Monday, August 08, 2005

The mind of a millionaire

This started with one of those uncomfortable airport "experiences", where you end up spending 12 hours on the ground because the airport system is not working. In this case, the problem was a huge line of thunderstorms that stood between where I was and where I was heading.

So I was trapped in the airport, and fortunately it had a used book store. One of the books on the shelf was "The Millionaire Mind" by Thomas Stanley. Stanley is best known as the author of "The Millionaire Next Door."

The jacket cover says, "In the 1996 best-seller The Millionaire Next Door, written by Dr. Thomas J. Stanley, one of contemporary America's most firmly held beliefs was shattered. According to Dr. Stanley, wealthy individuals do not all belong to an elite group of highly educated and exceedingly lucky people who often inherit their money and spend it on lavish purchases and pampered lifestyles. The Millionaire Next Door showed us that a significant number of America's wealthy are far more likely to work hard, save diligently, and live well below their means."

"The Millionaire Mind" is a book that tries to understand how these millionaires think. Stanley was trying to find "people who were actually wealthy, as opposed to those who had big homes with big mortgages but low net worth." He took a nationwide sampling of people like this, sent them questionnaires, and then compiled the trends in his book.

I am not yet done with the book, but even in chapter 1, some of the trends he explores are fascinating. Here, in no particular order, are some of those trends:
  • "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."

  • 61 percent received nothing by way of inheritance, financial gifts, trust income, etc.

  • 97 percent are homeowners. Median home price was $435,000 at the time of purchase. But only 10 percent bought "new" homes -- homes built in the last ten years. The vast majority are living in "older homes" in long-established neighborhoods.

  • 32 percent are business owners. 16 percent are corporate executives. 10 percent are attorneys. 9 percent are physicians. The rest are accountants, sales professionals, engineers, professors, etc. "A disproportionately high percentage of millionaires, multimillionaires, and decamillionaires are self employed business owners and entrepreneurs or self-employed professionals." See How to make a million dollars for a perspective on that.

  • Most of these millionaires "have been told by some authority figure or by the results of standardized test scores that we were not intellectually gifted, of law school caliber, medical school material, qualified to pursue a medical degree or smart enough to succeed." Average GPA in college is 2.92.

  • This was fascinating to me: "Not one millionaire that I interviewed had anything nice to say about gambling." I have been to Las Vegas many times for various business trips and conventions, but I have never spent a dime gambling. I have never even stuck a quarter in a slot machine. I always thought I was somehow "weird" because of that. Now I find out I am normal.

  • Finally, "What are the top five factors most often mentioned by millionaires as being very important in explaining their economic success? After you read them below, take out a card or a sheet of paper and write down these five elements of financial success. Keep a copy in your wallet or purse and paste a copy on your television...
    1. Integrity - being honest with all people
    2. Dsicipline - applying self control
    3. Social skills - getting along with people
    4. A supportive spouse
    5. Hard work - more than most people"
It's an interesting book with LOTS of tidbits like that.

I think that one of the key messages that you might carry away from the book, if you are striving to be a millionaire, is this: if you find that you are a hard-working, non-gambling, generally frugal person who does not need a flashy car/house/haircut, and so on, you may be onto something. You are headed, generally, down a path that many millionaires have followed. Simply be persistent. Read books like this one and The Millionaire Next Door, study them for lessons you can apply to your own life, and look at the world around you for opportunities. How to make a million dollars is one good starting point.


At 10:35 AM, Anonymous Anonymous said...

On a side note, I am tempted to purchase "The Art Of The Start".

Thanks for the review!
- Brandon Doyle

At 4:10 PM, Anonymous Anonymous said...

Good review!

I have read both of these books and can highly recommend them.

Also, Brandon, If you are interested in The Art of the Start, used to have an introductory pdf at their site with the first couple of chapters in it. If you can't find it, email me and I will send it to you (and anyone else who would like it) - contact me at my website.

Dominic Foster.

At 6:17 PM, Anonymous Anonymous said...

Thanks Dominic!
- Brandon Doyle

At 8:54 PM, Anonymous Anonymous said...

Great post!

I love reading books like this to gain valuable insights, but getting a quick summary of the most important points can be even better.

At 11:10 PM, Blogger Tom McKay said...

Enjoyable post, as always, Marshall. Thanks. I've read and enjoyed both books, but I think a lot of people expect (or hope) that they contain some magic potion or formula for achieving wealth. Sorry.

In that regards, your "How to Make a Million Dollars" is a far more specific -- and inspiring -- guide! It giveds me a tingle every time I re-read it. Now I'm trying to get my (adult) son to read and heed...

Tom McKay
BBC: Better Business Communications

At 9:21 PM, Blogger Swanie said...

This comment has been removed by a blog administrator.

At 9:26 PM, Blogger Swanie said...

I'll surely read those books. It's great to know that what you think about millionaires is different from the reality.

Thanks Marshall. You inspired me a lot.


At 2:56 AM, Anonymous Anonymous said...

These books tell you how to be a millionare when you get home. They also pretty much say don't market to millionares because they don't get caught in vanity traps.

Market to the wanna be's who will buy everything to impress their friends. They can be milked like cattle.

Just ask Apple, BMW, and Prada.

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