Remembering Dr. Tom Stanley

You might remember a publishing phenomenon in 1996: The Millionaire Next Door. Dr. Thomas J. Stanley and Dr. William D. Danko spent a couple of decades studying America’s millionaires to help companies market to the affluent. Then, they wrote a book explaining how the rest of America could join the rolls of what they called “modest millionaires.”

Stanley died Feb. 28, the victim of a reckless driver. A good way to commemorate Stanley’s passing would be to pass his lessons to your children or grandchildren.

The key to being rich isn’t earning a lot of money. The modest millionaires tend to earn comfortable incomes, but they live below their incomes.

As Stanley liked to phrase it, they collect wealth not things. They didn’t stretch their budgets to live in the fanciest homes or drive the nicest cars. There’s a difference between wealth and income that few people grasp. Income explains only about 30% of the difference in wealth among people, Stanley said.

The happiest people are those who live below their means. They accumulate wealth, instead of depreciating status symbols, and are more secure. They tend to have more wealth accumulated than their neighbors and are able to spend as much as or more than their neighbors while still being financially independent.

Most tend to own small businesses. Once they bought a home, they stayed there for decades. They also tend to buy quality cars at end-of-season sales and keep them for a long time. Owning a business isn’t essential. Certain occupations produce an outsize number of modest millionaires, such as engineers and educators. Millionaires tend to marry once and stay married.

Stanley also said millionaires tend to have healthier lifestyles because they are both disciplined and educated.

RW June 2015.