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Overview
The author of the blockbuster bestseller The Millionaire Next Door: The Surprising Secrets of America’s Wealthy shows how self-made millionaires have surmounted shortcomings such as average intelligence by carefully choosing their careers, taking calculated risks, and living balanced lifestyles while maintaining their integrity. Dr. Thomas J. Stanley also builds on his research from The Millionaire Next Door and takes us further into the psyche of the American millionaire.
Stanley focuses in on the top one percent of households in America and tells us the motor behind the engine; what makes them tick. His findings on how these families reached such financial success are based on in-depth surveys and interviews with more than thirteen hundred millionaires.
“A very good book that deserves to be well read.” —The Wall Street Journal
“Worth every cent . . . It’s an inspiration for anyone who has ever been told that he wasn’t smart enough or good enough.” —Associated Press
“A high IQ isn’t necessarily an indicator of financial success . . . Stanley tells us that the typical millionaire had an average GPA and frugal spending habits—but good interpersonal skills.” —Entertainment Weekly
“Ideas bigger than the next buck.” —Orlando Sentinel
Product Details
| ISBN-13: | 9780795314834 |
|---|---|
| Publisher: | RosettaBooks |
| Publication date: | 09/05/2019 |
| Series: | Millionaire Set , #1 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 419 |
| Sales rank: | 966,114 |
| File size: | 727 KB |
About the Author
Thomas J. Stanley is regarded as America's foremost authority and researcher of the affluent in the United States and has authored several well-regarded, award winning books on the subject.
He is the author of The Millionaire Next Door as well as The Millionaire Mind. In total, these books spent more than 170 weeks on the New York Times Best Seller list. His title The Millionaire Next Door was selected as a finalist for the business book of the year by the Independent Publishers Association and was on several business best seller lists. In total, over three million copies of Dr. Stanley's books have been sold worldwide.
Thomas J. Stanley is regarded as America's foremost authority and researcher of the affluent in the United States and has authored several well-regarded, award winning books on the subject.
He is the author of The Millionaire Next Door as well as The Millionaire Mind. In total, these books spent more than 170 weeks on the New York Times Best Seller list. His title The Millionaire Next Door was selected as a finalist for the business book of the year by the Independent Publishers Association and was on several business best seller lists. In total, over three million copies of Dr. Stanley's books have been sold worldwide.
Read an Excerpt
CHAPTER 1
An Introduction to the Millionaire Mind
They live in lovely homes located in fine neighborhoods. Balance is their approach to life. They are financially independent, yet they enjoy life — they are not "all work, no play" type of people. Most became millionaires in one generation. Neither their lifestyle nor their wealth was generated from being highly leveraged financially. They are not credit junkies. How did they accomplish this? How did they balance their need to become wealthy and economically productive with their need to enjoy life? They have the millionaire mind.
Early in my career of studying wealthy people, I had a glimpse of this segment of the millionaire population. In 1983 I was asked to interview sixty millionaires from Oklahoma. What I learned from them was simple, yet the message had a lasting impact on me: You cannot enjoy life if you are addicted to consumption and the use of credit. These Oklahoma millionaires were just the opposite, as demonstrated by one focus group of ten. All ten were seasoned business owners, executives, or professionals. All were first- generation wealthy. Some were credit-dependent earlier in their careers, but they eventually saw the light. They went cold turkey, breaking the cycle of borrowing to consume, earning to consume, and borrowing more and more money. Others never became addicted to credit or the need to display their success.
All ten were multimillionaires. They lived in fine homes in well- established, older neighborhoods. They drove American-made motor vehicles. They enjoyed life. They were not workaholics. They spent a lot of time with their families and friends, borrowed little money, and became wealthy, in most cases, before they were forty-five years old. My interview with this group was scheduled to last about two hours, but it actually went on for nearly four hours. I only had to ask a few questions — the members enjoyed telling their own stories about becoming wealthy. If there were a Focus Group Hall of Fame, all ten of these millionaires would be inducted during the first round.
There were many important points made about how one can become an economic success, but one statement was riveting. It was made by Gene. He mentioned that those who are "credit- dependent" are in fact controlled by someone else, some institution.
