The Next Millionaire Next Door Book Summary

The Millionaire Next Door by Thomas Stanley is one of the classics in personal finance.

In the 1996 classic, Dr Thomas Stanley looked at some myths most members of society have about wealth.

He discussed how most millionaires are middle-income, or slightly above average, wage earners, like teachers and accountants.

An excellent summary of the original book would be that “you shouldn’t judge a book by its cover” because many wealthy people don’t act flash.

The question is, is his work still relevant in this day and age? That is the question that  Sarah Stanley Fallaw and Thomas J. Stanley ask in the Next Millionaire Next Door.

What are 20 of the key findings of this book?

  1. The same trends exist as before (in 1996 when the first book was released). In other words, spending habits are a bigger indicator of wealth, as are behaviours more generally, rather than income.
  2. They found that even in poor societies, the same behaviours that are key to wealth, such as focus and discipline, are key.
  3. They deal with the survivorship bias issue. One of the critiques of the original book was that only the “cream of the crop” were selected. In other words, it might be true that many of the world’s millionaires are teachers, accountants and other mid-income professionals, but surely they are just the few that have succeeded.
  4. Most millionaires don’t look or act rich.
  5. One reason why many high-income executives aren’t always wealthy, is peer pressure. In other words, if all your banking or legal colleagues are boasting about going to a luxury holiday over the weekend, you are more likely to be like them. In comparison, if you are a teacher, you are less likely to feel the same pressure. That doesn’t mean that there aren’t many wealthy, high-income people. It more explains why this isn’t as prevalent as it should be.
  6. As a follow up to point 5, however, social media has started to change the dynamics. These days, even mid-income people are likely to feel pressure to “keep up with the Jones” due to Facebook and other social media
  7. Only some people use income to create wealth. Wealth is certainly not an autonomic ticket to wealth as countless sports and entertainment celebrities, and lottery winners, found out judging by the bankruptcy statistics.
  8. Many of the millionaire next door types had good habits early on. For example, one of the millionaire next door’s that is featured in the book, was taught by his frugal grandparents and parents to save 10% of what he makes. So even at college, he saved 0.70 cent from earning $7 an hour. He kept those habits up when he earned more, later in life.
  9. The small compounding effect of decisions adds up over time. For instance, investing 15%, instead of 5%, of your income sounds like nothing. Over 30 years, however, it can make a huge difference.
  10. The vast majority of millionaire next door types don’t live in fancy houses.
  11. There is a new rich these days, which is different to 1996. The dig economy has created a sub-section of people with 2-3 incomes. For example, they are a teacher + occasional uber driver. This demographic is increasing and a surprising number are actually reaching $1m.
  12. $1m in 1996 is worth about $1.5m now. However, that doesn’t change the statistics that much. There are more millionaires in the US and around the world, even adjusted for inflation, than 25 years ago.
  13. The wealthy need to focus on unearned income eventually, and not just earned income.
  14. The same basic skills, habits and behaviours that can lead to a $1m portfolio, aren’t affected by the economy, technology or elections long-term. The fact we had a financial crisis in 2008-2009, and yet more “millionaire next door types” have been created, is testimony to that.
  15. 70% of millionaires in the survey said they had always been frugal, meaning they spend a smaller percentage of their income relative to most people
  16. Small business owners, alongside the mid-income salary earners, are more likely to be millionaire next door types.
  17. Many of the sons and daughters of millionaire next doors, didn’t even know their parents were rich, until they die. One person inherited $10m but had no idea his dad was wealthy.
  18. The biggest thing stopping people from becoming financial independent is external pressure from friends, family and society to have big houses, cars and fancy lifestyles. People who give into this external pressures, become easy pray for marketers.
  19. Thinking differently has always been a trait of millionaire next doors and that hasn’t changed since 1996. Examples included in the book include people who have decided to live in smaller towns and cities, and “live like a poor person” in the eyes of many of their peers, rather than caring what the rest of society thinks about them.
  20. People shouldn’t be waiting on a radical government to save them and instead should focus on their own behaviours.


Overall, this book isn’t as good as the original, classic. However, it does answer a very important question. Namely, in this age of inequality and technology, is it still possible to be a millionaire next door?

The answer, according to their research, is a resounding yes. So this book is a timely reminder that even today, it is possible to become a millionaire on an average salary.

As the book is American-centric, this work is probably even more reassuring for a non-US audience, where healthcare and other related costs haven’t risen so much.

Further reading

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