The Millionaire Next Door: Book Review

The Millionaire Next Door

I was pretty excited to listen to The Millionaire Next Door, although I had a fair idea the type of information it would impart.  I had wanted to read this book for some time mainly because of its reputation.  It has a popularity akin to Rich Dad Poor Dad and The Four Hour Workweek.

I should note before we begin that the authors are not themselves millionaires. Rather, they spent a large amount of time studying them and their habits.

I think that habits and character are the two defining traits that make someone successful in building wealth, and this book hits on the habits side of things sweetly.  For those building wealth, being a miser to some extent, and enjoying watching money grow, is a necessary trait to have. More importantly, though, what are the habits that allow you to continue to build?

This book explores those habits by surveying many millionaires over a long period of time.

The Millionaire Next Door: Contents

The authors begin by explaining their particular jargon, which is important because they’ll use these words throughout the book.  Ultimately:

  • PAW = Prodigious Accumulator of Wealth. These people get and keep a lot of money.
  • AAW = Average Accumulator of Wealth. These people get and keep an average amount of money—we don’t hear about them much in the book.
  • UAW = Under Accumulator of Wealth. These people may or may not get a lot of money. They hang on to very little of the money they do get.

They also have some handy formulas that help you determine which of these you fall into. But I’ll leave that to the book to explain.


The Millionaire Next Door spends a lot of time explaining the habits of the rich. Habits reviewed include budgeting and money tracking, saving and investing, and living habits.

In fact, the authors go into a lot of detail about what kind of cars PAWs drive, how they purchase their cars, where they live, how much they spend on suits and watches, and other high-ticket items you might wonder about when it comes to millionaires.

The premise of the book is that millionaires live well below their means. They live in lower class areas than they can actually afford, spend carefully on big-ticket items, forego luxury items and homes, and track every dollar that comes into and leaves the household each year.

In fact, Stanley and Danko emphasized the fact that millionaires and PAWs spend a lot of time each year planning their finances compared to AAWs and UAWs.  To the surprise of no one, amirite?

They illustrate these points using a blend of stories, charts, and statistics.  For example, the authors would list out of the brands of cars driven by what percentage of millionaires they surveyed. But then they would later tell a story about throwing the type of party they thought millionaires would like, only to find out that millionaires tend to be a rather low-brow group that likes beer and cheap food.

Child Rearing

The authors spent much time discussing the benefits of providing what the authors refer to as “outpatient care” to adult children. Such outpatient care includes large annual monetary gifts, expensive houses, and cars.

As you might guess, the adult children of PAWs who receive a lot of outpatient care ended up the most crippled in their own ability to accumulate wealth. Those who did not receive outpatient care ended up being able to function as adults financially, to varying degrees, depending on the lessons taught to them by their PAW parents.

A Strong Financial Team

The authors placed a lot of emphasis on millionaires gathering around them a strong financial team. Such teams included a talented accountant, financial advisor, attorney, and spouse.  As someone who was previously married to a spender, I can definitely attest to the last one in that list being extremely important.  I’m still working on getting past the sticker shock of the other three.

The Listening Experience

I listened to the audio book version of The Millionaire Next Door, and I gotta say that listening to some of the charts read line by line was not a joy.  For this reason, I would say that if you intend to consume this book, you should probably get it in print.  This way you can either skim or peruse the charts according to your level of geek.  Listening to the charts read aloud neither permitted me to compare numbers leisurely nor to just skim them for the basic idea.

Otherwise, I’d say that this book was a nice mix of facts, stats, and stories. You shouldn’t get too bored listening to the material because there’s enough meat to make it interesting.

Unfortunately, this book was published way back in the ‘90s.  I’m sure this information was new and exciting when it first hit the reading market, but over time the information was regurgitated in numerous forms and now seems to scream, “Well, duh.”  The main tenants of financial fitness are spending less than you earn, financial planning, and investing, and this book didn’t seem to offer much beyond those common sense financial values.

So for me, the information was quite tired, although I still enjoyed listening. I didn’t learn a lot from the book except to confirm the ideas I already have.  If I had purchased this book when it was new, I may have had a different opinion. But in today’s world, I think we’re looking for something fresh and exciting, or a new voice and fresh way of delivering the same information.  Still, the information wasn’t bad, it just wasn’t news, and therefore wasn’t terribly informative.

3 out of 5 stars.

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