Gene was in his late forties at the time. He listed his occupation as "owner of a salvage business." He purchased or "salvaged" real estate from various financial institutions. These institutions "have loans that are in default ... six months or more."
Just a few weeks prior to the interview, Gene "salvaged" sixty- eight homes, a commercial shopping center, and five multifamily apartment complexes from a financial institution with which he'd had many previous dealings. Immediately after the deal was signed, the senior credit officer of the institution signaled to Gene and walked with him over to the large window in the officer's top- floor office. It was a tall building — they could see for miles and miles. There were thousands upon thousands of commercial buildings all around. Gene could even see some of the residential neighborhoods on the horizon.
As he looked out the window, the officer pointed to all the buildings, homes, offices, garages, shops, and so on, and said the words that made a lasting impression on Gene:
We [the lenders] own it all ... all of it. The business out there? ... You [borrowers] just run these businesses for us. You guys run them for us, the financial institutions.
How many people today in America run "their businesses," "their professional practices" but actually work for or are being controlled by lenders? How many live in luxury homes yet work hard to make payments to the ultimate owner of the mortgage? How many people take care of autos they lease from the real owner? Too many. But Gene is not among them, nor were any of the other members of his focus group. All possessed the millionaire mind. None had a private credit officer doling out cash. All lived in fine homes, but not one had a "jumbo mortgage."
The lesson I learned from Gene was repeated many times over by the millionaires surveyed for this book. They all have the millionaire mind, yet they believe it's possible to enjoy life and still become wealthy. They believe that financial independence and much economic success can be achieved without adopting a Spartan lifestyle. But there must be certain constraints, as discussed later in this book.
Some people are not controlled by credit institutions. For them it is just the opposite — they are controlled by greed. They are misers. They even shortchange their spouses and children. Money is their God. These people are not of the millionaire mind. Another millionaire who has the proper perspective said:
I taught my sons and daughters that money is not their God. You control it ... not let it control you.
Most of the people profiled in this book became economic successes in one generation. They came from economic ground zero. Most inherited no money. They never received the proceeds of an estate or income from a trust account. How did they do it? Again, they are of the millionaire mind.
You may never be able to generate the sizable incomes that many of these millionaires have earned. You may not become a multimillionaire in a few short years. But you can still benefit from understanding how these people maintained an enjoyable lifestyle at the same time they were accumulating wealth. Only a few people, even those with high incomes, know how this can be accomplished. Those with the millionaire mind know how, and they are profiled in this book.
THE SEARCH
The research conducted for my earlier book, The Millionaire Next Door, and the results reported therein have expanded the knowledge about the characteristics of America's most affluent people. I decided to broaden the size and scope of my next study to include many more participants from a significantly wealthier population base. The new survey also focused on a different set of attributes and lifestyles, designed to project a deeper, more comprehensive look at the millionaire mind. The results of that study are presented in the following chapters.
It is a lot easier to profile the characteristics of people who have the millionaire mind than it is to find them. Why not survey all the households in America? Because only about 4.9 percent of the households in this country have a net worth of $1 million or more. Nor can you just survey all the people who live in expensive homes. Often these "big-home owners" are what I call Income Statement Affluent. They have big incomes, big homes, big debt, but little net worth. They are experts at preparing loan applications, most of which do not ask about one's real level of net worth.
In sharp contrast there are those whom I call Balance Sheet Affluent. These people are of the millionaire mind. They focus upon accumulating wealth. Their assets greatly exceed their credit liabilities. Often they have little or no outstanding credit balances.
If I surveyed people who live in fine homes nationwide, what would I find? Too many Income Statement Affluent respondents. Yet I always believed that certain types of neighborhoods attract the Balance Sheet variety and retain those with the millionaire mind, and these same neighborhoods might be unattractive to the Income Statement Affluent. My hypothesis was confirmed by the results of the survey conducted for this book.
In order to help develop a representative sample of people with millionaire minds, the Balance Sheet Affluent, I sought advice from my friend and associate Jon Robbin. He is the foremost authority on geodemography, the term used to describe the study of the characteristics of people within defined geographic areas. Often these areas are at the zip-code level, but for my survey I wanted to get down to an even smaller level — neighborhoods or block groups. Some of these neighborhoods had fewer than fifty households.
