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- The Surprising Secrets of America's Wealthy -

Thomas J. Stanley, Ph.D. & William D. Danko, Ph.D.
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Book Details
 277 p
 File Size 
 3,670 KB
 File Type
 PDF format
 Mobipocket edition: 9780795314858
 1996 by Thomas J. Stanley
 and William D. Danko

A reporter recently asked me about the changes I have noticed among the
American millionaire population since the current economic meltdown. She
wanted to know if the millionaire market is dead given the recent reversals in the
market value of stocks and homes. I replied that the millionaire next door is still
alive and kicking even today in this recession. Since 1980 I have consistently
found that most millionaires do not have all of their wealth tied up in their stock
portfolios or in their homes. One of the reasons that millionaires are
economically successful is that they think differently. Many a millionaire has
told me that true diversity has much to do with controlling one’s investments; no
one can control the stock market. But you can, for example, control your own
business, private investments, and money you lend to private parties. Not at any
time during the past thirty years have I found that the typical millionaire had
more than 30 percent of his wealth invested in publicly traded stocks. More often
it is in the low-to-mid-20-percent range. These percentages are consistent with
those found in studies conducted by the Internal Revenue Service, which has the
best data set on millionaires in the world.

Consider the profile of a millionaire-next-door-type couple, Ms. T and her
husband. To most, this couple’s lifestyle is boring, even common. This
millionaire’s brand of watch is a Timex; her husband’s is a Seiko (number one
among millionaires). The couple buys their clothes at Dillard’s, J.C. Penney, and
TJ Maxx. They have purchased only two motor vehicles in the past 10 years:
both Fords. The current market value of their home is approximately $275,000.
Ms. T’s most recent haircut cost $18. Yet they are uncommon in the sense that
they are financially independent.

When I speak of people like Ms. T and her husband, invariably someone will
ask: “But are they happy?” Fully 90 percent of millionaires who live in homes
valued at under $300,000 are extremely satisfied with life. And, in my most
recent work, I state that there are nearly three times as many households with
investments of $1 million or more living in homes valued at $300,000 or less
than there are living in homes valued at $1 million or more.

Even most multimillionaires in America don’t live in expensive homes. I
recently tabulated the 2007 IRS estate data (the latest data available) for those
decedents with an estate valued at $3.5 million or more. I estimated that the
median market value of a decedent’s home was $469,021, or less than 10 percent
of their median net worth. On average these decedents had more than two-andone-
half times more of their wealth invested in investment real estate than in
their own personal homes.

Profiling the millionaire next door population was a cumulative process which
continues today. Originally I used a different description to define this segment. I
first coined the “wealthy blue collar” segment in a paper entitled “Market
Segmentation: Utilizing Investment Determinants,” which I presented on
October 10, 1979 at a conference of the Securities Industry Association in New
York City. The paper was later published by the American Marketing
Association. Earlier in May 1979, the New York Stock Exchange had asked me
to develop a set of marketing implications and recommendations based upon its
then recently completed national survey of 2,741 households on investment
patterns and attitudes and behaviors about money. This provided a base for the
above-mentioned paper. A key point I made in this paper was:
opportunities exist in segments that the [investment] industry has
ignored for years…. [Members of] the really big segment, the wealthy
blue collar, do not need to purchase expensive artifacts that are part of
the white collar workers’ knapsack….

At the time of my presentation I realized that the blue-collar/millionaire next
door segment did exist, and it was likely to be a sizable one. Not long after I first
idenrified this marker, I discovered how very large it indeed was.
In June 1980 I was asked by a large money center bank to conduct a national
study of the millionaire population in America. During the planning stage, an
event took place which had a major influence upon the direction of my career I
encountered my epiphany about the millionaire-next-door segment one morning
at a task force meeting with my client and a colleague and friend, Jon Robbin.
Jon is a Harvard-trained mathematician who profiled the wealth characteristics
of the residents within each of more than 200,000 neighborhoods across
America. He said, in passing, “About one-half of the millionaires in America
don’t live in upscale neighborhoods.” That’s when the light went on inside my
head! The really compelling story was not the millionaire population in general.
Rather it was the low-profile millionaires, the ones who lived in modest homes
situated in middle-class, even working-class neighborhoods. From that moment
on, I intensely began studying and writing about the millionaire-next-door types.

