Book Review: The Millionaire Next Door by Thomas J. Stanley

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The main idea of this book is that most millionaires are not flashy or showy like those you see in movies. In fact, many of them live frugally and make smart financial decisions like investing wisely and budgeting their resources. If you follow these principles, you too can become a millionaire.

The Millionaire Next Door encourages you to follow in the footsteps of successful millionaires by being dedicated and smart about managing your money.

In this book, you’ll discover why someone who drives a Bentley may actually earn less money than you; when you should start investing; and why children who are less responsible may end up inheriting a larger share of their millionaire parents’ wealth.

This book review will tell you what important lessons you can learn from this book so you can decide if it is worth your time.

Without further ado, let’s get started.

Key Insights

Lesson 1: Most millionaires have budgets and stick to them.

To build wealth like many millionaires do, it’s important to set financial goals and create a plan to reach them. One strategy is to invest a significant portion of your income, such as 25% of your pre-tax monthly income if you have a million dollars saved. To make this plan work, it’s important to create a budget that covers all necessary expenses, like food and clothing, as well as non-essential items like travel and entertainment. Sticking to this budget is crucial.

Thomas C. Corley, a millionaire himself, suggests cutting costs wherever possible, including adjusting your lifestyle. He recommends following a strict budget and has specific guidelines for various types of expenses. 

For example, he suggests that housing costs, whether for a home purchase or rental, should not exceed 25% of your annual income. 

Other recommendations include limiting entertainment expenses, like dining out or going to concerts, to no more than 10% of your monthly income and keeping car expenses to no more than 5% of your monthly after-tax income.

In addition to these tips, Corley advises against leasing a car, as you don’t end up owning anything at the end of the contract. It’s also important to avoid taking on credit card debt. To save for the future, consider contributing to a tax-deferred retirement account through your employer.

Millionaires often have their own detailed budgeting plans, including specific spending limits for various categories. Corley’s guidelines can be a helpful starting point for determining your own budget. Remember, he learned the importance of budgeting firsthand after his own family lost their multi-million dollar fortune.

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Lesson 2: Most millionaires are self-employed.

Two-thirds of millionaires in the United States own their own businesses, often in essential industries such as plumbing, electricity, car repair, and road building. 

Many professionals, like doctors, dentists, lawyers, and accountants, are also self-employed. These business owners and self-made millionaires value autonomy and control over their financial futures.

A newer group of self-made millionaires, known as “millionaire kids,” are young people who create successful businesses, often online, at a young age. 

One example is Ashley Qualis from Detroit, who had a background in web development and started the website 

in 2004. She gained popularity through word-of-mouth and by offering free layouts to her peers. 

In 2005, she joined Google’s Adsense program and saw a significant increase in revenue from ad clicks on her site. As the website grew in popularity, it also began generating millions of dollars in advertising revenue every year from companies placing ads on the site.

Lesson 3: Financial independence is more important to most millionaires than a luxurious lifestyle.

Millionaires often don’t place much value on showing off their wealth or worrying about what others think of them. They don’t care about the material possessions that money can buy, such as furniture, cars, or clothes. Instead, they see the potential for the financial security and comfort that money can provide, both in the present and future, especially in their retirement. This is what they consider to be the true value of money.

On the other hand, most people are concerned with their appearance and reputation in front of their peers, family, and colleagues. This often leads to unnecessary spending on things like extravagant homes, cars, and clothes.

Contrary to popular belief, many millionaires do not spend a significant amount of their wealth. For example, Facebook co-founder and CEO Mark Zuckerberg lives in a $7 million mansion in Palo Alto, California, even though his net worth is $33 billion. He could easily afford a more expensive home, but chooses not to. Zuckerberg also drives a modest $30,000 Volkswagen and is known for wearing a simple gray t-shirt and hoodie. 

