The Millionaire Next Door, is not really a Millionaire

This book was a tough one to finish. Super fine detail towards the end.  Most of it reiterating the same point.

If I could summarize it all for you:

Frugality = Millionaire.

It reminds me of the times I walk around and see a Lamborghini or a Ferrari.  You see these guys in nice cars, and you say to yourself – ah, I wouldn’t mind that car. Or you think – wow, that’s impressive. Firstly, there’s nothing wrong with admiring a nice car. I know many financially successful people who spend hundreds of thousands on their cars. What the Millionaire Next Door is trying to say is that a significant amount of people are putting up a lie – they can’t afford to live a high consumption life. So even though there are people who are successful, and are able to afford luxurious things, there are also many who simply do so to look rich.


The Millionaire Next Door?

The best example is simply comparing a guy who looks like a millionaire. We think of a giant house, great suburb, nice suit and exotic car. The reality is that a majority of millionaires don’t look like this. Take a look at Brin and Page (billionaire founders of Google). they drive a Toyota Prius! You don’t need to look rich to be rich. 

That’s not to say you can’t have nice things! What I took away from the book was that you should always be frugal when you can be, especially at the start. You can’t just make millions without saving. So where you can be, be frugal. Use your money wisely. Where you can, live below your means.

Keeping up the image.

Keeping up the image.

Is it easy? No way. I know that when I see something nice, and I have a bit of money saved up, I take a while to fight the urge. It’s hard. I also think its much harder for those living in very nice suburbs. The Millionaire Next Door shows that because you live in these nice suburbs, you feel pressured to keep up the ‘image’ of the area. Your neighbor has a nice car and is always nicely dressed – so why aren’t you? If you can afford to keep it up, why not – but if you can’t, don’t. Don’t waste your energy. Every dollar does matter. Use that money to build wealth. Sure, spoil yourself a little (these feel even better the longer you hold it off – you learn to appreciate it even more), but when you can, why don’t you save? Any accumulated wealth will position you in future for great ventures – I’m sure of it. 


My game plan or quick tips?

  • Eat at home when you can – when you see friends, host a small dinner at yours. Its more intimate as well!
  • No drinking – minimize the alcohol whenever you can (In Australia this is really marked up!)
  • Use the gym in my condo or my home gym as opposed to memberships. There’s also many videos on Youtube for body-weight exercises.
  • Work more, even on side projects.
  • Plan ahead, budget and all.

What’s yours?