Millionaire Next Door Quotes

Whatever your income, always live below your means.

Good health, longevity, happiness, a loving family, self-reliance, fine friends … if you [have] five, you’re a rich man….

Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.

I am not impressed with what people own. But I’m impressed with what they achieve. I’m proud to be a physician. Always strive to be the best in your field…. Don’t chase money. If you are the best in your field, money will find you.

It’s easier to accumulate wealth if you don’t live in a high-status neighborhood.

One of the reasons that millionaires are economically successful is that they think differently.

Many people who live in expensive homes and drive luxury cars do not actually have much wealth. Then, we discovered something even odder: Many people who have a great deal of wealth do not even live in upscale neighborhoods.

If your goal is to become financially secure, you’ll likely attain it…. But if your motive is to make money to spend money on the good life,… you’re never gonna make it.

The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning.

Money should never change one’s values…. Making money is only a report card. It’s a way to tell how you’re doing.

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.

Be tough … life is. In other words, there is no promise of a rose garden.

it matters less how much more you make than what you do with what you already have.

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

Most people will never become wealthy in one generation if they are married to people who are wasteful. A couple cannot accumulate wealth if one of its members is a hyperconsumer.

Great offense and poor defense translate into under accumulation of wealth.

To build wealth, minimize your realized (taxable) income and maximize your unrealized income (wealth/capital appreciation without a cash flow).

it is very difficult for a married couple to accumulate wealth if one is a spendthrift. A household divided in its financial orientation is unlikely to accumulate significant wealth.

Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that’s why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.

How can well-educated, high-income people be so naive about money? Because being a well-educated, high-income earner does not automatically translate into financial independence. It takes planning and sacrificing.

His view of millionaires is shared by most people who are not wealthy. They think millionaires own expensive clothes, watches, and other status artifacts. We have found this is not the case.

If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend.

Financially independent people are happier than those in their same income/age cohort who are not financially secure.

Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend.

Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement. What are three words that profile the affluent? FRUGAL FRUGAL FRUGAL

According to our most recent survey, the typical American millionaire reported that he (she) never spent more than $399 for a suit of clothing for himself or for anyone else.

The “some college,” “four-year college graduate,” and “no college” types who have high incomes often had a head start on many well-educated workers.

It’s amazing what you can do when you set your mind to it. You’ll be surprised how many sales calls you can make when you have no alternative except to succeed.

our youth are told that buying expensive items is normal behavior for affluent people. They are led to believe that the wealthy have a high-consumption lifestyle. They learn that hyperspending is the main reward for becoming affluent in America. Why

The advertising industry and Hollywood have done a wonderful job conditioning us to believe that wealth and hyperconsumption go hand in hand.

Operate your household like a productive business.

QUESTION 2: DO YOU KNOW HOW MUCH YOUR FAMILY SPENDS EACH YEAR FOR FOOD, CLOTHING, AND SHELTER? Almost two-thirds of the millionaires surveyed (62.4 percent) answered “yes” to this question.

What if he had taken full advantage of the tax-advantaged benefit from the time he was first employed? Today he would be a millionaire. Instead, he is on the perpetual earn-and-consume treadmill.

Victor wants his children to become physicians, lawyers, accountants, executives, and so on. But in so encouraging them, Victor essentially discourages his children from becoming entrepreneurs. He unknowingly encourages them to postpone their entry into the labor market. And, of course, he encourages them to reject his lifestyle of thrift and a self-imposed environment of scarcity.

For every millionaire who owns a $1,000 suit, there are at least six owners who have annual incomes in the $50,000 to $200,000 range but who are not millionaires.

It is easier to purchase products that denote superiority than to actually be superior in economic achievement.

if you’re not financially independent, you will spend an increasing amount of your time and energy worrying about your socioeconomic future.

There is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one’s financial future.