Similarly, Warren Buffett, one of the wealthiest people in the world, has lived in the same middle-class neighborhood in Omaha in a modest house for decades. He is known for ordering hamburgers at restaurants and being frugal with his spending. 

People like Zuckerberg and Buffett, who are among the richest in the world, invest their wealth rather than spend it extravagantly, and many other millionaires try to follow their example.

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Lesson 4: Most millionaires did not receive financial assistance from their parents to start their businesses.

Many millionaires didn’t have their parents pay for their higher education or help them start a business. In some cases, the parents offered financial support but expected too much in return, such as dictating their children’s career paths or business decisions.

John Paul Dejoria, who is now a billionaire, grew up in poverty with a single mother who worked hard to make ends meet. He and his brother started working at a young age to help support the family. Dejoria realized he couldn’t rely on his family’s wealth and instead worked various jobs before joining the Navy and co-founding the Paul Mitchell Systems hair care company. He later co-founded the Patron Spirits Tequila Company and made numerous other investments. 

Dejoria’s difficult upbringing motivated him to become successful and he later became a major donor to children’s charities, including orphanages and food banks.

Lesson 5: Most millionaires are big investors.

Most millionaires invest 20% of their annual income in various investments such as savings accounts, stocks and real estate. Millionaires often invest their money in the stock market because they believe the end result is worth the effort, even though it requires some work. One of their main goals is to have a comfortable retirement.

To achieve a comfortable retirement, people may have to give up some comforts or continue working when they would rather be enjoying themselves.

Therefore, wealthy people always keep an eye out for promising new investments, especially in the stock market and real estate market. They carefully research and consult with experts before making any decisions. Additionally, they hold onto their investments for a long time instead of selling them after just a few years.

Warren Buffett is a prime example of successful investors worldwide. He has built his wealth by owning several companies and investing heavily in others. He invests in companies he is familiar with, such as those that produce or supply goods or services that are widely used, like Coca-Cola, or those with little competition in their industry, like railroads in certain regions of the United States.

Buffett also invests in companies that offer products or services he values, such as Dairy Queen franchises. He holds onto his stocks unless there are major changes in the company, industry, or economy. In fact, he avoids technology stocks, which he considers a fad and doesn’t fully understand.

When he refused to buy technology stocks during the dot-com bubble of the late 1990s and early 2000s, other investors made fun of him. They believed he was missing out on huge profit potential. However, when the technology bubble burst on March 10, 2000, many investors lost a lot of money.

In 2011, Buffett invested in technology companies for the first time. In September of that year, his company owned more than 68 million shares in International Business Machines.

Although most investors will never achieve the same level of success as Warren Buffett, they can still learn from his strategy by buying less exciting stocks that offer products or services that are necessary for everyone and holding onto them for the long term.

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Lesson 6: Most millionaires have lower income tax rates.

Millionaires often pay lower income taxes because they have a good, but not exceptional, income and they rarely sell investments that would increase their tax liability. According to The Millionaire Next Door, the average millionaire pays just 7% of their income in taxes. One reason for this is that many millionaires own their own businesses, which reduces their taxable income. Another reason is that they don’t sell stocks, real estate, or other assets that would increase their tax burden.

There has been a lot of discussion about large corporations in the United States using questionable tactics to pay little or no taxes, and about wealthy individuals using tax havens like the Cayman Islands to avoid paying taxes in the United States. These practices are often viewed as unethical and immoral by the majority of Americans. 

In contrast, typical middle-class earners in the United States pay up to 30% of their income in taxes. One reason for this is that they don’t have the same deductions for business expenses as millionaires. 

Additionally, unlike millionaires, many people who buy stocks, bonds, and real estate sell them quickly, which means they have to pay income tax on the difference between the price they paid and the price they sold for. Many people mistakenly believe that they have no control over their tax bill and that whatever happens will happen, but millionaires are smarter than that. They plan their finances carefully to minimize their tax burden.


