What I Learned From The Millionaire Next Door
In an earlier post I mentioned that I bought a book called The Millionaire Next Door
I have just finished reading this book and I want to impart some of what I learned from it. But before I do I just wanted to say that why I recommend this book, it isn’t a book on personal finance, but rather a great book to get you thinking about what it really means to be wealthy (as opposed to just earning a lot).
It shows you who the real wealthy in America are and how they got that way. And it wasn’t through spending lavishly on imported sports cars and gold watches, but rather by working hard on their money, living below their means and being frugal.
It’s a good book to get you thinking and will place you in the right frame of mind for budgeting and saving.
This is what I learned from The Millionaire Next Door:
- Live below your means.
- Be frugal with your money.
- Invest heavily.
- Reduce your taxable income (legally!).
- Research and comparison shop on large purchases.
- Spend time each month on your finances.
- Hire a good accountant.
- Keep your investments for the long-term.
- Invest for your retirement (super).
- Risk is part of life and sometimes necessary.
- Don’t accept expensive gifts.
Out of all the above list the last one was the one that stuck with me the most.
The authors tell a story of a millionaire, Mr Allan, who was going to be receiving a Rolls-Royce from some of the people he had helped to stay in business over the years, as a kind of thank-you gift. He was uneasy about receiving this gift and eventually told them thanks, but no thanks. Why?
Because Mr Allan understood the dangers of having status symbols such as a Rolls-Royce, and how having one status product can lead to purchases others “to fill up the socially conspicuous puzzle.”
In other words, items have a way of changing you. You could say that you are what you purchase.
Have you also read The Millionaire Next Door? What did you think? Did you learn anything from it?
Image credit: Gary Bridgman
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