Book review: millionaire next door
Great finance book
"Millionaire next door" is a slightly different type of business/ finance book to those business books that I've reviewed in previous articles. However, it's a fascinating read nonetheless.
The premise of "Millionaire next door"
"Millionaire next door" is an analysis of a series of surveys conducted in the USA in the 1990s on wealth. The authors identified thousands of Americans who would be considered millionaires and multimillionaires. Those surveyed were asked questions about their background, types of employment, motivations and various other socio-economic questions. The results are what makes up the contents of the book.
Surprising results about your average millionaire
Some of the more interesting results from the study include those below. Please note that some of the information may not be 100% as written within the book as I don't have the book to hand as I write this:
- Only 30% of millionaires inherited their wealth. I found this to be quite a shocking reveal. It means that the vast majority of millionaires create the wealth in their own lifetime. What a motivational thought to me and the readers of multimillionaireroad.com!
- Not good to give large sums of money to your children. The book goes into great detail as to why a parent who is wealthy can actually harm the chances of their children's succes by giving them a regular income or large sums of money for big purchases. In short, the damage is caused by the act creating a reliance and a habit to rely on parental income for life. This tends to lead to overspending beyond their regular salary. Furthermore, it doesn't ever allow the child to develop budgeting techniques and spending restraint. These can lead to large spending problems in the children when the parents pass on.
- Most millionaires run their own businesses. The key message is to get into the realms of becoming a multimillionaire then you need to think about starting your own business. This ties into what we've preached here at multimillionaireroad that you must become a producer and not a consumer. Create things that other people want. Do not simply spend!
- Millionaires encourage children to be professionals. This is an odd one. Having made their money normally through taking on risk via a business most millionaires prefer their children to take jobs with professional qualifications: Doctor, accountant, lawyer etc. The reason being that it is considered a "safe" route as there will always be an income. However, it actually may be harming their chances of becoming a millionaire. Be warned!
- Most millionaires are migrants to the country. This is an interesting one and isn't given much explanation. It is speculated that it is due to migrants being more determined to work hard given that they've largely made sacrifices to move countries - they strive to make the sacrifice worth it.
Review of the finance book
If you're interested in pure business books then this isn't one for you. However, I found that it had some fairly useful insights that are worth carrying in the back on my mind for life. I'd be interested to read any more recent data surrounding similar questions.
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