Thomas Stanley Ph.D. Wrote the book The Millionaire Next Door in 1996. This book highlighted how millionaires accumulated their wealth; they classified millionaires by people who have net worths over one million dollars. A follow-up to the millionaire next door is The Millionaire Mind. Which was published in February of 2000.
The Millionaire Mind [Thomas J. Stanley] on Amazon.com. *FREE* shipping on qualifying offers. 'Readers with an entrepreneurial turn of mind will devour The Millionaire Mind because it provides road maps on how millionaires found their niches.' After its first publication. Your current opinions to reserve The Millionaire Mind -- some other readers should be able to determine of a ebook. Such help will make people much more Usa! Dr Thomas J Stanley.
Below are my highlights of the book the Millionaire Mind by Thomas Stanley Ph.D. 4.9% of the households in America have a net worth of a millionaires. Income statement millionaires. Have a high income and high debt. Balance sheet affluent are of the millionaire mind. They usually don’t have any credit balances. To create the research group to identify the millionaires in America.
Stanley worked with a highly specialized demographer. They identified 226,399 areas/neighborhoods in America that would most likely have a high concentration of millionaires. They paired that group down to 2,397 homes and sent them surveys to complete. Of the 2,397 homes that received the survey, 1,001 responded to survey and of that number 733 of the respondents were actually millionaires.
Some of the statistics on these 733 homes that responded. Most of the respondents were in homes that were built-in the 1950’s and even the 1940’s in well established neighborhoods and cities. 1 out of 4 millionaires were married and had been with their spouse on average of 28 years. On average these millionaires had three children. 92% of the millionaires were married.
95% of the millionaires have children. Only 3% widowed. Only 2% had never been married. 9.2 million average net worth; With the median being around 4.3 million net worth.
749,000 income; median 436,000. On average they never spent more than $41,000 on a car.
Did not spend more than $4,500 on engagement ring. Never spent more than $38 dollars for a haircut. Never spent more than $340,000 on a home. Only 2% of them inherited their homes. 61% never received an inheritance or gifts from others to accumulate their wealth. Only 1 in 4 paid more than a million dollars for a home.
1 out of 3 are business owners. 1/5 are Senior Executives within a company. 1/10 are attorneys.
1/10 Are doctors. 1/3 are middle managers, sales professionals, engineers, and professors. Business owners are the richest. 50% of the wives don’t work outside the home. 90% are college graduates. 50% have advanced degrees. Average age is 54 This book goes onto highlight eight key areas that were vital in these millionaires to become millionaires and ultimately have what the author calls “The Millionaire Mind”.
Success factors These 733 millionaires were asked to rate 30 success factors. The 30 they were asked to rank came from a list of 100 success factors that were created by the author through interviews and other research the author conducted with groups of millionaires. Of the 30 success factors the three that ranked the highest are Honesty, Discipline and Social skills. I doubt there is anything here that should surprise any of us. Here are what some of the millionaires said about these three success factors:.
Integrity is not a pass fail course. Millionaires don’t wait for people to tell them what to do at work, in their personal life, or anything else. They set their own agenda, they create their own goals. I am a finisher in a society of starters. Leasing a Mercedes doesn’t make you rich. Finding a source of discipline when you find your self lacking in discipline.
I really liked how one of them said this. We all lack discipline at times, but the difference is that people of the millionaire mind realize the lack and seek out a way to find the discipline needed. 94% of millionaires ranked getting along with people as one of the most important factors of getting rich. The author tells a great story of being in a meeting with several former players of the legendary coach Bear Bryant, who were all now successful business owners and senior executives in companies.
The author asked questions of the former players. Instead of asking the typical questions you would ask, the author asked a simple very focused question. What is the first thing you learned from coach Bryant. All of the former players tell this story: On the first day of practice he asked one question. Have you called your parents to thank them? He then says. None of you got here on your own.
It required your parents to sacrifice many days taking you to little league practices, school, and feeding you and ensuring that you could play football and ultimately be on this team. None of us got here on our own and we will not win on our own. The message from coach Bryant was clear. You must have an attitude of gratitude and realize they we all need each other to get where we want to go. The millionaires in the study agreed with coach Bryant’s assertion. To be a leader and to get a long in the work place you must have social skills and the ability to get a long with others. This is not only important if you want to grow in your company and be promoted, but it is also necessary to be able to get things done, which will then allow you to accomplish things, get you noticed and get you promoted.
