This easy-to-read book is the first reading assignment in William Bernstein's If you can: How millennials can get rich slowly. Of note, the latter book is currently free on Kindle, though not expensive in paperback.
The Millionaire Next Door offers a behavioral commentary on the habits of millionaire's based on the authors' research. It is highly anectodal by necessity, as the research seems to have involved retrospective interviews with millionaires. Stanley and Dankos divide earners into Prodigious Accumulators of Wealth (PAW) and the other people (UAW, or Under Accumulator of Wealth). Throughout the book, they compare and contrast the behaviors and stories of these two groups.
The essential message, to consume far less than you earn and make value-based purchases in order to accumulate vs expend money, is not surprising to those who read consumer or behavioral finance even intermittently. The book's anecdotal style delivers deeper impact than a simple summary conveys. The authors delve into the education and training of their subjects, and I appreciated this deeper approach to the psychology of millionaires.
Just before the end of the book, the authors dive into business and occupations of self-employed millionaires. These are, likely, the true merchant class of our country. Their risk is insightfully addressed:
What is risk? Having a single source of income.
Actually, there is considerable financial risk in being a business owner. But business owners have a set of beliefs that helps them reduce their risk or at least their perceived risk:...This book will not provide specific investing recommendations. It does address underlying behavioral tendencies that allow the investor to build capital to invest.
- Risk is working for a ruthless employer.
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