The Millionaire Next Door

A very repetitive and somewhat dull book: essentially they interviewed a few thousand millionaires (so the sample is limited), showing that most do not live like a stereotypical rich person, but remain frugal. By contrast, many big spenders often do not earn enough to sustain that lifestyle but want to appear affluent. I doubt that most millionaires are as they describe; it seems they focused on a particular niche. Still, the Income vs Wealth idea is interesting:

If I earn 100k but spend 90k a year, my wealth will be low. If I earn 50k and spend 20k, I have many more opportunities to grow. The usual lesson on frugality.

Millionaires have 7 characteristics:

1. They live well below what they can afford (e.g., used cars, simple clothing, and ordinary houses)
2. They allocate their time and energy to building wealth, such as investing and diversifying
3. They think financial independence is more important than looking rich
4. Their parents did not give them financial help.
5. Their adult children are financially self-sufficient. Linked to point 4, it shows that helping children too much with many gifts leads them to spend more and spend poorly
6. They are good at targeting market opportunities
7. They choose the right occupation. This is interesting: often millionaires are entrepreneurs who had some luck, but they advise their children to study engineering/medicine/law, knowing it is safer than what they did.

In short, the real millionaires (or rather, the ones they interviewed with a method that may exclude certain millionaires) do not show off and stay humble. I was surprised, but I’ll take the lesson with me.