decades to studying the behaviors and habits of America’s wealthiest individuals. He composed an in-depth series of financial literature based on his studies’ findings. Among his most popular books are The Millionaire Mind and The Millionaire Next Door.

A Brief Summary

Have you ever passed through an affluent neighborhood and wondered what the residents’ financial profiles look like? In The Millionaire Next Door, Thomas J. Stanley cuts through the façade of luxury status symbols and shows readers how truly wealthy Americans live.

Stanley takes a near-comprehensive look at the lives of hundreds of millionaires and deca-millionaires. He examines their educational backgrounds, marriages, vocations, spending habits, and more! Next, Stanley analyzes the most dominant commonalities among the members of America’s affluent class.

Contrary to popular belief, the typical millionaire is not flashy or overly complex. Stanley’s study revealed that prodigious accumulators of wealth tend to be frugal shoppers who invest wisely and spend deliberately. Moreover, they tend to have a spouse who also believes in operating the household in an efficient cost-conscious manner.

In accumulating massive amounts of wealth, the average millionaire prefers to commit financial resources to products and services only when they will add value to their life.

According to Stanley, the vast majority of America’s wealthy recognize that their greatest resource is, and will always be, their time. With that in mind, millionaires tend to live well below their means while putting the rest of their funds to work for them so they can someday gain the freedom of time. Thus, there are tremendously wealthy individuals hidden in plain sight all around us!

Meanwhile, most of us mistakenly believe that hyper-consumers are actually the wealthiest among us. That’s because we see these individuals feverishly devouring consumer goods and services and assume they have plenty of riches to support their lavish lifestyles. In reality, however, those individuals are often income statement affluent but lack meaningful assets.

Stanley makes insightful observations throughout the book. For example, he points out that IQ and GPA are overrated measures of success in the modern world. Often times, those who score well above average in aptitude tests lack the creative intelligence and practical skills necessary to thrive in society, the workplace, and financially. Many millionaires, Stanley claims, despite average measurable intelligence have creative intellect that catapults them into the top percentile of net worth.

Key Concepts

One of the more popular and long-lasting concepts from the book is a formula Stanley created to measure one’s ability to accumulate wealth.

The formula is simple: multiply your age by your annual pre-tax income and divide that number by 10. That will give you a number. Here’s what that number means…

Let’s take a 40-year-old making $50k annually. Stanley posits that it would be reasonable to expect that individual to have amassed a net worth of $200k by that age. If that individual, in fact, has a net worth of $300k, Stanley would consider him a Prodigious Accumulator of Wealth (“PAW”). By contrast, the further below $200,000 that individual has amassed, the more severely they’d be considered an Under-Accumulator of Wealth (“UAW”).

Critics of the formula point out that the formula has a few flaws. Namely, it is best-suited for people aged 40 and up. That’s because it ignores certain factors such as student loan debt that hinders wealth accumulation among younger adults. There’s also the fact that the formula was created during a time of economic prosperity. Even the most prudent investments during depressed market conditions can alter how realistic the expectation may be. Any one who’s read more than a few personal finance books or blogs know that there’s no perfect formula to measure one’s financial status. Nevertheless, Stanley’s formula is often cited in literature because it offers a respectable way to measure an individual’s net worth expectations.

TDB Rating

I give The Millionaire Next Door the highest possible rating of five stars. I firmly believe that all the investing knowledge in the world isn’t enough to overcome habits and lifestyle choices that are incongruent with basic wealth-building principles. This book cuts right to the chase and highlights key lifestyles decisions that America’s wealthy exhibit. Anyone who is serious about becoming wealthy themselves should strongly consider implementing those habits in their own life.

Alternative Book Recommendation: Reading this book will teach you just as much about lifestyle philosophy as it will about handling money. As you’ll learn, the two topics are intimately interrelated. If you’d like to delve deeper into the lifestyle and character ethics of successful individuals, I’d suggest checking out The 7 Habits of High Effective People.

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