I told Jon about my problem, and he solved it in short order. Jon is a Harvard-trained mathematician and a brilliant researcher, and his geodemographic database is also extraordinary. He developed a sophisticated mathematical model that estimates the net worth characteristics for most block groups/neighborhoods in America.
Jon found that some neighborhoods have high concentrations of people who have substantial investment income and thus would have the millionaire mind-set. From his national database of 226,399 neighborhoods, Jon selected 2,487. His mathematical model predicted that these would contain high concentrations of people who were actually wealthy, as opposed to those who had big homes with big mortgages but low net worth. A national sample was generated by randomly selecting 5,063 households from those neighborhoods. Each household selected was sent a questionnaire.
Of the 1,001 fully completed responses, 733 were from millionaires. Each had a net worth of $1 million or more. This national survey of 733 millionaires provided much of the empirical base for this book. Most of the respondents lived in old, well- established, upper-middle-class neighborhoods, in homes built in the 1950s or even in the 1940s or earlier. What? No homes with five Jacuzzis? What? No flashy new subdivisions or newly developed suburban estates? Could it be that those with the millionaire mind-set are not "trendy" when it comes to selecting homes and neighborhoods? It seems that's the case. Plus, most of the respondents had either small outstanding balances on their home mortgages or no mortgages at all.
The methodology of how each respondent was selected on a random basis was described earlier in an article (see Thomas J. Stanley and Murphy A. Sewall, "The Response of Affluent Consumers to Mall Surveys," Journal of Advertising Research, June-July 1986, pp. 55–58). The nine-page questionnaire completed by each respondent contained 277 questions. This project was the most comprehensive I have undertaken. The survey data were collected and tabulated by one of the premier survey organizations in America, the Survey Research Center, Institute for Behavioral Research, University of Georgia in Athens. The center also did the univariate and multivariate computer analyses of the data.
Earlier, the questionnaire and survey methodology were pretested on an ad hoc sample of 638 millionaires. All had income statements and balance-sheet characteristics that would qualify them for jumbo mortgages. This pretest survey was conducted by the author and his staff.
In addition, important case studies were developed from a series of personal interviews and focus groups. These cases are detailed throughout the book, and they provide an important piece of the puzzle. For it isn't easy to develop a full understanding of the millionaire mind. The results summarized in this book are intended to help people develop an understanding and appreciation of the meaning of a balanced lifestyle.
A DEMOGRAPHIC SKETCH
A demographic overview of the survey results follows below. Expanding and broadening the portrait of America's self-made millionaires provided in The Millionaire Next Door, here is a sketch, in their own "voices," of our most economically productive men and women.
A TRADITIONAL FAMILY
• I am a fifty-four-year-old male. I have been married to the same woman for twenty-eight years. One in four of us has been with the same spouse for thirty-eight or more years.
• On average, we have three children.
• Most of us, 92 percent, are married. And of those married, 95 percent have children.
• Only 2 percent of us have never been married. About 3 percent are widowed.
WEALTH, INCOME, AND SOME ARTIFACTS
• We are financially well-off. On average, our households have a net worth of approximately $9.2 million. The typical or median level of net worth is $4.3 million. The average figure is skewed in an upward direction by those respondents who have very high levels of wealth.
• Our household's total annual realized income is $749,000. The median income figure is $436,000. Those of us who have incomes of $1 million or more (20 percent) skew the average upward.
• In spite of our wealth and income, the typical member of our group has never spent more than $41,000 for an automobile or $4,500 for an engagement ring. Neither our spouses nor we have ever spent more than $38 (including tip) for a haircut. Fully one in four of us has never spent more than $24 for a haircut; $340,000 for a home; $30,900 for a motor vehicle; or $1,500 for an engagement ring. Some of us, about 7 percent of those who are married, did not have to purchase an engagement ring. It was passed down from one of our relatives.
ABOUT INHERITED WEALTH
• We live in fine homes in quality neighborhoods, but only 2 percent of us inherited all or any part of our homes and property.
