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Book Review: The Millionaire Next Door by Thomas Stanley and William Danko

by Suleman
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The Millionaire Next Door: America’s Wealthy’s Shocking Mysteries is a contemporary book published by Thomas J. Stanley and William Danko. The writers researched America’s millionaires, including their lifestyles and professions, and came up with some fascinating anecdotes concerning this affluent community. The book has destroyed some of the popular notions about the “affluent class” and their ways of living and provides new insights in these areas. Results of polls, statistical evidence and case reports confirm the inferences. The writers have cited many examples of individuals who have been active in acquiring a significant sum of money in the course of their careers. They’re meant to be reminders of the younger generation who can imitate their examples. About 50 percent of US millionaires have been found to be involved in their own company projects. The bulk of this demographic were small-scale entrepreneurs who became affluent by living a life of hard work and self-discipline. The book also gives useful insights into the methods of buying and operating one’s own small business.

A millionaire is described as a person whose net worth amounts to $ 1 million dollars and above, according to Stanley and Danko. The authors have observed and analyzed the ways in which the affluent citizens of the USA have accumulated their wealth over the years. This forms the central idea of the book which has been further developed and enumerated through the successive chapters. The fundamental research for the book was initially conducted with the help of simple household surveys. Subsequent corporate studies on affluent American citizens have added to the authors’ study content. The writers have based their analysis on information of this research and a plethora of statistical data and case studies. It also contains the profiles of the life and careers of some of America’s millionaires. The examples of their lives are enumerated for the ambitious young readers to follow and emulate.

Book Review: The Millionaire Next Door by Thomas Stanley and William Danko

In the work, several important findings are noted. Many individuals have misplaced assumptions about money and the forms in which it is obtained. Wealth is appropriately defined as a resource which is accumulated by individuals. Citizens can accumulate wealth by embodying “hard work, perseverance, planning and self-discipline” in their life led over a considerable period of time. (Stanley & Danko, 2)

The authors discuss the types of people who have the potential of becoming affluent in society. Persons earning a low income naturally possess a very narrow possibility of amassing wealth. It is the individuals who earn a high level of income who possess the capacity of becoming rich. However, earning a high income only is not sufficient for individuals to become wealthy. There are many high-income earners in the American society who are high spenders as well. They will lead a luxurious lifestyle based on their extravagant spending, but are not successful in case of accumulating their earned money. It is necessary for aspiring wealth accumulators, according to the writers, to “be strong in their offense as well as defense” (Stanley and Danko 38). This implies that in order to become rich, a person should earn a handsome amount of money and make efforts to save the majority of it without spending a huge amount on consuming things. An individual must develop both these habits in order to build up a considerable amount of assets during his lifetime. Apart from these two characteristics, the wealthy people of America also share certain common features. The authors note that 80% of the US millionaires have amassed wealth through their own efforts; the assets have not been inherited. (This is contrary to popular belief). 50% of this wealthy population has earned their resources through their own business and 20% of them are retired from their respective working careers (Stanley & Danko, 3-10).

Stanley and Danko observe that most of the wealthy Americans are businessmen who have spent the majority of their work life in a single town or city. They are usually engaged in factory business, store chain business or operating service companies. Majority of them lead a straightforward life amidst the common society people utilizing only a fraction of their resources for their daily living. Most of their efforts are directed towards saving and investing their self-earned money. In the course of their research, the authors have identified seven common characteristics among the American citizens who had been successful in accumulating wealth:

  1. Most of the millionaires were used to a lifestyle well below their actual means
  2. Their time, energy and resources are efficiently directed towards saving and preserving their hard-earned money
  3. Majority of the wealthy population do not believe in flaunting their high social status; instead they prefer to use their resources in enhancing their financial independence
  4. Most of America’s present rich people were not financially supported by their parents during the initial stages of their careers.
  5. They believe in following a similar policy with their own children; they do not provide financial resources to their adult children due to which the latter learn to be financially independent as well.
  6. The successful people have been able to identify the suitable market opportunities at the right point of time. They have made use of these opportunities to gain a stronghold in their respective professions.
  7. Most of the millionaires have recognized their professional leanings early in their lives and have taken up the most suitable careers for themselves

The authors Stanley and Danko have identified “doing business” as the most suitable profession for the aspiring millionaires of USA. According to their research, 50% of America’s wealthy population has amassed their wealth from their own businesses. They have been observed to be engaged in small business such as operating a factory, owning a chain of stores or running a service organization. According to Thomas Stanley, small business owners have four times more chances of becoming wealthy compared to individuals who are employed in traditional business. This is because owners of small-scale business have the power to regulate and control the earnings from their own business. Almost all decisions related to the business are taken by the entrepreneur himself: it is his choice whether he chooses to expand his business or not. In case, he decides to increase his business, he takes on the responsibility of delivering increased goods and services through his operations. He is most likely to recruit additional resources for his business, so that he is able to produce additional goods and services to be delivered to his clients. The small-scale entrepreneur is also capable of motivating his employees to promote the products of his business venture and therefore increase the sales of the commodities and services.

Majority of the business owned by the small-scale entrepreneurs traditionally belong to the low technology genre. These businessmen are usually American middle-class citizens, who have been bred under a culture of hard work. They infuse this culture of diligence in their own business which creates a positive atmosphere conducive to the growth of the venture. Stanley and Danko declare that most of the small entrepreneurs have experienced that operating their own business was an assured way of achieving their financial independence and securing the future of their finances. Initiating a small-scale business venture has its own advantages also. The initial cost of capital required is not as high as a large-scale business and can be financed from the entrepreneur’s own resources. In most cases, he will not be required to borrow resources from his family or any other sources.

However, the authors also enumerate the risks involved in starting a business venture and are caution their readers about the uncertainties of the profession. The authors state that the educational qualifications of an individual and his ability to accumulate wealth have been found to be negatively correlated. That is, most of America’s millionaires do not fall in the category of highly educated people. Inspite of this, Stanley and Danko caution parents not to encourage their children to start their own business without completing their education. Most business ventures have been forced to be abandoned within just a few years of their establishment. Among the entrepreneurs whose businesses manage to survive, only a small percentage is successful in turning their ventures into lucrative establishments. Only they are able to emerge as wealthy businessmen in the society. Therefore, through their work, Stanley and Danko have provided their readers with useful insights about setting up and operating a business venture. This is exactly what I enjoy the most about the novel. Though the topic has not been explicitly discussed in the book, the authors’ writing throws up valuable inferences on this issue. Majority of America’s present millionaires have been found to have amassed their wealth from their own business ventures. Thus, “doing business” has been presented as a viable option to the young generation, many of whom harbor dreams of “making it big” in life. However, the authors have not forgotten to mention a note of caution regarding the uncertainties of the profession.

References;

Stanley J. Thomas and Danko William The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, United Kingdom, Taylor Trade Publishing, 2010

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