If you are a business owner social skills are a must to grow your business. Lastly, discipline to do the things you don’t want to do, when you know they must be done. This is the mindset the people with the millionaire mind have. Schooling A majority of the millionaires surveyed did not attribute good grades or the school they attended as playing a role in their ability to accumulate wealth.
Questioning the status quo and the norms are all skills that allow people to accumulate wealth. 2% of millionaires surveyed graduated in the top of their college class.
3 out of 10 said that they made more A’s than B’s, C’s, and D’s. 90% graduated from college with an average GPA of 2.9. Schooling is important but it is not necessary. Although 90% of the millionaires surveyed had a four-year degree, they all said that it isn’t the only thing that contributed to their wealth.
They ranked it very low on the list of success factors. Relationship between courage and wealth All of the millionaires surveyed said it requires courage to accumulate wealth. To accumulate wealth you must be willing to take financial risk as well as risk that goes along with challenging the status quo. One of the respondents said it like this: Working for others puts you at greater risk than working for yourself.
Having one source of income is a bigger risk than taking a risk on doing something on your own. I had never looked at it quite like this before, but how true it is.
Becoming wealthy is a mind game. You must overcome your fear and worry. Overcoming fear is one step in the process of accumulating wealth. How do you overcome fear: Belief in yourself. (Read the Power of Positive Thinking, Norman Vincent Peale). Almost all millionaires surveyed say that belief in yourself is the number one way to accumulate wealth.
They are not always confident, but they have a way to find confidence even when they are not confident. It is hard to be motivated and to motivate others if you don’t believe in yourself. Fear and worry are never all the way defeated. Confidence is built through the process. Vocation Choosing a vocation is one of the major reasons for many of these millionaires success.
Although many of them agree that a stable upbringing, love from a spouse, and warmth from family is critical in success, being passionate about what you do everyday is a major success factor. Business owners is the largest category of millionaires, next to doctors, lawyers, and senior corporate executives.
All confidence begins at home. Only 55% of millionaires say that they chose their career or vocation because they loved it. But over time 80% say that it is because they love their vocation that they accumulated wealth. 58% chose their field because it showed the opportunity for wealth accumulation. 2 out of 3 millionaires don’t retire even though financially they can, because they love their vocation. 81% of people chose their career because it allowed full use of their skills, passion, and abilities.
Specialization in a certain field is one way to become a millionaire. 46% of millionaires say that intuition is what led them down the path of wealth and opportunity.
There are more than 22,000 different opportunities within the defined business areas. Choice of spouse What is it about marital status that allows couples to accumulate wealth?. With dual incomes the ability to take more financial risks are created. Which could lead to successful businesses and larger investments.
The support a loving spouse can provide when things aren’t going well can get their partner through tough spots. The decision-making ability a person with a millionaire mind has in choosing their spouse was well discussed at length in this book. Millionaires and people with the millionaire minds have the ability to pick spouses. They have the ability to pick mates that have patience and are caring. 96% of both the husband and wife believe that telling the truth is important. For every 100 millionaires that say that their spouse wasn’t important in accumulating wealth, there 1,317 that say that their spouse was extremely important. Economically productive Household All the millionaires surveyed ran very ecumenically productive households that you wouldn’t think you average millionaire would do.
Things such as:. Having furniture refurnished instead of buying new. Never buying from a phone solicitation.
Using coupons. Buying household products in bulk.
Having shoes resoled instead of buying new. An interesting statistic with a great example in the book was: An average household spends $10,000 a year on food. Which is $400,000 – $600,000 in a lifetime.
By couponing if you are able to cut just 5% of the cost down, that would be roughly $25,000 over a lifetime. If you invest the money saved in a mutual fund.
That money could grow to a half million dollars. Millionaires are future focused. Millionaires don’t spend time on things that they aren’t very good at. For example: Putting in a hot water heater. You are better off hiring and paying someone than doing it yourself.