• Some of us have inherited a portion of our wealth. Nearly 8 percent inherited 50 percent or more of their net worth. In sharp contrast, 61 percent of us never received any inheritance, financial gifts, or income from an estate or trust.
SOME NAMES AND PLACES
• We can be found in more than two thousand well- established, older neighborhoods in towns and cities with such names as Shawnee Mission, Kansas 66208; New Canaan, Connecticut 06840; Richmond, Virginia 23224; Pittsburgh, Pennsylvania 15238; Fort Worth, Texas 76107; Kenilworth, Illinois 60043; Columbus, Ohio 43209; Atlanta, Georgia 30327; Summit, New Jersey 07901; Englewood, Colorado 80110; and Tulsa, Oklahoma 74137.
HOME STYLE
• Nearly all of us (97 percent) are homeowners.
• About twelve years ago we purchased our current home for an average price of $558,718. The median price was $435,000. We have enjoyed reasonably good appreciation on our home. On average, it is currently worth $1,381,729. The current median value is approximately $750,000. Thus, we have benefited financially and added to our net worth by the appreciation of our homes.
• In spite of the high value of our homes, we generally have small outstanding mortgage balances.
• Most of us (61 percent) live in homes that are currently valued at over $1 million. But only one in four (25 percent) paid $1 million or more for our current homes.
• One in ten of us purchased a home in the three years that followed the stock market plunge of 1987. Many of us who did were searching for a foreclosure.
• We live in a home that was constructed forty years ago (median year). Fully one in four of us live in homes that were built before 1936. Only about 10 percent of us live in homes that were built in the past ten years.
• The majority (53 percent) of us have not moved in the past ten years. Only 23 percent of our group has moved two or more times during the same period.
• Only a minority (27 percent) of our group has ever had a home of any type built for them. We of the millionaire mind believe that it's better to purchase an existing home than to "get into the building business." It is much less time- consuming and probably costs less to purchase homes "out of existing inventory."
• Who among us are the least likely to have homes built for them? Attorneys! We have to wonder why they are so reluctant to build.
OUR VOCATIONS
• About one in three (32 percent) of us are business owners or entrepreneurs. Nearly one in five (16 percent) are senior corporate executives. One in ten (10 percent) of our group are attorneys. Nearly the same proportion (9 percent) are physicians. The other one-third of our population is composed of retirees, corporate middle managers, accountants, sales professionals or new-business- development officers, engineers, architects, teachers, professors, and housewives.
• Business owners overall are the richest of our group, but senior executives are often among the ranks of multimillionaires. They account for 16 percent of the millionaires but for nearly 26 percent of the decamillionaires, those with net worths of $10 million or more.
• Nearly 50 percent of our wives do not work outside the home. Those who are employed are business owners or entrepreneurs (7 percent), sales professionals (5 percent), corporate middle managers (4 percent), attorneys (4 percent), teachers (3 percent), senior corporate executives (3 percent), and physicians (2 percent). About 16 percent of wives who were employed outside the home are currently retired.
• About two-thirds of us who are decamillionaires report that their wives do not work outside the home. About one-half of those wives who do work, work part-time.
EDUCATION
• We are well educated. Fully 90 percent of us are college graduates. More than one-half (52 percent) hold advanced degrees.
(Continues…)
Excerpted from "The Millionaire Mind"
by .
Copyright © 2010 RosettaBooks, LLC.
Excerpted by permission of RosettaBooks.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Tables,
Acknowledgments,
1. An Introduction to the Millionaire Mind,
2. Success Factors,
3. School Days,
4. The Relationship Between Courage and Wealth,
5. Vocation Vocation Vocation,
6. Choice of Spouse,
7. The Economically Productive Household,
8. The Home,
9. The Lifestyles of Millionaires: Real vs. Imagined,
10. A Final Note About the Millionaire Mind,
Appendix 1: In Search of the Balance Sheet Affluent,
Appendix 2: Businesses Owned and Managed by Millionaires (National Geodemographically Based Sample),
Appendix 3: Businesses Owned and Managed by Millionaires (Ad Hoc Sample),
Author's Note,
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