Get Rich Slowly has a great interview with Thomas Stanley, Co-Author of “The Millionaire Next Door” (one of the best personal finance books ever IMO) that has some really great quotes. I thought I'd share a few of them with you (in red) and give my comments on them. Here we go:
Income only explains about 30% of the variation in wealth. So they are doing something other than just making money and accumulating wealth via investments.
So again we see that having a high income is only partially responsible for making people wealthy (we've discussed this in Wealth Doesn't Require a High Income and The Wealth of Farmers.) In fact, income is less than a third of the reason that millionaires are wealthy. What accounts for the majority of their success? The fact that they spend less than they earn (regardless of their income.)
Every time I post on the fact that you can become wealthy by spending less than you earn, someone says something like, "Yeah, but you also have to have a high income." No, you don't. You need a "decent" income, of course (someone making $10k per year isn't going to become wealthy no matter how much they cut spending.) But you don't need to be making six figures to become wealthy.
And yes, I realize that people with higher incomes have a better opportunity of becoming wealthy. But as the statements above imply, many people don't seize this opportunity -- their spending simply rises as their income does. Unfortunately, this is more likely to happen (that even high income people spend all -- or even more -- than they make) than not happen in America today.
If you look at the statistics on happiness in life overall, those people who live below their means are happier than people who don’t.
Why is this? Is it because they've controlled their desires and are thus not always left wanting "more"? Or is it because they end up becoming wealthier and this leads to happy feelings? Thoughts?
The happiest people are the people who have substantially more money than most of the people that live in their neighborhood.
As we've discussed, relative income is a better predictor of happiness than absolute income.
The price of the house is a very high correlative of everything else that you spend money on.
In other words, if you spend a boatload on a home, it's also likely that you'll spend a boatload on all sorts of other expenses. People who want to grow their wealth understand this. And that's why in the United States, there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more. For specifics, see Why Many Homeowners are Having a Tough Time.
Most people should not be in their own business.
Eliminates the myth that you have to have your own business to become wealthy.
There are a whole lot of folks out there in this country who are millionaires [but not self-employed].
Let me say from experience that you can certainly earn a great income without being self-employed.
Most millionaires are disciplined not only in terms of money, but also in consumption of food. We found in the correlations that weight is related inversely to health. Most wealthy people are not overweight. They are healthier than most people.
Let's face it, the reason many of these people is wealthy is because they are disciplined -- they control various portions of their lives (and can resist temptations) and thus become wealthy. This discipline carries over into other areas of their lives (like health/weight issues) in many cases.
Overall, it's great, great stuff from an author who I really admire. The Millionaire Next Door was one book I read and applied early in my post-college life. The results have been tremendous and for this I owe Dr. Stanley a great big THANK YOU!!!!