Unlike the millionaire next door, the soldier next door is uncelebrated by commerce and culture. He is the sheepdog, the ranger, the sentry who walks our walls. She is the corpsman, the driver, the mate who patrols our harbors. It was my brief privilege to stand with—not the prettiest people, nor the best educated or most flossily advantaged—but the very best people my country could offer up.

Most millionaires measure their success by their net worth, not by their realized income. For the purposes of wealth building, income doesn’t matter that much. Once you’re in a high-income bracket, say $100,000 or $200,000 or more, it matters less how much more you make than what you do with what you already have.

About one-half of the millionaires in America don’t live in upscale neighborhoods.

Courage can be developed. But it cannot be nurtured in an environment that eliminates all risks, all difficulty, all dangers.

They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way. Sometimes

Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires.

Unfortunately, most Americans think that they are emulating the rich by immediately consuming any upward swing in their cash flow.

America is still the land of opportunity. Over the past thirty years I have consistently found that 80 to 85 percent of millionaires are self-made.

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

Nearly all (95 percent) of the millionaires we surveyed own stocks; most have 20 percent or more of their wealth in publicly traded stocks.

Wealth is not the same as income.

THEIR ADULT CHILDREN ARE ECONOMICALLY SELF-SUFFICIENT.

I don’t own big hats, but I have a lot of cattle.

Once you’re in a high-income bracket, say $100,000 or $200,000 or more, it matters less how much more you make than what you do with what you already have.

Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline. How

UAWs tend to live above their means; they emphasize consumption. And they tend to de-emphasize many of the key factors that underlie wealth building. YOU

We can't assume that yesterday's success translates to tomorrow's good fortune.

Most of us want to be wealthy, but most of us do not spend the time, energy, and money required to enhance our chances of realizing this goal.

What are the implications of our findings? It’s easier to accumulate wealth if you don’t live in a high-status neighborhood.

What's it like to have it all, lose it, and find your way back?

Big Hat No Cattle

Mrs. Rule wants to be free of financial worry before her sixty-fifth birthday. Each time she tabulates, she tells herself she is reducing her fear of never being able to retire in comfort.

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be. For

Most people who become millionaires have confidence in their own abilities. They do not spend time worrying about whether or not their parents were wealthy. They do not believe that one must be born wealthy.

What you probably don’t know is that your neighbor in the $300,000 house next to yours bought his house only after he became wealthy. You bought yours in anticipation of becoming wealthy. That day may never come. Each

To many successful, achievement-oriented children of the affluent, accumulating money is not the superordinate goal. Instead, they want to be well educated, to be respected by their peers, and to occupy a high-status position. For

After twenty years of studying millionaires across a wide spectrum of industries, we have concluded that the character of the business owner is more important in predicting his level of wealth than the classification of his business. But

I have always been goal-oriented. I have a clearly defined set of daily goals, weekly goals, monthly goals, annual goals, and lifetime goals. I even have goals to go to the bathroom. I always tell our young executives that they must have goals.

What is to be learned from this case scenario? 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. If you don’t have an accountant, hire one. Another

Mr. Denzi can teach us all something about accumulating wealth. Begin earning and investing early in your adult life. That will enable you to outpace the wealth accumulation levels of even the so-called gifted kids from your high school class. Remember, wealth is blind.

Victor wants his children to have a better life. He encourages them to spend many years in college. Victor wants his children to become physicians, lawyers, accountants, executives, and so on. But in so encouraging them, Victor essentially discourages his children from becoming entrepreneurs.

Why aren’t you as wealthy as you should be? It may be because of the way you operate your household. Would a business, especially a very productive one, ever hire a key employee without doing a serious background check and an in-depth interview? No! Yet most people, even those with high incomes, hire financial advisors after obtaining little or no background information about these “employment candidates.” Some

It is unfortunate that some people judge others by their choice in foods, beverages, suits, watches, motor vehicles, and such. To them, superior people have excellent tastes in consumer goods. But it is easier to purchase products that denote superiority than to be actually superior in economic achievement. Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement.