You would think that being frugal that a millionaire would want to save the money and do it themselves. However, millionaires know that there is an opportunity cost associated with doing it themselves. They lose the opportunity to go and accumulate new business or skills that would earn them more money. Millionaires are frugal when they need to be. The DIY is not always the cheaper way. You are better off to earn income from your vocation than being a do it yourselfer.
Ask yourself: is there better use of my time. 4 out of 10 millionaires have clothing altered versus buying new. How millionaires choose their home. Average purchase price: $560,000 and hold onto in for it at least 10 + years. 53% of have not moved in the past 10 years. Balance sheet affluent versus Income statement affluent.
I loved how the book really highlighted the differences between the balance sheet affluent and the income statement affluent. There are lots of people who make a lot of money (income statement affluent) but they spend it all. Balance sheet affluent have a high net worth because of assets and other investments. High Incomer earners in their 30’s and 40’s have a disproportion amount of the higher value mortgages in the market. Millionaires use these guidelines to pick homes:. 1.
Be willing to walk away from any deal on any home at any time. Don’t pay the initial asking price for any home. If you have ever paid the asking price for any home, most likely you are not a millionaire. Never try to buy a home in a short span of time. Look for an estate sale, divorce sale, or a foreclosure. Only 27% of millionaires ever had a custom-built home. 1 out of 5 millionaires actually ever bought a spec house.
Always buy homes that you can afford. Appreciation of the home and whether or not you can afford the payments easily. What is affordable? Assume that your annual income is cut in half a year after you buy a home.
Could you still afford it? If not, then it is not affordable for you. Lifestyles The 733 millionaires were surveyed and asked what activities they were engaged in within the last 30 days.
There were 27 lifestyle activities that these millionaires were engaged in. Here are the top 3. Socializing with children and grandchildren 2. Entertaining close friends. Planning of investments. Millionaires don’t spend money so they can have fun.
They don’t buy boats, they don’t take exciting vacations. Most millionaires are not do it yourself types.
On average they make $325 an hour. They don’t put shelves up in the house, when they could be doing something else to earn $325 an hour. Golf ranks 13th on the list: However, most of the millionaires said that golf was not only a recreational activity, but it was a business activity that was one of the success factors that led them down the path to accumulate wealth. Most millionaires in the study on average paid over $300,000 in taxes.
1 out of 5 paid over 1 million dollars in taxes. One of the activities was that they all had met with a tax professional within the last 30 days.
Don’t borrow money for a new venture. Bootstrap any business ventures. Attended religious activities These are my notes from the Millionaire Mind. I hope you enjoyed the summary and picked up a few nuggets of wisdom along the way. Please share.
To your success and your future.
One of the authors that has deeply affected my understanding of financial matters and wealth is Thomas Stanley. His book helped me understand that financial success has little to do with how much you make and everything to do with how much you keep vs. What you spend. Stanley was killed in a car accident a few weeks ago.
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In honor of his life I decided to pull one of his books off the shelf that I had purchased a while back but had not had time to read. How do millionaires think?
Was the sequel to the. In the first book Dr. Stanley looked at the actions of millionaires and found that most millionaires don’t live the stereotypical life that we see on Lifestyles of the Rich and Famous. In fact, many millionaires live quiet, modest lives so much so that they might be your next door neighbor and you wouldn’t even know it.
In, Stanley delved into the thought processes behind those millionaires. How do they think? What is important to them?
How do they view common everyday parts of life? The millionaires surveyed Stanley surveyed 733 millionaires as a part of gathering data for this book. On average these millionaires had a net worth of just a little short of 10 million dollars. Contrary to what you might expect most of these millionaires did not arrive with a silver spoon. Less than 2 percent inherited their homes or any significant part of their property. Only 8 percent inherited more than half their wealth. 61% never received any inheritance at all.
So these are people who for the most part started with little to nothing and built substantial fortunes. Understanding how these millionaires think would clearly be helpful in understanding how we can be successful too. The key success factors Stanley surveyed these millionaires on a wide range of factors to discover what they felt was most important in enabling them to build wealth. You might think that high degrees of intelligence or education or a specialized knowledge were keys to building wealth. In fact these traits ranked fairly low. So what were the top factors?. Being honest with all people.
