Stephanie Harlow
951284303
HIST 363 – Prof. Pope
26 May 2016
The Millionaire Next Door
The definition of wealth in America has evolved over the past 300 years. In 1996 Thomas Stanley and William Danko published a book based on their 20-year study of how people become wealthy; entitled The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. A key takeaway is that looks can be deceiving and “wealth is not the same as income” (1). The discussion and reflections from the book prove that high net worth individuals think and act inversely to those without money. This essay will discuss how success is defined, the necessary character traits of successful individuals, how a developing person can lead a successful life, the audience
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that Stanley and Danko’s book is geared toward and whether their assertions are relatable and valuable. Stanley and Danko discuss wealth as a measure not only of success but “hard work, perseverance, planning, and, most of all, self-discipline” (1). The book discusses the importance of lifestyle, planning, and dedication. A very poignant point made by Stanley and Danko is that wealth is not what you spend but what you are able to accumulate. The equation that both men use to determine the expected net worth of an individual is “age times income divided by 10” (13). If an individual has accumulated less than this expected value than they are described as “under accumulators of wealth (UAW)” and “prodigious accumulators of wealth (PAW)” if they have saved more (14). In order to be considered a PAW one’s wealth must be twice the expected level. Stanley and Danko have an extensive list regarding personalities, skills, mindset, and operations in the discussion of how a person becomes wealthy and stays wealthy. The following examples are simplified from the portrait of a millionaire discussion in the book: o 1 in 5 are retired and 2/3 who are working are self employed o “On average, our total annual realized income is less than 7 percent of our wealth. In other words, we live on less than 7 percent of our wealth” (7). o 97% are homeowners and half have occupied the home for more than 20 years o about 80% are first generation affluent o “We live well below our means. We wear inexpensive suits and drive American-made cars. Only a minority of us drive the current-model- year automobile. Only a minority ever lease our motor vehicles” (7). o Education is extremely important to the head of household and therefore provide their children and grandchildren with the opportunity. These examples provide a mold of who the millionaires of the United States were during the late 1990s. Based upon the discussion, examples, and observations in Stanley and Danko’s book there are only a handful of traits that a young person needs for future success.
The traits include education, perseverance, hard-work, and self-discipline. The foundation for building wealth starts with being frugal. Someone who makes a good income each year but spends it all is not getting wealthier they are just living a high life and in some cases from paycheck to paycheck without saving. It is important to not only have self-discipline but that your partner have it as well. Stanley and Danko assert that if your partner is materialistic and wishes to lead a high-consumption lifestyle, then the likelihood that you will become wealthy greatly decreases. Education is extremely important for the foundation of building wealth because it provides individuals with the ability to plan, budget, and analyze. Perseverance and hard-work go hand in hand. Both comes from the ability of someone to continue to push toward their dream or move through more difficult times toward their desired goal. In the book, the most dominant concept discussed is self-discipline and how it is essential when it comes to accumulating wealth. In order to accumulate wealth one must not be a materialist who is focused on driving the latest model of a luxury vehicle or wearing the latest
style. The Millionaire Next Door is not overtly geared toward one group, ethnicity, or social class. Anyone who is concerned or interested in improving their financial status and financial freedom should read the book to gain insights that will not only help themselves financially but also give their children the opportunity to learn as well. Even though the book is not geared toward a specific group or ethnicity it is more likely that people considered wealthy will not be purchasing the book, rather, individuals seeking to build their own wealth. Stanley and Danko’s book was published in 1996 which predictably means that the factoids and data are out of date. However, the concepts and overall principles discussed are applicable to today. Given what we have discussed in class and what I have learned through various experiences much of the insights and information from this book were either instilled in me through my parents or lessons I have learned on my own. This book was written when I was 3 years old and interestingly enough I was raised on many of the concepts discussed. My parents own a small business, have lived in our family home for 24 years, are first generation affluent, and are the most frugal individuals I know. You buy quality over quantity and invest in the necessities over your whims. Frugal planning prevents wasteful spending. Better to buy an item that costs slightly more up front than a cheaper substitute that breaks down or needs replacement sooner. This is why our cars routinely have over 100,000 miles and still look sharp. In conclusion, The Millionaire Next Door provides the audience with an opportunity to evaluate and reassess their lifestyle and apply various principles discussed in the book towards their own lives. Money is a sensitive issue for many people. But, the approach that The Millionaire Next Door takes is not telling the reader how to get rich quick. It is about the fundamentals of accumulating wealth over a lifetime and the mindset that wealthy individuals possess. A Chinese proverb that is relevant to the discussion within the book and that helps the reader take away the information is that your mindset will determine your actions and your actions will determine your results.
Carnegie opens his essay with the statement that there are three main ways most wealthy people use or distribute their money. First, some pass their money on to the next generation. Children...
