I just finished The Millionaire Next Door by Thomas J. Stanley and William D. Danko and I found it to be a refreshingly fascinating look at money and the pursuit of wealth. While the main ideas of The Millionaire Next Door didn't seem entirely novel to me, the amount of research and findings did surprise me.

How Should We Measure Wealth?

What's the premise? There are a lot of millionaires, but it can be tricky knowing who they are. You can't use external status indicators because many people who aren't wealthy go into debt to live like a wealthy person and, according to the research the authors did, most millionaires choose to save their money instead of buying expensive status indicators (cars, houses, etc.). In other words, there may be millionaires "next door."

The authors coined the terms UAW (Under accumulator of Wealth) and PAW (Prodigious Accumulator of Wealth) to describe two groups of people and their wealth. The UAWs have a low net worth compared to their income level. The PAWs have a high net worth compared to their income level. Most "millionaires" are PAWs.

How Do You Become A Millionaire (PAW)

Ok. Here it comes. The Millionaire Next Door in one sentence: Spend Less Than You Earn That's it. The most important principle to become wealthy is to stop buying expensive crap that depreciates in value and to start saving.

Other Interesting Points From The Millionaire Next Door

• PAWs are willing to take financial risk if it is worth the reward
• UAWs tend to have children who require an influx of their parents' money in order to afford the lifestyle that they expect for themselves
• Millionaires buy cheap cars but expensive financial advise
• There is a high UAW concentration among doctors, physicians, lawyers, and dentists because of the amount of money and time required to get into these occupations and because these professionals are expected to "fit in" with the upscale lifestyle.

I highly recommend The Millionaire Next Door (you can read the first chapter here) and I dare you to live within your means.