Published on March 7, 2016
1. The Millionaire Next Door ByThomas J. Stanley andWilliam D. Danko
2. Wealth is more often the result of a lifestyle of hard work, perseverance, planning and most of all, self-discipline.
3. The Seven Factors Characteristics of the wealthy 1. They live well below their means. 2. They allocate their time, energy and money efficiently, in ways conducive to building wealth. 3. They believe that financial independence is more important than displaying high social status. 4. Their parents did not provide economic outpatient care.
4. 5. Their adult children are economically self-sufficient. 6. They are proficient in targeting market opportunities. 7. They chose the right occupation.
5. PAW – Prodigious Accumulator ofWealth UAW – Under Accumulator ofWealth AAW – Average Accumulator of Wealth
6. PAWS ARE BUILDERS OF WEALTH
7. What are the 3 words that profile the affluent? FRUGAL FRUGAL FRUGAL
8. BEING FRUGAL ISTHE CORNERSTONE OF WEALTH-BUILDING.
9. The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning.
10. They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way.
11. “PAYYOURSELF FIRST” STRATEGY
12. Financially independent people are happier than those in their same income/age cohort who are not financially secure.
13. FEAR IS A GREAT MOTIVATOR One earns to spend. When you need to spend more, you need to earn more.
14. To build wealth, minimize your realized (taxable) income and maximize your unrealized income (wealth/capital appreciation without a cash flow.)
15. Your plan should be to sacrifice high consumption today for financial independence tomorrow.
16. It’s easier to accumulate wealth if you don’t live in a high-status neighborhood.
17. If you’re not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household’s total annual realized income.
18. Living in less costly areas can enable you to spend less and to invest more of your income.
19. They allocate their time, energy and money efficiently, in ways conducive in building wealth
20. Efficiency is one of the most important components of wealth accumulation. Simply: people who become wealthy allocate their time, energy and money in ways consistent with enhancing their net worth.
21. Begin earning and investing early in your adult life.
22. Investing when one has little or no intellectual basis for one’s decisions often translates into major losses.
23. Choose a financial advisor who is endorsed by an enlightened accountant and/or his clients with investment portfolios that in the long run outpace the market.
24. They believe that financial independence is more important than displaying high social status.
25. Money should never change one’s values…making money is only a report card. It’s a way to tell how you’re doing.
26. Building wealth is not something that will change your lifestyle. Even at this stage of life, I don’t want to change the way I live.
27. Most millionaires are dealer shoppers as opposed to dealer loyalists.
28. What factors explain variations in wealth accumulation? 1. Income 2. Occupation
29. If you cannot increase your compensation significantly, become wealthy some other way. Do it defensively.
30. Economic Outpatient Care (EOC) - refers to the substantial economic gifts and acts of kindness some parents give their adult children and grandchildren.
31. We find that the giving of such gifts is the single most significant factor that explains lack of productivity among the adult children of the affluent.
32. 1. Giving precipitates more consumption than saving and investing. 2. Gift receivers in general never fully distinguish between their wealth and the wealth of their gift-giving parents. 3. Gift receivers are significantly more dependent on credit than are nonreceivers. 4. Receivers of gifts invest much less money than do nonreceivers.
33. WHATEVERYOU INCOME,ALWAYS LIVE BELOWYOUR MEANS.
34. The Product of EOC: The more dollars adult children receive, the fewer dollars they accumulate, while those who are given fewer dollars accumulate more.
35. If you are wealthy and want your children to become happy and independent adults, minimize discussions and behavior that center on the topic of receiving other people’s money.
36. Rules for Affluent Parents and Productive Children 1. Never tell children that their parents are wealthy. 2. No matter how wealthy you are, teach your children discipline and frugality. 3. Assure that your children won’t realize you’re affluent until after they have established a mature, disciplined and adult lifestyle and profession. 4. Minimize discussions of the items that each child and grandchild will inherit or receive as gifts.
37. 5. Never give cash or other significant gifts to your adult children as part of a negotiation strategy. 6. Stay out of your adult children’s family matters. 7. Don’t try to compete with your children. 8. Always remember that your children are individuals.
38. 9. Emphasize your children’s achievements, no matter how small, not their or your symbols of success. 10. Tell you children that there are a lot of things more valuable than money.
39. THE CHARACTER OFTHE BUSINESS OWNER IS MORE IMPORTANT IN PREDICTING HIS LEVEL OF WEALTHTHANTHE CLASSIFICATION OF HIS BUSINESS.
The Millionaire Next Door: The Surprising Secrets of America's Wealthy (ISBN 0-671-01520-6) is a 1996 book by Thomas J. Stanley and William D. Danko.
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