Authors: Dr. Thomas J. Stanley and Dr. William D. Danko
Country: United States
Genre: Business Finance
Reviewer: Blessing Peter Titus
Beginning with the comparison between the Trust Officer and the Millionaire next door was mind-changing. I would, too, have picked the trust officer as the Millionaire due to his clearly affluent lifestyle.
However, the authors shattered that mindset by portraying that looking wealthy (as popularly propagated by the mainstream media) isn’t the same as being wealthy in real life.
Talking about the portrait of a millionaire, I marveled that a millionaire could spend 2-3 hours answering a questionnaire just to earn a single dollar!
It took the writers twenty years of conducting research before coming up with this book. To me, this gives it credibility and shows how determined the authors were in presenting facts to help people build wealth.
The writers give a formula that one can use to calculate their net worth. They suggest that if you multiply your age with your realized pretax annual household income from all sources except inheritances divided by ten. This, less any inherited wealth, is what your net worth should be.
Such knowledge, according to the writers, helps to determine if you are a prodigious accumulator of wealth (PAW), an under accumulator of wealth (UAW)), or an average accumulator of wealth (AAW), and it acts as an eye-opener.
However, it might be a little tricky to calculate the networth of someone who does not earn a monthly salary or has not kept a consistent record nor taken note of his or her annual income.
Stanley and Danko also give ideas on what a person can invest in, mentioning publicly traded stocks, mutual funds, common stocks, bonds and equities as investment areas.
The advice to get an accountant, particularly a certified public accountant (CPA) and attorney, seemed far-fetched to me because I don’t know how effective those are.
The whole bane of the book is centered around these seven common denominators concerning those who successfully build wealth:
They spend less than they earn; they allocate their time, energy, and money efficiently in ways conducive to building wealth, and they also believe that financial independence is more important than displaying high social status.
Though maybe, their parents did not provide economic outpatient care, their adult children are economically self-sufficient. They are proficient in targeting market opportunities and they also choose the right occupation.
Let me conclude with this excerpt from the book: “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.
Conversely, people of modest backgrounds who believe that only the wealthy produce millionaires are predetermined to remain non-affluent.”
The story Mr. Allan (a character in the book) shared in chapter four made me wonder, “How can a person refuse a gift of a Rolls-Royce?”
I then remembered the chapter’s title, “You are not what you drive.”
I recommend this book to anyone who wants clarity on how to build wealth and understand how millionaires work, think and spend.
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BOOK REVIEW: I’m in Charge of My Narrative
A review of Volume II of The Open Society and Its Enemies
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