Comparison of Millionaire Lifestyles

10 Eye-Opening Facts from ‘The Millionaire Next Door’: A Review

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Think right now about your average millionaire. What do they look like? What do they do? Where do they live? 

Do you have someone in mind? Good. 

Maybe you pictured a doctor living in a big brick house. Maybe you pictured a lawyer driving a Porsche to the office. 

You would be wrong. 

The average millionaire is not who you think they are and this isn’t your average personal finance book. 

The Millionaire Next Door, written by Thomas J. Stanley and William D. Danko, is based on comprehensive research of millionaires in the United States done from 1995-96. This books still pack a very relevant punch despite the time that has passed.

In place of lovely anecdotes and cameos from ‘people just like you’, you’ll find in most books of the genre, this book is packed cover to cover in powerful insights backed by powerful research. 

These insights uncover what wealth really looks like in America. The data is explained in a detailed and simplified way so that you can follow along on your own path to building wealth. 

*All the information quoted in this article is from ‘The Millionaire Next Door’, written by Thomas J. Stanley and William D. Danko unless otherwise quoted.* 

But first things first, how do we define wealth in the first place? If there is one lesson to take away from this book, it is that wealth is not defined simply by your possessions. In fact there are several ways to define wealth. 

The ways to wealth

Net worth is the most common way that people define their wealth. In this book, they interviewed those with a net worth above one million dollars to get their study group. It is a pretty simple formula. 

Assets - Debts = Net Worth 

But this book takes it a step further. They suggest benchmarking your wealth according to age and income level instead of simply calculating your worth with nothing to reference. 

“Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.”

Using this, they further divided up their group of millionaires into categories. The ‘prodigious accumulators of wealth’ (PAWs) and the ‘under accumulators of wealth’(UAWs). PAWs are those earning far more than their calculated wealth and UAWs were those who earned far less. 

Yes, even millionaires can be underearners. 

Common Traits Among Millionaires

After the interviews with the millionaires of America were said and done, the authors identified seven common traits that separated the ‘PAWs’ from the ‘UAWs’. 

  • “They live below their means
  • They allocate their time, energy, and money to building wealth
  • They believe that financial independence is much more important than displaying high social status
  • Their parents did not provide economic outpatient care
  • Their adult children are economically self-sufficient
  • They are proficient in targeting market opportunities
  • They chose the right occupation”

Some of these don’t seem so astonishing, but we promise the statistics that support these millionaire traits will surprise you. 

10 Eye-Opening Facts About Millionaires

They don’t live in massive houses.

Comparison of Millionaire Homes: One Luxury home and one modest home.

#1 Millionaires in this book’s study live in a house worth 320 thousand dollars on average. 

Adjusted for inflation this roughly equates to 500 thousand dollars. A large sum but certainly no giant, gated mansion with the swimming pool in the backyard. In addition:

#2 “About of us have occupied the same home for more than twenty years”

The authors believe the modest homes contribute to being a millionaire for a few reasons. The first and most obvious reason is that the cheaper the house the lower the amount that you will have to mortgage. 

#3 “If you’re not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household’s total annual realized income”

The other not so obvious reason is that expensive houses come with hidden costs. We’re not just talking about landscaping and repairs. Expensive homes often come in expensive neighborhoods and expensive neighborhoods come with expectations. 

Those expectations can include driving a nice car, wearing expensive clothes, attending private schools or being the members a country club. Before you know it, what you thought was a change in scenery becomes an all out assault on your wallet. 

They don’t drive brand new luxury cars.

Comparison of Millionaire Cars

Millionares in this study prioritize financial independence over showing off. The car is arguably the most important symbol of status in society. But the stereotype of millionaires driving a new european luxury car doesn’t add up. 

The most popular cars in the study? American-made cars. 

#4 “U.S. car manufacturers may be pleased to note that their makes account for 57.7 percent of the  vehicles millionaires are driving…” 

The most popular car maker? Ford. 

#5 “The most popular models include the F-150 pickup and the Explorer sports utility vehicle.” 

So according to this study, more millionaires drive a pickup truck than a sports car! If that doesn’t change how you view real wealth we don’t know what will. 

They don’t wear fancy clothes.

Comparison of Luxury Clothes and Normal Clothes

There is also a difference in the clothes that millionaires actually wear and what we perceive. Millionaires in the study were more likely to shop at typical shopping mall stores than luxury boutiques.

#6 “Both Sears and Penny’s cards are significantly more popular among the wealthy than the cards of status retailers”

RIP to Sears and Penny’s but hopefully you get the idea. Differences were also found in the consumption habits of self-made millionaires and those who inherited wealth. 

#7 “The typical (50th percentile) self-made millionaire paid $360 for a suit, while the typical inheritor of wealth reported paying more than $600.”

They plan the finances.

This may not seem so surprising but ‘planning’ may not mean what you think. This time is spent consulting advisors, searching for quality accountants, lawyers and counselors. 

#8 “PAWs allocate nearly twice the number of hours per month to planning their financial investments as UAWs do.”

You may think ‘financial planning’ entails a lot of stock trading and other investments, but the next few facts will really surprise you. 

They don’t trade often.

The previous point talked about planning finances. It is important to understand that planning finance and trading investments are two very different activities. If your idea of a millionaire is someone looking at stock charts all day you would be wrong. 

#9 “Fewer than 1% of millionaire interviewed held investment for periods less than a week.”

This means that fewer than one percent of millionaires interviewed were active investors. In addition, they seem to hardly trade at all. 

#10 “About 9 percent of the millionaires we have interviewed hold their investments for less than one year” 

Therefore the vast majority of these millionaires hold their investments far longer than one year. There are several books that explain how holding investments long term beats trying to time the market and trading frequenltly. This book is not on investment theories but a great book that explains this can be found here. 

These are just some of the eye-opening fast from this book and we have not even touched on the last four traits of millionaires. 

  • “Their parents did not provide economic outpatient care
  • Their adult children are economically self-sufficient
  • They are proficient in targeting market opportunities
  • They chose the right occupation”

To learn about these equally eye-opening traits check out the rest of the book here. 

The Best Part about this Book

We haven’t even gotten to the best part.

You don’t have to be a millionaire to follow along with the ‘PAWs’ millionaires. You don’t have to be a millionaire to be a ‘Prodigious’ accumulator of wealth. Driving reasonable, used cars, living in modest homes, and wearing sensible clothes (among countless other insights included in the book) are all things that can be done regardless of income. 

The Millionaire Next Door is a favorite here at TBD and we recommend it to pretty much everyone. But dont just take our word for it. 


“The Implications of The Millionaire Next Door… is that nearly anybody with a steady job can amass a tidy fortune”  -Forbes

“If you want to be rich yourself, what better way to learn than to study those who are rich?” -Ramit Sethi Author of I Will Teach You to be Rich

“far and above my favorite book on personal finance,” -Nick Holeman senior financial planner at Betterment