Stop Reading “The Millionaire Next Door”

Dividends Forever
4 min readMay 24, 2021

The Millionaire Next Door, by Thomas J. Stanley and William D. Danko, is a book that is constantly recommended as the gold standard for personal finance.

Here’s a summary quoted from Wikipedia:

The authors compare the behaviour of those they call “UAWs” (Under Accumulators of Wealth) and those who are “PAWs” (Prodigious Accumulator of Wealth). Their findings, that millionaires are disproportionately clustered in middle-class and blue-collar neighborhoods and not in more affluent or white-collar communities, came as a surprise to the authors who anticipated the contrary. Stanley and Danko’s book explains why, noting that high-income white-collar professionals are more likely to devote their income to luxury goods or status items, thus neglecting savings and investments.

There’s nothing wrong with the book itself, and a lot of the advice is practical. You learn about the dangers of playing status games, and why it is important to buy assets instead of liabilities.

That’s good, basic advice.

However, The Millionaire Next Door is not a good financial book to read if you are interested in building wealth.

Here’s why.

Being A Millionaire Is Not That Special

In their study, Stanley and Danko found that the average age of a millionaire is 57. At the risk of sounding like a jerk, living frugally and saving up $1 million in your 50’s isn’t a massive accomplishment.

It doesn’t take incredible financial or intellectual skills to eat at home or drive a used car.

Likewise, $1 million really is not a lot of money. Having a million bucks in a 6% cash flowing asset means you’re collecting $60,000 a year. That’s not enough to live in many parts of the United States.

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