The book The Millionaire Next Door was written by marketing professors William Danko and Thomas Stanley in 1996. The book shows the difference between the concept of a millionaire in pop culture and the real facts about real millionaire. The book also provides some sort of tips about how to develop and maintain a wealth-building lifestyle. It is a compilation of research on a topic of wealth. Thomas J. Stanley and William D. Danko compare the behavior of UAWs (Under Accumulators of Wealth) and those who are PAWs (Prodigious Accumulator of Wealth). They share the ‘secrets’, how to become a millionaire.
Thomas J. Stanley and William D. Danko portray wealthy people as frugal ones. According to authors, millionaires live below their means and make more than they spend (Stanley and Danko 3). They efficiently use their time, energy and money and do not spend a lot them to maintain their lifestyle. According to authors, those who live in a rich neighborhood and have an expensive car are not necessarily millionaires or even rich people. Just the opposite, they most likely have many debts. The real millionaires do not buy status things, but they make a status fortune. They take financial risks because they are not misers and they know that it worth it. They usually make investments for good returns. They invest in both stock exchange and venture companies, but only if it worth the reward.
The Millionaire Next Door‘s authors claim that to live well below your means is the right thing to do. They claim that in order to become a millionaire one have to refuse from all finer things and just keep saving your money. However, that is wrong because if someone is not able to spend his money on himself or on his family, then what is he saving them for? Here is an example from the book, an indignant grandmother says, “What am I supposed to do with my money? My daughter’s family is having a rough time making ends meet. Do you know about the problems with public school around here? I’m sending my grandchildren to private schools” (Stanley and Danko 145).
Authors provide such example as a good thing to spend your money for, but it seems that they have different values. They constantly mention private schools “in the same category as big houses, country club memberships, and, of course, luxury automobiles” (Curmudgeon n.p.). Then, authors introduce their analysis. They say that grandmother is not at ease because of providing the economic support to daughter’s family. Authors claim that the real problem in this situation is not with the schools, but it is that “her daughter’s family is in a situation of economic dependency” (Stanley and Danko 146). However, authors ignore the fact that it is not the daughter or her husband who receive the money, but the grandchildren. Thus, the authors claim that living at your means is bad and even immoral.
The Millionaire Next Door book has other wrong claims. It is not true that wealthy people forsake consumerism and just plunge into savings and investments because obtaining “a higher level of education would lead one to acquire the affinity towards saving and investing” (“Saving, Spending & Social Climbing” n. par.). According to some researches, “education received and salary earned are directly related”, while the average value of “cars and homes purchased by people of different credentials” is not much variable. (“Saving, Spending & Social Climbing” n. par.).
According to such tendency, one would assume that people with higher levels of education would spend less money and invest much more than people with lower levels of education, while people with undergraduate degrees only would “spend substantially more on consumer items” and would not think about savings (“Saving, Spending & Social Climbing” n. par.). Researches show real levels of savings for different educational groups. According to The Millionaire Next Door, the individuals with higher level of education should have a substantially higher degree of savings, while the low educated individuals should have a negligible degree of savings (“Saving, Spending & Social Climbing” n. par.). However, researches show that there is no big divide amongst groups with different levels of education. The authors would also expect people with the low-level education to have substantially higher Social Climber Index (SCI). Despite the individuals with Master’s Degree have the highest degree of SCI, it is very close for all groups.
The book The Millionaire Next Door discusses how to reach millionaire status and frugal lifestyle; however, it does not discuss why white-collar professionals like attorneys and investment bankers have to maintain a certain lifestyle. It seems that the book has a Marxist view of consumer culture. It explains the reason why ordinary people with “steady jobs lack tidy fortunes” as because they are “seduced into spending all they make” on high status and fancy things (Curmudgeon n.p.).
In such a way, one may completely “refute the assertions posed” in The Millionaire Next Door (“Saving, Spending & Social Climbing” n. par.). The book supposed to deliver the message that anybody could become a millionaire if “they followed the secrets in the book, that generated enthusiasm” (Curmudgeon n.p.).
Works Cited
Curmudgeon, Frank, What’s Wrong with The Millionaire Next Door. 2009. Web.
Saving, Spending & Social Climbing n.d. Web.
Stanley, Thomas J. and W. D. Danko. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, Pennsylvania: Gallery Books, 1998. Print.