Ode to Mr. Stanley
“Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and most of all, self-discipline.”
Thomas J. Stanley (1944-2015), author of The Millionaire Next Door –TWEET THAT
Sad. My wife and I exchanged the above text messages in early March of this year. She had alerted me to the fact that the author, Tom Stanley, of The Millionaire Next Door (TMND) had died. My parents had purchased this game-changing book for me in 1998 upon my 30th birthday. I was already a solid manager of money, but this book was instrumental in giving me hard data with which to relate and build on my money management skills.
Periodically, Warren and I are asked by clients what resources we would recommend for their children and grandchildren to access in order to be better stewards of their money. Undoubtedly, The Millionaire Next Door makes our short list.
As a belated tribute to Mr. Stanley, the following are some takeaways from his timeless tome:
- Who is “The Millionaire Next Door”?
Owners of their own businesses that are many times defined as dull. For them, wealth is NOT income or the owning of possessions, but the substantial accumulation of appreciable assets. They consume, on average, the same amount as a family who has an income that is one-third of their level and do not live in upscale neighborhoods.
“Wealth is what you accumulate, not what you spend.” – Tweet That!
- Frugal
These Prodigious Accumulators of Wealth (PAWs) normally purchase a home with a mortgage that is considerably less than two times their household income. On average, they live in their understated home for over 20 years. As I see it, each time you move you are sucking out of your net worth the equivalent of up to 8% of the value of the sale price of your home.
Very few PAWs lease their vehicles and, on average, they own their vehicles for at least 8 years and often much longer. As we discuss in our Pre-Training Preparation, most PAWs save at least 15% of their earned income. Their spouses are willing participants in this frugal lifestyle.
- Planning
As I re-read TMND, I was pleasantly reminded at how fanatical the PAWs are about planning like we do for clients through our Marathon Roadmap Process. Their ability to save at least 15% of their income is a direct by-product of their planning and frugality. They dedicate meaningfully more time (two times more than Under Accumulators of Wealth – UAWs) each month to budgeting and planning and are very goal oriented.
- Gifts to Children
PAWs view the greatest gift they can provide their children is to provide education and demonstrate the rewards of responsibility. Very seldom do they provide direct monetary gifts. They do their best to make sure their kids don’t realize they are affluent until after the kids have established a mature, disciplined adult lifestyle.
If this strikes you as basic common sense then you are probably already a client of ours or very similar to them. Mr. Stanley’s book would make for a meaningful gift for a recent college graduate or your favorite twenty or thirty-something. You could make a lot worse choices than The Millionaire Next Door.
Thank you Mr. Stanley!
As always, thank you for the introduction of your friends and family that so many of you have made. We are honored to serve you! As a service to our clients, we are happy to act as a sounding board for your friends and family. If any of them should need a second opinion on their financial situation, introduce them to www.striblingwhalen.com or call us at 678-989-0048.
Regards,
Warren D. Stribling, IV, CFP®, Principal
warren.stribling@striblingwhalen.com
Brian E. Whalen, CFP®, CIMA®, Principal
brian.whalen@striblingwhalen.com
Sources:
The Millionaire Next Door by Thomas J. Stanley
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Brian Whalen and not necessarily those of Raymond James.
