In The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (1996) researchers Thomas J. Stanley and William D. Danko present their findings about the habits, lifestyles, and financial behaviors of American millionaires. While most picture millionaires as the nation’s highest earners and most conspicuous spenders, Stanley and Danko argue that most of them accumulate wealth through hard work, frugality, disciplined saving, and long-term investing. The Millionaire Next Door outlines the seven factors that Danko and Stanley believe anyone can follow to consistently build wealth and ultimately reach millionaire status.

Key takeaways include:

• Live Below Your Means
• Overspending Is the Enemy of Wealth Building
• Budget Your Money—and Your Time and Energy
• Teach Children Frugality and Self-Sufficiency
• Choose Your Profession Wisely

This guide uses the 1997 Longstreet Press version of this book.

Content Warning: This guide and the source text include discussion of racism and sexism. The guide discusses the source text’s sexist assumptions about household gender roles, which reflect the era of its publication.

Summary

In their Introduction, authors Danko and Stanley explain that they have thoroughly researched thousands of millionaires across America. They found that most of those they studied did not have inherited wealth or celebrity status, but worked hard and used sound financial practices to accumulate wealth. The authors lament that many Americans make good incomes but lack the financial knowledge and disciplined lifestyles to create security for themselves and their families. They promise to teach the reader the seven factors to live by so that they can make the most of their income and become wealthy.

The authors refute the stereotype that most millionaires live luxurious lifestyles and spend their money freely. Instead, they argue that most intentionally live far below their means in order to accumulate wealth. Most wealthy people have not inherited their money and receive little, if any, family money. These points teach the reader that working hard, saving and investing wisely are essential to growing one’s wealth.

The authors claim that truly wealthy people do not overspend on luxury goods and understand the value of even small amounts of money. While earning a high income is a good financial “offense,” it is essential to develop the “defense” strategy of saving. Many high-earning people do not become truly wealthy because they overspend.

The authors discuss how affluent parents support their adult children, arguing that giving money regularly creates dependency and encourages spending, overconsumption, and financial ignorance.

The authors predict that the number of millionaires in America will continue to grow, and so will the demand for services they need.

Business owners represent a large proportion of America’s millionaires. However, many businesses fail, and self-employment is often risky and difficult. The authors note that most affluent people encourage their kids to become engineers, lawyers, professors, and doctors. These professions are always needed. They are advantageous to many businesses because they sell people’s intellect and expertise and often have lower overhead costs.

Stanley and Danko remind the reader that no one profession is guaranteed to make them rich. One must live by principles of the wealthy to achieve financial success.