Being well-disciplined. Getting along with people. Having a supportive spouse. Working harder than most people So the keys to becoming a multi-millionaire according to those surveyed? Integrity, quality relationships and discipline and hard work.
Education While most of the millionaires surveyed were college graduates, few graduated at the top of their class. On average these millionaires graduated from college with a 2.92 grade point average and had an SAT score of 1190. It was interesting that many millionaires noted that because they had never been the best students in their class, some had been told by teachers or other mentors at some point in their education that they were unlikely ever to be successful. Those comments became motivating factors that pushed them toward where they were. Because they had to work harder for their academic degree than their counterparts for whom everything came easy, they learned the discipline of hard work and how to press on through discouraging circumstances. Those lessons paid off later in business when they suffered setbacks. They had the perseverance to press on.
Their counterparts that had been at the head of their class were more inclined to give up when faced with similar obstacles. Courage Courage was another key for these millionaires. While they were not gamblers, they were willing to take a calculated risk when they saw an opportunity. Because of this attitude many of those surveyed were self-employed. While some may see self employment as risky, they viewed relying on their abilities as less of a risk then working for a larger company where they had less control. The also were much more likely to focus on the positives that could come from success as opposed to the negatives of failure. Many of the millionaires surveyed sited a strong religious faith as a significant factor in helping them to have the courage to prevail in hard times.
This is not to say that the risks they took always came out to their benefit. Many had suffered financial setbacks. But they had an uncommon belief in their abilities to handle any situation. Vocation The millionaires in the survey understood well their strengths and weaknesses and credited choosing work that enabled them to maximize their ability. It is very hard to succeed over the course of a lifetime in a vocation that is not well suited to our particular talents. These millionaires understood this and sought out work that they enjoyed, that invigorated them, and that matched the unique skills they had been born with. Marriage 92 percent of the millionaires surveyed were married and only 2 percent had been divorced.
On average these millionaires had been married 28 years. One of the highest rated factors in their success these millionaires cited was having a supportive spouse.
How did these millionaires choose so well when they were looking for a person to spend their life with? While physical attractiveness was not an insignificant factor, it was not a high-ranking deciding factor that led these millionaires to choose their mate. The top 5 factors that they indicated were most important were:. Honest. Responsible.
Loving. Capable.
Supportive Finding a spouse with these qualities played a major role in their success. Economically productive households These millionaires were frugal but that doesn’t necessarily mean buying things cheap. They understood quality and took good care of their possessions.
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For example they did not buy the cheapest shoes they could find. 70% of them indicated that they had purchased high quality shoes and had them resoled on a regular basis.
While they paid good money for their shoes initially, in the long run they actually saved money by taking care of them. These millionaires were also very careful with their time. For example most regularly grocery shop with a specific list. They didn’t spend an hour or more aimlessly browsing the grocery store.
They went in with a list and purchased what they needed. This was partly due to a desire not to spend wastefully, but even more so it was about saving time. They understood the value of time and took every effort to maximize it when they had the opportunity. Their homes One of the striking characteristics of these millionaires when it came to purchasing their homes was their patience. They looked for homes in well established neighborhoods that were likely to appreciate in value. They resisted the temptation to succumb to house fever.
They were tough negotiators and were willing to wait until they found the deal that they were looking for. Few of these millionaires ever built their own home. Once again they understood the value of their time. Building a home requires a great deal of planning and follow-up. They prefer to use their time in ways that bring them value as opposed to babysitting contractors.
Their lifestyles Much of their lifestyles were based around relationships more than possessions. For example, golf was the most common sport played, in large part because of the relational nature of golf.
Charity was an important part of their lives but interestingly, not just after they acquired wealth. For many of these millionaires volunteering and giving had been a large part of their lives from the time they were young. They chose to build friendships with other affluent people who would help push them to accomplish the things they did. They also made it a practice to surround themselves with high quality advisers to help them in important areas. Pursue The Millionaire Mind I believe that one of the keys to success in any area is studying what successful people do and then trying to incorporate those practices into your own life. Certainly that is true in financial matters and that is one of the things I appreciate about the work Dr.
Stanley did, first in and then in. If you want to understand how millionaires think, reading is a great place to start.