All too often high-income-producing UAWs spend countless hours studying the market—but not the stock market. They can tell you the names of the top auto dealers, but not the top investment advisors. They can tell you how to shop and spend. But they can’t tell you how to invest. They know the styles, prices, and availability at various car dealers. But they know little or nothing about the various values of equity market offerings. As

millionaire has told me that true diversity has much to do with controlling one’s investments; no one can control the stock market. But you can, for example, control your own business, private investments, and money you lend to private parties. Not at any time during the past thirty years have I found that the typical millionaire had more than 30 percent of his wealth invested in publicly traded stocks. More often it is in the low-to-mid-20-p

Twenty years ago we began studying how people become wealthy. Initially, we did it just as you might imagine, by surveying people in so-called upscale neighborhoods across the country. In time, we discovered something odd. Many people who live in expensive homes and drive luxury cars do not actually have much wealth. Then, we discovered something even odder: Many people who have a great deal of wealth do not even live in upscale neighborhoods.

Nearly all (95 percent) of the millionaires we surveyed own stocks; most have 20 percent or more of their wealth in publicly traded stocks. Yet you would be wrong to assume that these millionaires actively trade their stocks. Most don’t follow the ups and downs of the market day by day. Most don’t call their stock brokers each morning to ask how the London market did. Most don’t trade stocks in response to daily headlines in the financial media. Do

Consider the level of car-purchasing knowledge Dr. South has recently acquired that will never pay capital gains or real dividends or enhance the productivity of his business. He now has knowledge about every Porsche dealer within a four hundred-mile radius of his home. Dr. South also can tell you immediately the dealer’s cost on nearly every Porsche model, the cost of options and accessories, and the performance characteristics of most models. It takes much time and effort to acquire such information. Dr.

$90,000, she’s worth more than twenty times that amount. And she is in control of her household’s domestic spending. Robert and Judy, on the other hand, are frightened. And they should be. This couple earns $200,000 annually, or more than twice what Mrs. Rule earns. Yet, like so many of today’s high-income-producing couples, Robert and Judy have only a fraction of Mrs. Rule’s wealth. They feel that consumption controls them, not the other way around. Even Mrs. Rule might find it daunting to have to account for $200,000

Forbes lists several top-performing small businesses that have had great endurance for the past ten years. Some of the industries represented include wallboard manufacturing, building material manufacturing, electronics stores, prefab housing, and automobile parts. No, these industries don’t sound very exciting. But typically it’s these mundane categories of businesses that produce wealth for their owners. Often dull-normal industries don’t attract a great deal of competition, and demand for their offerings is not usually subject to rapid downturns. We

How do you judge the professionals you patronize? Too many people judge them by display factors. Extra points are given to those who wear expensive clothes, drive luxury automobiles, and live in exclusive neighborhoods. They assume a professional is likely to be mediocre, even incompetent, if he lives in a modest home and drives a three-year-old Ford Crown Victoria. Very, very few people judge the quality of the professionals they use by net worth criteria. Many professionals have told us they must look successful to convince their customers/clients that they are.

Mr. Friend never really enjoys his life. He owns a lot of upscale things, yet he works so hard and for so many hours during a typical day that he has no time to enjoy them. He has no time for his family, either. He leaves his house each day before dawn and rarely returns home in time for dinner. Would you like to be Mr. Friend? His lifestyle is appealing to many people. But if these people really understood Mr. Friend’s inner workings, they might evaluate him differently. Mr. Friend is possessed by possessions. He works for things. His motivation and his thoughts are focused on the symbols of economic success.

