Guess what? Truly wealthy people cut coupons, plan purchases and budget, regularly. North Americans first read about these revelations in Thomas Stanley and Richard Danko’s The Millionaire Next Door (“The Surprising Secrets of America’s Wealthy”) way back in 1996. This team is our final honoree in the “Financial Writers Who Inspire Us” blog series. Here is why, even in 2016, as was famously sung in Casablanca, “The fundamental things apply. As time goes by.”
More than an overly optimistic look at what frugality can accomplish.
Despite the book’s popularity (over 3 million copies have been sold), The Millionaire Next Door has received much criticism over the years. Its central message has been reduced to an overly optimistic view of what frugality can accomplish. It won’t come as a surprise to our readers that we disagree. We believe The Millionaire Next Door should continue to be celebrated for revealing the eye-opening habits that many truly financially independent people practice: driving the same car for decades, not trading up their home, and wearing a Timex watch. Stanley and Danko made North Americans widely aware of the fact that just because someone looks wealthy doesn’t mean they are wealthy. And vice versa!
Kids, if you want to follow millionaires, think before you buy.
At Gifting Sense, we are turning shopping for typical childhood purchases into a tool that helps parents give their children the best gift ever: fun-damental financial literacy. Our DIMS – DOES IT MAKE SENSE?® SCORE Calculator instills many of the habits that Stanley and Danko discovered millionaires employ in their day-to-day lives. Some say the book is outdated because society has evolved; Millenials consume less than Baby Boomers. We aren’t sure this is entirely accurate. The car might be electric, the house more energy-efficient, the trip more socially conscious, and the clothes less formal. However, people are still spending more than they have, with historically high debt-to-income ratios.
Not saving isn’t new; borrowing to pay for lifestyle-driven purchases is.
When Stanley and Danko first wrote, it was a lot harder to buy things you didn’t have the money for. Some folks spent all their money and saved very little – but borrowing just wasn’t as available as it is now. Today, it is actually pretty easy to spend not just all that you make but more than you make. Others say the book is outdated because modern-day career paths didn’t yet exist when it was written. Read the last two chapters, “Find Your Niche” and “Jobs: Millionaires Versus Heirs”. There is gold in these pages that applies even to today’s world, where the speed of change feels unparalleled.
Unanticipated conclusions can be the most revealing.
Stanley and Danko went into their project thinking they would discover an entirely different set of behaviors than the ones they did. We like their book for this reason as well. Why? As we wrote last October, the DIMS SCORE® Calculator is an incredibly effective “head-fake”; a great way to teach kids one thing while they think they are doing another. Sure, youth use the DIMS SCORE® Calculator to get what they think they want. But what they are really getting are some great habits, like calculating the cost-per-use of a potential purchase or working out if they’ll really use and appreciate an item or experience before they ask for it.
If your kids complain that “no one else has to use the DIMS SCORE® Calculator when preparing a holiday or birthday wish list,” – just tell them that you recently re-read a 20-year-old book and know for a fact that they are only walking in the footsteps of Millionaires before them. If they persist, regale them with some of the most enduring lyrics ever written. Because even the most “digital” of us eventually reach an age where it becomes just about impossible to deny – that despite the speed of new inventions, “…The fundamental things apply. As time goes by.”
Please click on the pink or blue buttons below to learn more about our approach to early financial education.
Child Development Financial Literacy For Kids For Parents For Teachers Inspiring Financial Writers
