THE MILLIONAIRE NEXT DOOR BOOK REVIEW

            This book is a collection of various profiles of millionaires carried through a research by two PhD authors that is Thomas Stanley and William Danko. The use of the word millionaire has a more specific meaning in the book as it is used to refer to the United States households together with the net worth that go beyond one million dollars. Therefore the authors compare the behaviors of those that are regarded as under accumulators of wealth and the prodigious accumulators of wealth. According to the authors, the under accumulators of wealth are a representation of a certain level of people who basically have a lower net worth than that of their earnings. Thus the under accumulation strategy is viewed by the authors as the practice where an individual uses more of his/ her income than the rate at which he or she is saving the earnings. Thus according to the book the under accumulators only have a net worth that amounts to a tenth of their age multiplied by the present yearly income from all sources of income. Therefore for a conclusion to be made whether a person is an under accumulator or rather a prodigious accumulator, the wealth accumulated after the calculation would be a half of the result for the under accumulators while the result would be twice for the prodigious accumulators as seen in chapter three (Stanley et al 1-7).

            On the other hand, the prodigious accumulators of wealth are the ones regarded by the authors as millionaires since they accumulate twice the individual’s age and a tenth of the individuals recognized earnings. In the authors research findings they noted that a large number of millionaires that they had outlined did not have extravagant standards of living as most of the people would expect.

This was supported by the little expenses that these millionaires spent on purchasing luxurious things such as cars, suits and expensive watches as gathered from a survey that they carried out. The book therefore majors on two themes that involve elaborating on the reasons as to why the millionaires accumulate more wealth and also contrasting linking the balance sheet for those with the high net worth and those with lower net worth but have higher earnings (Stanley et al 71-108 ).

            Chapter one of the book especially page one gives the reader the current situation at hand in our economy as it gives an outline of news.  Just as the sub title of this chapter the author elaborates the meaning of the subtitle bringing out clearly the meaning of the neighbor at the next door. The authors in their definition in this chapter they provide us with an illustration where they state that there is a high probability that even at the place of residence for the middle class individuals there might be a millionaire living there next door. These wealthy people that occupy same location as those of the middle class men tend to live a middle level lifestyle as they own the same type of houses that the middle class people has (Stanley et al 7-26).

            In chapter two the authors describes about the frugal concept where the wealthy are regarded as economical in the way they lead their lives. They are frugal in the way they spend their finances on the luxurious things and this makes the major reason as to why they are regarded as millionaires as they use little of their earnings that their total income which is high. An estimate of 50% of the wealthy American people survey reports has shown that they are frugal (Stanley et al 27-70).

           

Generally, the two authors define wealth in terms of the net worth which is a much permanent financial independent indicator for the long run. Their definition is not at any chance based on the gross income or the kind of lifestyle that one leads. This is a challenge to many people as they define wealth in the other way than that of the authors. The authors in this book have thus set a straight record as it has adequate data to reinforce their arguments. The book also utilizes more of charts with essential data which is presented nicely and the information in the book is quite interesting. Among the interesting things about the book, the reader is able to understand how most of the Americans manage to live far beyond their income.

            The book is among the best selling books but however it has its pitfall. The book advocates for more of the frugal concept and more of saving with an intention for a better long run. However, it is quite clear that no one knows of the time of death and yet again in the long run we must all die. This leaves questions as to why we should work hard to get more income to save for others to use in the long run when we die and why not use it at the moment for a better lifestyle. However the book has a lot of teachings on wealth accumulation and any reader who reads this book has a better way to approach wealth issues.

 

 

 

 

 

 

            Reference

Stanley, Thomas J. The Millionnaire Next Door: The Surprising Secrets of America's Wealth. New York:       MJF Books, 2003. Print.