Sklar provides vivid illustrations of the astronomical wealth of America’s richest class. Sklar opens her article with the following fact from the CIA World Factbook, “‘Since 1975, practically all the gains in household income have gone to the top 20 percent of households’” (308). This is a disturbing fact especially for a country that prides itself on equality. A truly equal society would reflect nationwide prosperity throughout all levels. Next, Sklar writes about the Forbes 400, the wealthiest people in America. Sklar states that the minimum net worth to get on the list is $...
The movie Born Rich at first seems like a kid who wants to overcome the “voodoo of inherited wealth” (Born rich, 4:24). Jamie Johnson the heir to the Johnson & Johnson fortune is intent on getting his inner circle of friends to address this controversial issue. From the beginning of the movie there seems to be an unwritten rule that it’s in bad taste to discuss your wealth. This point seems funny that those with money don’t want to talk about their wealth, while those without money only talk about having wealth. As reluctant as they say they are, it seems that they are more than willing to babel on about it and the privilege that accompanies it throughout the movie which seems hypocritical. These kids, seems to range from very grounded to on the verge of paranoia about their money. However when you look at the range of problems, insecurities and unhappiness that exists among these kids it’s easy to say money doesn’t solve your problems.
This idea about becoming multimillionaires over a short period of time or mere hard work has been wide spread through success stories of people’s achieving opportunity in spite of the disadvantages that everyone else has. It seems that in America people are willing to believe any success story that they hear and because of this it gives many Americans a false image of the real world or life. Many people see champions like in boxing for instance, to be complemented with fame, money, and better life while doing what they enjoy the most, but they fall short to realize that there can be one champion. It success stories like these that Mantsios in “Class in America-2012” says that the media has a terminus influence on the perspective of success stories and suggests that Americans live in a facade going from nothing to extremely wealthy society (391). What this shows is that through the use of media people are becoming blind to the idea it will take much more than hard work to achieve upper class status. Because of this blindness, the rich will keep getting richer while everyone else will spend their lives falsifying hope that one day they too will achieve upper class levels status. In the film Trading Places, Ophelia says, “[reading Louis ' palm] You 've never done a day 's work in your life” (trading places). In the film, Luis lived a privileged life where he did not have to do labor-intensive work for a living in comparison to the upper class Americans. The film clearly demonstrates that the idea is falsified, since it can be concluded that the people in the upper class (the one percent) do not work hard at all and still make tons of money
With each class comes a certain level in financial standing, the lower class having the lowest income and the upper class having the highest income. According to Mantsios’ “Class in America” the wealthiest one percent of the American population hold thirty-four percent of the total national wealth and while this is going on nearly thirty-seven million Americans across the nation live in unrelenting poverty (Mantsios 284-6). There is a clear difference in the way that these two groups of people live, one is extreme poverty and the other extremely
...at the American culture places economic success at the pinnacle of social desirability, without listing legitimate ways for attaining the desired goal (Merton 672-682). Today, the American Dream no longer reflects the dream Adams had, but instead, the idea that one can only call themselves truly successful if they have become rich, regardless of the way they got there. The American Dream does not guarantee happiness, but rather the pursuit of it, but with the media strongly persuading people that money guarantees happiness, people are encouraged to do whatever it takes, even it means disregarding their morals, so that they achieve ‘success.’ The inability to achieve this goal often leads people to destructive, and ultimately life-threatening criminal behavior as their feelings of anxiety and frustration over this vision of the “American Dream” get the best of them.
The Millionaire Next Door written by Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D. is a highly informative book about what it takes to become wealthy. Some of the information I knew, such as the obvious fact that you need money to be a millionaire, but some information, such as millionaires not owning big luxury items, surprised me. People become wealthy by saving money, not by living in a huge house or driving an expensive car. Most households generate a lot of money, but, because people love buying things, they live from paycheck to paycheck. Stanley and Danko say, “Building wealth requires discipline, sacrifice, and hard work” (Stanley and Danko 5). There are not too many millionaires because people are not willing to change their
The Millionaire Next Door written by William Danko and Thomas J. Stanley illustrates the misconception of high luxury spenders in wealthy neighborhoods are considered wealthy. This clarifies that American’s who drive expensive cars, and live in lavish homes are not millionaires and financially independent. The authors show the typical millionaire are one that is frugal, and disciplined. Their cars are used, and their suits were purchased at a discount. As we read the book from cover to cover are misconceptions start to fade. The typical millionaire is very frugal in all endeavors and finds the best discounts possible. A budget is implemented daily, monthly, and annually for a typical millionaire. They live by the budget and are goal oriented. Living well below their means is crucial for a millionaire, and discovering ways to allocate time and money more efficiently. The typical millionaire next door is different than the majority of America presumes. Let’s first off mention what it is not. The typical millionaire is surprisingly not the individual with the lavish house worth a million dollars, owning multiple expensive cars, a boat, expensive clothes, and ultimately living lavishly. The individual is frugal and often looks for discounts for consumable goods. The book illustrates the typical millionaire in one simple word: frugal. It is shocking to believe that this is true, but it does make sense. To achieve financial independence is inherently more satisfying and important than accumulating wealth. According to the book the majority of these millionaires portray characteristics of being sacrificial, disciplined, persistent and frugal. In the book it states, “Being frugal is the cornerstone of wealth-building. Yet far too often th...
