The Millionaire Next Door – Book Review

Categories Financial Independence, Investing, Retirement
The Millionaire Next Door - Book Review Logo

The last book I read is The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, by Thomas J. Stanley and William D. Danko. This book is a study of the millionaire households in the United States. In this post, you will find out exactly what this book is about and what I thought about it. I was lucky to find it very cheap on Kindle.

I am still reading many new personal finance books. And so far, it is been a great ride. There are some really great books about personal finance, investing and frugality. It is just a bit sad that most of these books are missing any international content. They are really made for the United States. However, a lot of their lessons can still be translated into Europe.

The Millionaire Next Door book

The Millionaire Next Door Book Logo
The Millionaire Next Door Book Logo

The authors of the book collected a lot of data on millionaires. They did it by interviewing millionaires in the United States. In this book, you will find how they collected this data and what is the average millionaire in the US. This may surprise you!

Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier

Indeed, they found out that a lot of high-income earners are not wealthy. The reason is simple, they spend all their income. They are living a high-consumption lifestyle. But, most of the self-made millionaires they interviewed are living a very frugal life. They are saving most of their income. And they are working towards the goal of Financial Independence. A lot of the millionaires already achieved financial independence.

Operate your household like a productive business

In this book, you will find exactly how the millionaires are living. Not only are they living frugal living, but they are also budgeting very strictly. They are also investing. They are operating as a business. And they are hiring the best people (advisors for instance) to help them meet the goals.

Whatever your income, always live below your means

This is the most important advice of the book. If you want to get wealthy (or affluent), you need to live below your means. You need to be frugal. You need to save on most of your things. Even if you earn 300’000 USD a month, you do not need to drive a Porsche. You can live really well with a 3 years old use Sedan car. This is very important. Most of the examples in the book were of high-income. But you definitely can do the same even if you have a smaller income. As long as you live below your means, you will save some money. And you can invest this money to get you faster to your goals.

Economic Outpatient Care

One chapter in the book that I did not expect is talking about how the affluent are giving money to their children. This was very interesting, although a bit long.

Giving precipitates more consumption that saving and investing

It is often more difficult for children of the affluent to become affluent themselves. Indeed, they are used to a nice life but often do not have the same income as their parents. Moreover, a lot of affluent parents give money to their children. The goal is to help them, but the result is often to make them live above their means. This makes them financially dependent of their parents.

The book show several examples of how the affluent are helping their children. From some good examples (paying for education) to some bad examples (paying for their house). There are even extreme examples where the parents control the life of their children with their money.

Accumulators of wealth

Something really interesting in the book is that they are distinguishing between Under Accumulator of Wealth (UAW) and Prodigious Accumulator of Wealth (PAW). There is a simple formula to compute which one of them you are:

Multiply your age times your realized pretax annual household income from all sources (excluding inheritance). Divide by ten. This, less your inherited wealth, is how much net worth you should have.

If you are in the below quartile, you are a UAW. In the top quartile, you are a PAW. Otherwise, you are just average.  For me, this means I should have a net worth of 240’000 CHF. Which I am very far from. I am an Under Accumulator of Wealth. Maybe I am still too young for this test, since I only started getting an income around five years ago. And I just finished my Ph.D. I should do the test again in a few years to see how I am doing for fun.

This is a very nice way of distinguishing between accumulators of wealth. Of course, this is only a number, do not pay attention to it too much. The most important is to reach your goals.

What I liked

I really liked The Millionaire Next Door. It is very well written and is very interesting. It was a very nice source of information to see how the millionaires were living. You can read what jobs they are doing. What is especially good about this book is the amount of the research by the authors. Every point they make is well documented. There many examples throughout the book for each affirmation about the millionaires.

It shows that by living frugally, well below your means, you can become a millionaire. The examples that are set in the book can really help you towards this goal.

What I did not like

Something that is missing from this book is some examples about young millionaires. There seems to be some form of anti-youth bias in the book. The youngest examples in the book are in their mid forties. This is far from some examples of early retirees from the internet. These people have net worth in the millions already. Another thing that is a bit sad is that most examples are showing very large income, from 300K to 700K. This is not so common, even for the United States. I think you can become a millionaire even without so much income.

Another thing I did not like is that some chapters are going into too much details and examples. They insist upon themselves even when the point of the chapter is simple. For instance, the part about the cars of the millionaires. No need for so many details. And also the chapter about Economic Outpatient Care that had way too many examples.

One other thing that is missing from this book is some global information. Only millionaires from the United States have been taken into account for this study. I can understand that this is already a huge work. But some information about how this is different in other countries would be great. The authors have collected data for many years. They could have collected some smaller samples in other countries as well. Or cited other research for them. If you are from the United States, you do not have to worry about this point.


In summary, The Millionaire Next Door is a very good book on the way millionaires are living. Indeed, most millionaires do not have a high-consumption lifestyle. And most people with high-income are not wealthy. Millionaires are becoming wealthy with a simple way of life. By being frugal, planning for financial independence and investing. I would recommend this book to read information about millionaires. If you are interested in early retirement, this book may not be very interesting. It focuses on people in their mid-forties.

You can get this book on Amazon: The Millionaire Next Door – The surprising secrets of America’s Wealthy

If you want to read more about books, you can take a look at the best personal finance books I have read. I am now reading I will Teach You To Be Rich. I will tell you what I think of this one when I am done.

If you already read The Millionaire Next Door, I would be very interested on your point of view!

2 thoughts on “The Millionaire Next Door – Book Review”

  1. Hey Poor Swiss!

    This is a great review here. I agree that living below your means is very important. I know a lot of people say this is obvious, but the problem is they don’t know how to live below their means. They will say they can’t and some will even come up with excuses, lol. I’ll admit it is hard for a lot who are earning little income but if they really have the drive, they will go and find ways to earn more whether it be a side hustle or putting in effort to get that promotion.

    Overall, this is a nice review. I can see why you wish they provided info outside of the US. I live in Canada so I guess we can relate to them a little bit more, but still… It would be nice to know our own countries too, haha.

    BTW, I loved Ramit’s book. I love Ramit’s style! His writing style is also entertaining and easy to understand. I know some people see him as raw and too straight up, but I love it! He’s no fluff, no BS… straight to the point!

    1. Thanks panda ;)

      Yeah, a lot of people don’t realize that is actually very easy to leave below one’s means. And there is a also some peer pressure. Now that I’ve got a good salary after my Ph.D. one of my friend is pressuring me to spend more :P

      I’m almost through Ramit’s book and except for a few things on which I don’t agree with him, it’s a very good reading. The style is very light and entertaining. It’s a really good book.

      Thanks for stopping by :)

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