Millionaire Next Door / Thomas J. Stanley 258 p.
Say millionaire and one thinks of Donald Trump. Stanley and his co-author-researcher William D. Danko have interviewed millionaires extensively. They learned that the millionaire is more likely to live a very simple lifestyle. A high wage earner is not necessarily a millionaire. In order to accumulate lasting wealth, one must not only earn a lot but also develop frugal habits. A millionaire lives below his means. They are frugal. They are likely to pay for quality, but not the image. So they are likely to drive an American made car and generally a used model. They plan their investments. A formula Stanley and Danko developed defines net worth as equal to one-tenth their age multiplied by their current annual income from all sources. The researches coined the term Under Accumulator of Wealth (UAW) to describe those individuals who have a low net wealth compared to their income. The opposite of UAW is the Prodigious Accumulator of Wealth (PAW). PAWs have a high net worth. PAWs do not feel the need to live up to the "Jones'". They don't buy luxury foreign cars, expensive suits, big name watches. On the other hand, PAWs spend to live in a wonderful neighborhood and feel the pressure to spend. Some tips from the authors, spend less than one makes, invest for the long term, and avoid "spending tomorrow's cash today". It is interesting that the researches found that doctors, lawyers, dentists are generally UAWs. The message is loud and strong...save more, spend less, and invest the difference in non-risky investments.
No comments:
Post a Comment