Thomas J. Stanley - The Next Millionaire Next Door: Enduring Strategies for Building Wealth

ALSO BY THOMAS J. STANLEY

Marketing to the Affluent

Selling to the Affluent

Networking with the Affluent and Their Advisors

The Millionaire Next Door (with William D. Danko)

The Millionaire Mind

Millionaire Women Next Door

Stop Acting Rich

In loving memory of my father, Thomas J. Stanley; to my courageous mother, Janet G. Stanley; and to Tim, Anna, Kate, and Julie

An imprint of The Rowman & Littlefield Publishing Group, Inc.

4501 Forbes Blvd., Ste. 200

Lanham, MD 20706

www.rowman.com

Distributed by NATIONAL BOOK NETWORK

Copyright 2019 by Affluent Market Institute, Ltd. and Sarah Stanley Fallaw, PhD

All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without written permission from the publisher, except by a reviewer who may quote passages in a review.

British Library Cataloguing in Publication Information Available

Library of Congress Cataloging-in-Publication Data

Names: Stanley, Thomas J., author. | Fallaw, Sarah Stanley, author.

Title: The next millionaire next door : enduring strategies for building wealth / Thomas J. Stanley, PhD, and Sarah Stanley Fallaw, PhD.

Description: Guilford, Connecticut : Lyons Press, [2018] | Includes bibliographical references.

Identifiers: LCCN 2018030576 (print) | LCCN 2018033317 (ebook) | ISBN 9781493035366 (ebook) | ISBN 9781493035359 (hardcover)

Subjects: LCSH: Rich peopleUnited States. | MillionairesUnited States. | WealthUnited States. | Finance, PersonalUnited States.

Classification: LCC HC110.W4 (ebook) | LCC HC110.W4 S733 2018 (print) | DDC 332.024/010973dc23

LC record available at https://lccn.loc.gov/2018030576

The paper used in this publication meets the minimum requirements of American National Standard for Information SciencesPermanence of Paper for Printed Library Materials, ANSI/NISO Z39.48-1992.

Printed in the United States of America

Figure: Ratio of Mean to Median Net Worth for Years Available

1-1. Percentage of Income Received through Trusts, Estates, and Inheritance in Previous Year by Percentage of Millionaires (1996 & 2016)

1-2. Career-Lifestyle Groups of Affluent Sample

3-1. Early Experiences of Millionaires

4-1. Most Important Reasons for Latest Home Purchase by Millionaires.

4-2. Least Important Reasons for Latest Home Purchase by Millionaires.

4-3. Purchase Price and Current Home Values for Millionaire Homeowners

4-4. Percentage of Millionaire Homeowners with and without Estate/Trust Income by Original Purchase Price of Home

4-5. Percentage of Millionaire Homeowners with and without Estate/Trust Income by Current Market Value of Home

4-6. Total Median Cost of Homeownership by Month and Satisfaction Indicators for Selected US Cities (2012)

4-7. Budgeting & Frugality of Prodigious Accumulators of Wealth vs. Under Accumulators of Wealth

4-8. Most Paid by Millionaires for Clothing and Accessories: 1996 to 2016 (in 2016 Dollars)

4-9. Most Spent by Millionaires for Jeans, Sunglasses, and Furniture

4-10. Top Makes of Motor Vehicles of Millionaires (1996 & 2016)

4-11. Model Year Cars by Percentage Owned by Millionaires (1996 & 2016)

4-12. Percentage of Income Spent on Categories by Millionaires

4-13. Charitable Deductions as a Percentage of Size of Estate

5-1. Categories of Wealth-Related Behavioral Patterns

5-2. Discipline Related to Wealth Status: Under Accumulators of Wealth vs. Prodigious Accumulators of Wealth

5-3. Education Levels of Millionaires (1996 & 2016)

5-4. Percentage of College-Educated Millionaires by Type of College

5-5. Success Factors: Percentage of Millionaires Endorsing as Important or Very Important (1998 & 2016)

5-6. Hours Spent Per Month in Selected Activities for Under Accumulators of Wealth vs. Prodigious Accumulators of Wealth (1996 & 2016)

5-7. Hours Spent Per Month in Selected Activities for Under Accumulators of Wealth vs. Prodigious Accumulators of Wealth

5-8. Hours Spent Per Week in Selected Activities: Millionaires vs. American Population

5-9. Time Spent in Previous Week on Selected Activities by Percentage of Millionaires

5-10. Time Spent Thinking about Selected Topics by Percentage of Millionaires

5-11. Percentage of Prodigious Accumulators of Wealth and Under Accumulators of Wealth Spending Time Worrying About Selected Topics in Past Week

6-1. Selected Millionaire Job Titles

6-2. Sources of Income for Millionaires

6-3. Career Strategies & Choices of Self-Employed Millionaires vs. Other Millionaires

7-1. Percentage of Assets Held by Millionaires

7-2. IRS Estate Tax Data Comparing 2016 and 1996 Estate Tax Returns

7-3. Investing Statements by Millionaires Agreement

7-4. Average Holding Periods for Investments

7-5. Investing Strategy of Millionaires by Percentage

7-6. Reported Investing Behaviors of Millionaires

Appendix B: Rankings of Sole Proprietorships by Percentage Profitable (1998 & 2015)

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.

Most of the names in the case studies contained in this book are pseudonyms used to protect the privacy of the individuals involved.

For nearly 40 years, my father, Thomas J. Stanley, studied the affluent in America to discover and highlight paths to financial independence and economic success that did not depend on inheritances or other large monetary gifts. He found in his work some universal components, but also saw that there were many paths to wealth involving many unique career, consumer, and business choices.

Despite the evidence-based financial planning principles embodied in his book The Millionaire Next Door and the tried-and-true paths to wealth accumulation that have been documented quite clearly, many people continue to ask, How come I am not wealthy? Whether youre a small business owner, teacher, attorney, or sales professional, a disciplined, methodical approach to building wealth has been proven to work. As my father wrote in The Millionaire Next Door, They [the millionaires profiled in the book] did it slowly, steadily, without signing a multimillion dollar contract with the Yankees, without winning the lottery, without becoming the next Mick Jagger.

This slow and steady approach applies to many of lifes challenges, such as learning a new skill, getting or staying in good physical shape, raising children, or starting a new business. Achieving any major goalincluding financial independencerequires disciplined action over time, an awareness of ones own abilities, and the effective allocation of resources.

But a desire for a certain type of lifestyleone with a requisite level of consumption and displayed statusstill makes the journey difficult for most of us. A lifestyle that is dictated by what others do, drive, and wear cannot be sustained by most without a steady fire hose of incoming cash flow. Many of us simply accept our current habits, or refuse to do the hard work to change them, all the while complaining and often giving in to a life of dependency and worry.