The median (typical) household in America has a net worth of less than $15,000, excluding home equity. Factor out equity in motor vehicles, furniture, and such, and guess what? More often than not the household has zero financial assets, such as stocks and bonds. How long could the average American household survive economically without a monthly check from an employer? Perhaps a month or two in most cases. Even those in the top quintile are not really wealthy. Their median household net worth is less than $150,000. Excluding home equity, the median net worth for this group falls to less than $60,000. And what about our senior citizens? Without Social Security benefits, almost one-half of Americans over sixty-five would live in poverty. Only

During the year we interviewed him, Dr. South spent more than $70,000 for his most recent motor vehicle purchase, related sales tax, and insurance. Yet for the same period, how much did he place in his pension plan? About $5,700! In other words, only about $1 in every $125 of his income was set aside for retirement. The amount of time Dr. South took to find the best deal on his car was also counterproductive. We estimated that it took him more than sixty hours to study, negotiate, and purchase his Porsche. How much time and effort does it take someone to place money in a pension plan? A small fraction of this time and energy. It is easy for Dr. South to say he wants to accumulate wealth, but his actions speak much louder than his words. Perhaps that explains why he has lost a considerable amount of wealth through imprudent investing. Investing when one has little or no intellectual basis for one’s decisions often translates into major losses. T

having a set of stated goals does not necessarily mean that one is committed to achieving them. Most of us want to be wealthy, but most of us do not spend the time, energy, and money required to enhance our chances of realizing this goal.

QUESTION 3: DO YOU HAVE A CLEARLY DEFINED SET OF DAILY, WEEKLY, MONTHLY, ANNUAL, AND LIFETIME GOALS?

FEARS AND WORRIES                                  What do you spend time worrying about? Are your concerns congruent with wealth accumulation? Or do you spend time thinking about issues that are impediments to becoming affluent?

HOW TO DETERMINE IF YOU’RE WEALTHY Whatever your age, whatever your income, how much should you be worth right now? From years of surveying various high-income/ high-net worth people, we have developed several multivariate-based wealth equations. A simple rule of thumb, however, is more than adequate in computing one’s expected net worth. Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be. For example, if Mr. Anthony O. Duncan is forty-one years old, makes $143,000 a year, and has investments that return another $12,000, he would multiply $155,000 by forty-one. That equals $6,355,000. Dividing by ten, his net worth should be $635,500. If Ms. Lucy R. Frankel is sixty-one and has a total annual realized income of $235,000, her net worth should be $1,433,500. Given your age and income, how does your net worth match up? Where do you stand along the wealth continuum

Economic independence belongs to those with the willingness to allocate time, money, energy, and cognitive resources to achieve financial goals.

Mr. Allan recognizes that many status artifacts can be a burden, if not an impediment, to becoming financially independent. Life has its own burdens. Why add excess baggage?

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Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that’s why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status. Most

I am my favorite charity.” “WEALTHY

(62.4 percent) answered “yes” to this question. So did Mrs. Rule. But only about 35 percent of high-income-producing nonmillionaires answered “yes” to this question.

We looked at each other; one said: “These people are not into status; they buy automobiles by the pound!

Spending beyond a pretty low level of materialism is mostly a reflection of ego approaching income. A way to spend money, to show people that you have or had money. Think of it like this: and one of the most powerful ways to increase your savings isn't to raise your income, it's to raise your humility.

The illusion of control is more persuasive than the reality of uncertainty.

Modern capitalism is a pro at two things: generating wealth and generating envy. Perhaps they go hand in hand; wanting to surpass your peers can be the fuel of hard work. But life isn't any fun without a sense of

The Millionaire Next Door by Thomas J. Stanley and William D. Danko:

To make money they didn't have and didn't need, they risked what they did have and did need. And that's foolish. It is just plain foolish. If you risk something that is important to you for something that is unimportant to you, it just does not make any sense. There is no reason to risk what you have and need for what you don't have and don't need.

set of daily, weekly, monthly, annual, and lifetime goals

Wealth is not the same as income. If you make a good income each year and spend it all, you are not getting wealthier. You are just living high. Wealth is what you accumulate, not what you spend. How