How does one earn the title of wealthy? Authors Dr. Thomas J. Stanley and Dr. William D. Danko have studied how people become wealthy for over twenty years. They have conducted research, written books, conducted seminars, and advised major corporations on whom the wealthy are and what are the characteristics of the affluent in America. The research for The Millionaire Next Door was comprised of personal, as well as focus group interviews, with more than 500 millionaires. A survey of 1,115 high net worth and/ or high income respondents was also compiled. The authors define the threshold for being wealthy as having a net worth of $1 million or more. This is one distinction that the authors make in comparison to what most Americans might perceive is the definition of wealth. As opposed to what most Americans in our society believe, a measure of an individual’s material possessions does not necessarily equate to being wealthy. According to the authors, wealth is what you accumulate and not what you spend. Based on the author’s definition of wealth, only 3.5% of American households meet their criteria for status as a millionaire. Of this small percentage, 95% of millionaires have a net worth between $1 million and $10 million. The authors chose to focus on this segment of millionaires because this level of wealth can be attained in one generation and by many Americans.
“A Millionaire in Blue Jeans?” One of the most valuable principles is found in the very first chapter. Our authors do a wonderful job at dispelling any delusions we have regarding what a Millionaire looks like. I had long assumed, like many others, that the Millionaires of America were the hyperconsumers and elaborate spenders. In fact, we learn that just the opposite is true. I came to understand that, “Wealth is not the same as income”. (The Millionaire Next Door, p. 1, Stanley & Danko) In many cases, income is not at the forefront of relevancy when determining whether someone will become wealthy. There are several factors involved, but ultimately, if a person spends their entire income, the number value of said income simply doesn’t matter. The old age adage regarding spending less than you make is of much more importance. In the Church, this is referred to as ‘living below our means’. We have often been counseled to exercise restraint regarding our spending habits, and have also been commanded to obtain a level of financially secure by building up our savings, staying out of debt, and living within our means. (Teachings of Presidents of the Church: Spencer W. Kimball, (2006), 11423) It seems rather silly that a large percentage of our population would be under the assumption that living a large lifestyle, along with the accumulation of fancy things, would somehow equate to wealth. After reading the book, I have come to understand that many of us have an extremely distorted relationship with money, in the assumption that money is to get and spend, while those who are authentic accumulators of wealth understand that money should be invested and stored up as a measure of safety and peace.
In this documentary, many of the individuals were “born rich,” meaning that they have inherited an excessive amount of money, not because of their intelligence and talent, but because they are heirs to wealth. The director of the film, Jamie Johnson highlights the life of the rich, in which the wealthy 1% have more than the rest of the 99% of people. Meritocracy is non-existent in the life of the rich. A rich person has many educational benefits, because they have the networks and connections that those of the middle and lower classes do not have. The rich have the right access to schools because of their wealth and power that comes from their wealthy status. For example, in the documentary one of the rich kids, Luke Weil, attended Brown University and was describing his entry to the Ivy League as expected. He did well on the boards, but it was “incidental” (Weil, movie) because without it he would have still went to Brown University or any other Ivy League University because of his inherited wealth. Interestingly, even when he attended Brown University, he was not a good student, where in his first year he did not attend more than eight academic events, including tests and exams. As a result, he was put on academic probation because he was not attending classes so he was
main idea discussed is whether or not being rich is a good thing. The story
Economics of Reich “Why the Rich are getting Richer and the Poor, Poorer” written by Robert Reich, describes as the title says, why the rich are getting richer and the poor, poorer. In Reich’s essay, he delves into numerous reasons and gives examples of each. It makes one wonder if the world will continue on the path of complete economic separation between the rich and the poor. One very important factor Reich examines in his essay is that large corporations are always trying to find the edge, whether that is new technology or cheaper wages. One may ask, how does that affect me?
Unlike some people Michael Eisner, CO. CEO of Walt Disney, has become very wealthy. He made more money in one day than some people made in over ten years. “By exercising his stock options, Eisner boosted his take to an astounding five hundred and seventy-five million- more than a million dollars a day” (Cooper). The wealthy people are rising above the poor and middle class and becoming more common than the others. If you would have researched about income a few years ago the middle class and the poor would have been more people than the wealthy.
Becoming wealthy is all about a mixture of hard work, making wise decisions, and investing your money and time into areas that will lead you the highest return of investment. There are very few businesses and ideas that will lead you to a million bucks or more within a short period of time. In this article, you'll learn the basics of being filled with wealth and how to bring money into your life. You'll discover different ideas to help you lead a life where money just flows into your life.