1. It encourages readers to build wealth

One of the things that I particularly like about the book is that it encourages readers to be proactive in building their wealth. The authors argue that becoming wealthy requires self-discipline, delayed gratification, and a willingness to invest a portion of one’s income into income-generating assets. They provide practical advice on how to start a business, how to evaluate the viability of a business idea, and how to save and invest for the long term.

2. It’s written in conversational tone

Another thing that I like about the book is its conversational tone. The authors write in a way that is accessible and easy to understand. They use real-life examples and anecdotes to illustrate their points, making the book both engaging and informative. The authors’ writing style is light and humorous, which makes the book a pleasure to read.

3. It provides you with a blueprint for becoming a millionaire

Finally, I appreciate that the book provides a roadmap for anyone who wants to become a millionaire. The authors emphasize the importance of setting goals, living below one’s means, investing in income-generating assets, and developing the character qualities that are necessary for building wealth. While the book may not provide a magic formula for becoming a millionaire overnight, it does provide a clear and practical guide for anyone who wants to build wealth over a lifetime.


1. The pricing examples are outdated 

While the core message of “The Millionaire Next Door” is still relevant today, the pricing examples used in the book are severely outdated.

Inflation has eroded the purchasing power of the dollar, and what was once considered a frugal lifestyle is now simply unsustainable for many. This can make it hard to follow the book’s practical advice and may leave readers feeling frustrated and disheartened.

2. It has a narrow focus on specific objects

The authors of “The Millionaire Next Door” seem to have an obsession with specific objects such as domestic vehicles, JCPenney suits, and watches. While these may have been relevant in 1996, they are not necessarily so today.

The book also doesn’t leave much room for nuance; it’s black and white, with little discussion of the gray areas that may exist in personal finance. Additionally, the authors seem to have a bias against foreign automobiles, which can feel like an unnecessary agenda.

3. Some readers might find the advice outdated

The book offers anecdotes and outdated recommendations that aren’t always helpful. While the message to live below your means and invest your money wisely is sound, some of the insights offered in the book are strange and off-putting. For example, the authors suggest that frugal people have stronger morals than those who don’t save, and they imply that divorced people are somehow less virtuous.

These themes of frugality equaling morality appear throughout the book and can be alienating to some readers. The book also lacks real advice about what to do with the money you save, which can be a significant drawback for those looking for a more comprehensive guide to personal finance.


“The Millionaire Next Door” is a book that challenges our preconceived notions about what it takes to become a millionaire. Through inspiring anecdotes and carefully selected examples, the authors demonstrate that becoming a millionaire is attainable with the right mindset and habits. It’s not about splurging on expensive items or living an extravagant lifestyle, but rather about being careful with your money and saving through budgeting and planning.

This book is an enjoyable read because it is easy to understand, without overwhelming the reader with too many numbers. So, if you’re looking to change your financial habits and build wealth, “The Millionaire Next Door” is a valuable resource that can help you achieve your goals.

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About The Author

Stanley and Danko’s research on millionaires led to the writing of their book, The Millionaire Next Door, which was intended for a general audience. 

Stanley, a business theorist and professor at the University of Tennessee and the University of Georgia, spent much of his career studying wealth in the United States and wrote several books on the subject. Tragically, Stanley died in a car accident in 2015. 

Danko, a marketing professor at the State University of New York’s University at Albany, has also spent his career researching consumer spending and wealth accumulation. He co-authored The Millionaire Next Door with Stanley, which was a bestseller for three years after its publication in 1996.


“If your goal is to become financially secure, you’ll likely attain it…. But if your motive is to make money to spend money on the good life,… you’re never gonna make it.”


“Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that’s why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status.”


“Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.”


“One of the reasons that millionaires are economically successful is that they think differently.”


“Most people will never become wealthy in one generation if they are married to people who are wasteful. A couple cannot accumulate wealth if one of its members is a hyperconsumer.”

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If you want to buy the book The Millionaire Next Door, you can get it from the following links:

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