The research that I conducted thirty years ago in 1980 was the first
comprehensive national study about the size, geographic distribution, and
financial lifestyles of millionaires. The key findings were highly congruent with
the numerous studies that I have conducted since that time.

I authored “The National Affluent Study 1981-1982” for a consortium of the
top fifty financial institutions in America. In addition to designing this study, I
traveled the country conducting focus group interviews with millionaires. Later,
many of these financial institutions, including seven of the top ten trust
companies in America, asked me to conduct focus group interviews and surveys
of the affluent on their behalf. As a result, I had the opportunity to meet with
more than 500 millionaires face to face. My interpretation of these interviews as
well as many others that I conducted is given throughout The Millionaire Next
Door. Interestingly, the millionaires I interviewed in Oklahoma and Texas, for
example, had the same set of traditional American values as those whom I
interviewed in New York City and Chicago. The large majority was keenly
interested in being financially independent. That’s why they lived below their means.

Prior to writing The Millionaire Next Door, I spent nearly an entire year
reviewing my survey data and the transcripts of the interviews conducted
between 1982 and 1996. This extensive research and analysis, I believe, is what
makes The Millionaire Next Door a perennial best seller. For the price of a book,
the reader is essentially buying the equivalent of more than $1 million worth of
invaluable research and interpretation.

Why do I continue to write about rich people? It is not for the benefit of rich
people! What I write is designed to enlighten those who are confused and
misinformed about what it means to be rich. Most Americans have no idea about
the true inner workings of a wealthy household. The advertising industry and
Hollywood have done a wonderful job conditioning us to believe that wealth and
hyperconsumption go hand in hand. Yet, as I have said many times, the large
majority of the rich live well below their means. Unfortunately, most Americans
think that they are emulating the rich by immediately consuming any upward
swing in their cash flow.
But the millionaire-next-door types do it differently. As one millionaire
woman trained as an engineer told me, “After college my husband (also an
engineer) and I both got good jobs. We lived on one income and saved the other.
Anytime we got raises we just saved more. We have lived in the same modest
1,900-square-foot home for twenty years…. Sometimes my kids ask if we are
poor because I make them order from the $1 value menu.”

America is still the land of opportunity. Over the past thirty years I have
consistently found that 80 to 85 percent of millionaires are self-made. There is
great pride, joy and satisfaction to be derived from building one’s own fortune.
Countless millionaires have told me that the journey to wealth is much more
satisfying than the destination. When they look back over their history of
building wealth, they recall constantly setting economic goals and the great
happiness gained from achieving them. Yes, in the context of economic
achievement, it is the trip, the journey to financial independence about which the
millionaires next door most often boast.
Thomas J. Stanley, Ph.D.
June 2010
Atlanta, Georgia
Visit Dr. Stanley at

Twenty years ago we began studying how people become wealthy. Initially, we
did it just as you might imagine, by surveying people in so-called upscale
neighborhoods across the country. In time, we discovered something odd. Many
people who live in expensive homes and drive luxury cars do not actually have
much wealth. Then, we discovered something even odder: Many people who
have a great deal of wealth do not even live in upscale neighborhoods.

That small insight changed our lives. It led one of us, Tom Stanley, out of an
academic career, inspired him to write three books on marketing to the affluent
in America, and made him an advisor to corporations that provide products and
services to the affluent. In addition, he conducted research about the affluent for
seven of the top ten financial service corporations in America. Between us, we
have conducted hundreds of seminars on the topic of targeting the wealthy.
Why are so many people interested in what we have to say? Because we have
discovered who the wealthy really are and who they are not. And, most
important, we have determined how ordinary people can become wealthy.

What is so profound about these discoveries? Just this: Most people have it all
wrong about wealth in America. Wealth is not the same as income. If you make a
good income each year and spend it all, you are not getting wealthier. You are
just living high. Wealth is what you accumulate, not what you spend.
How do you become wealthy? Here, too, most people have it wrong. It is
seldom luck or inheritance or advanced degrees or evenintelligence that enables
people to amass fortunes. Wealth is more often the result of a lifestyle of hard
work, perseverance, planning, and, most of all, self-discipline.

How come I am not wealthy?

