The first personal finance book I ever read completely changed the way I think about and manage my money
- Lots of personal finance books teach you about money, but "The Millionaire Next Door" taught me about perspective.
- I used to think that frugality was for people who need money, and that looking for deals and coupons was for people who couldn't spare an extra few cents. I spent years building and living with debt, thinking it was normal.
- But "The Millionaire Next Door" showed me that many millionaires are thoughtful about building wealth, and frugal in their day-to-day lives. It was mind-blowing for me, and changed the way I managed my money going forward.
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There are many books out there about money. So many aim to teach you how to manage your money better, offering new conceptual tips and strategies to accomplish success.
Personally, the best money book I have ever read taught me about perspective. By reading this book, I found myself with a completely new mindset, and as a result, my entire life started to evolve.
That book was "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko. It's an analysis of the everyday millionaires in America who aren't making headlines, diving deep into how they make, keep, and grow their money. It was originally published in 1996, and while it's been updated a few times since then, it's just as relevant today.
Very few books resonate with me as much as "The Millionaire Next Door." It was one of the main catalysts for how I currently deal with money and practice frugality. After reading this book, it was impossible to go about my life in the same way, change had to be made.
"The Millionaire Next Door" is a book that explains the intricacy of today's millionaires, people you would be surprised to find wealthy, and the habits and decisions that got them to that wealth level.
But, it's more than just a book about wealth and tips to get there. It's a book about mindset and habit changes that all of us can do. I learned some valuable lessons from the first personal finance book I ever read and that literally changed my life.
Prior to reading "The Millionaire Next Door," I was in so much debt and never thought much of it. I just lived a "normal" life of payments and adding more debt. After reading this book, I started changing my life. Now, I'm debt-free, building wealth, and have converted to frugal living to enjoy the things I love.
Here's what I learned from the best book I ever read about money, "The Millionaire Next Door":
1. Being in debt is standard for many millionaires
We may think that even the rich have debt just like us. But according to the book, many millionaires don't acquire debt. Instead, the wealthy look to grow their wealth by investing early and contributing often.
Debt, the book says, lies mostly in the lower to middle classes. Mainly the people that strive for status and acceptance by their friends are the ones who go into debt trying to look like they're rich.
When I read this, I realized that I needed to become deb- free. It was my first step to achieving wealth and success with my money.
2. Most millionaires did not come from wealth or inherit money
Contrary to popular belief, most of today's millionaires worked hard to get there. According to the book, 70% of millionaires didn't inherit their millions, nor were they born as heirs or heiresses.
In fact, many of today's millionaires worked ordinary blue and white-collar jobs or had a small business. It wasn't the amount of income that brought them wealth, it was their mindset of saving money and being consistent with their money habits that brought them to wealth.
3. Millionaires (and billionaires) are generally frugal
They know money is a tool, and the more they are able to save money, the more they can invest it and grow their wealth. They're not ashamed to be frugal in public because they know that frugality is the key to accumulating, keeping, and building wealth. When you are able to save money on everyday living, you can use the money you saved to work for you.
When we look at even billionaires like Warren Buffett or Mark Zuckerberg, we typically don't see them in lavish cars, high end clothing, or fancy accessories. Instead, they're relatively modest. Warren Buffett lives in the same house he originally bought when he married. Mark Zuckerberg wears t-shirts and jeans every day.
It's a simple concept, but before reading this book, I always looked at frugality as something people did when they didn't have a lot of money. This was so eye-opening for me. It was what sparked me to convert to frugality for good. This literally changed my life.
4. It's the small daily habits that make all the difference with your money
Millionaires didn't get there overnight. It took patience, discipline, and small daily choices to get to millionaire-ville.
They ingrain good choices into their lifestyle. They don't splurge on non-essentials from time to time. They don't use retail shopping as therapy. And they certainly don't buy things they can't afford on a high-interest credit card like many of us do.
Instead, they incorporate small daily habits that make all the difference. They make their coffee at home, they buy shoes only when their current pair wears out, and they look for the best value (not sales) on everything.
Notice, looking for the best value is inherently frugal, whereas looking for sales is not. Millionaires in the book are often portrayed as weighing out depreciation of the item, the purpose and functionality it provides for their life, and the overall lifespan of the item. Price, while of course is considered, is not at the forefront. Using that frugal mindset on small daily choices helps them naturally accumulate save more money in the long run.
5. Some millionaires clip coupons like ordinary people
I was shocked to hear that Warren Buffett, an investment tycoon and one of the richest men in the world, clips coupons. Well, to be more accurate, his wife clips coupons.
When I read this, it made me realize you're never too rich to save money. Someone who has billions to his name is unashamed to use coupons! Clipping coupons is not a practice of people in need of money- it's the practice of people who value their money.
This was mind-blowing for me. Up until this moment, I had been embarrassed at the thought of giving a cashier coupons, in fear of the person behind me in line judging me. Perhaps they might think I couldn't afford the extra 25 cents I was aiming to save.
This part of the book transformed my mindset more than anything. Imagine, a normal person, making an average salary, ashamed to save money but one of the most wealthy, unashamed!
This book was such an eye-opener. It changed my perspective on how I should manage my money. It took away the shame of frugality and saving money. The words in the book told more than a story about these millionaires. It described how these millionaires got to this status and drew me a roadmap of how I could get there, too.