Many people ask this question of themselves all the time. Often they are hardworking,
well-educated, high-income people. Why, then, are so few affluent?

Table of Contents
1: Meet the Millionaire Next Door
2: Frugal Frugal Frugal
3: Time, Energy, and Money
4: You Aren’t What You Drive
5: Economic Outpatient Care
6: Affirmative Action, Family Style
7: Find Your Niche
8: Jobs: Millionaires versus Heirs
Appendix 1
Appendix 2
Appendix 3

1-1: The Top Ten Ancestry Groups of American Millionaires
1-2: The Top Fifteen Economically Productive Small Population Ancestry Groups
2-1: Prices Paid by Millionaires for Clothing and Accessories
2-2: Credit Cards of Millionaire Household Members
2-3: Contrasts among American Taxpayers
3-1: Concerns, Fears, and Worries: Dr. North vs. Dr. South
3-2: Consumption Habits: The Norths vs. the Souths
3-3: Income and Wealth Contrasts: The Norths vs. the Souths
3-4: Concerns, Fears, and Worries: PAWs vs. UAWs
3-5: Investment Planning and Demographic Contrasts: Middle-Income PAWs vs. UAWs
3-6: Hours Allocated: Dr. North vs. Dr. South
4-1: Motor Vehicles of Millionaires: Model-Year
4-2: Motor Vehicles of Millionaires: Purchase Price
4-3: Motor Vehicle Acquisition Orientations of Millionaires
4-4: Economic Lifestyles of Motor Vehicle Acquisition Types
5-1: Economic Outpatient Care Given by Affluent Parents
5-2: Receivers vs. Nonreceivers of Cash Gifts
6-1: The Likelihood of Receiving a Substantial Inheritance: Occupational Contrasts
6-2: The Likelihood of Receiving Substantial Financial Gifts: Occupational Contrasts
6-3: Mean Annual Earnings: Men vs. Women
6-4: Corporate Executive—Gifts and Inheritance
6-5: Entrepreneur—Gifts and Inheritance
6-6: Physicians—Gifts and Inheritance
7-1: Estimated Allocations of Estates Valued at $1 Million or More
7-2: Estimated Fees for Estate Services
7-3: Predicted Number and Value of Estates of $1 Million or More
7-4: Predicted Number of Estates Valued at $1 Million or More Rank Ordered by
Number of Estates by State for the Year 2000
7-5: Estimated Number of Millionaire Households in the Year 2005
8-1: Rankings of Selected Categories of Sole Proprietorships
8-2: The Top Ten Most Profitable Sole-Proprietorship Businesses
8-3: Selected Businesses/Occupations of Self-Employed Millionaires

The Millionaire Next Door- The Surprising Secrets of America's Wealthy
Preface copyright © 2010 by Thomas J. Stanley
Cover art to the electronic edition copyright © 2010 by RosettaBooks, LLC

Electronic edition published 2010 by RosettaBooks LLC, New York.

This publication is designed to provide accurate and authoritative
information in regard to the subject matter covered. It is sold with the
understanding that neither the author nor the publisher is engaged in
rendering legal, investment, accounting, or other professional services. If
legal advice or other expert assistance is required, the services of a
competent professional person should be sought.

All the names in the case studies contained in this book are pseudonyms.

Thomas J. Stanley, Ph.D.
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Book Details
 410 p
 File Size 
 3,235 KB
 File Type
 PDF format
 2001 by Thomas J. Stanley 

Author’s Note
In the course of my research I have met and interviewed many
fascinating people who personify “The Millionaire Next Door” and
“Millionaire Women Next Door,” and define “The Millionaire Mind.”
Some of their stories are told in my books and journal articles.
Hopefully, they enlighten and inspire readers who wish to increase
their economic productivity and achieve millionaire status. If you
have a story to tell or advice to share, perhaps for inclusion in one
of my future books, please write to me at the address below.

Dr. Thomas J. Stanley
Wealthworks, Inc.
P.O. Box 680203
Marietta, GA 30068-0004

An Introduction to The Millionaire Mind
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 creditdependent
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 wellestablished,
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
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.

Table of Contents

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)


Electronic edition published 2010 by RosettaBooks LLC, New York.
Cover art to the electronic edition copyright © 2010 by RosettaBooks, LLC
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