How Many of These Traits of “The Millionaire Next Door” Do You Share?

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“The definition of insanity is doing the same thing over and over again and expecting a different result” – Tony Robbins

Some books are worth reading once a year. One of them for me is the Millionaire Next Door by Thomas Stanley and William Danko. The book was the result of some research for a private client trust services organization and they wanted to know the traits of their target market.

The key outcome was that: public perception is VERY different than how most millionaires behave.

The television’s “warped version of reality”  was very well proven by the research in the book.  After all, how many stories of NFL players making millions and yet retiring broke have you heard?  How about lottery winners?

While written in 1996, the wisdom of the seven common traits strikes me just as relevant today. These are some good traits you ought to know as a real estate investor.

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The Seven Traits of Millionaires

  1. They live well below their means
  2. They allocate their time, energy and money efficiently in wealth building activities
  3. They belief financial independence is more important that displaying high status
  4. They did not inherit their wealth
  5. Their adult children are economically self sufficient
  6. They are great at selecting and seizing opportunity
  7. They chose the right occupation

It would seem if you want to be rich following those rules would go a long way. The other really crucial point the book presented to me are the following principles:

Great Offense

Wealthy people are great earners. This is one that gets a lot of attention in my mind. However, the one that deserves more focus to me however is the next point:

Great Defense

  • Wealthy people are frugal frugal frugal. The work hard at keeping what they earn by effective budgeting and tax planning. The also trade their investment portfolio INFREQUENTLY.
  • When it comes to spending in general they will buy suits off the rack and spend little on things like watches.
  • Only about twenty percent buy new cars off the lot. This one had a wide dispersion of when they would by. This one makes sense too. Why take all that depreciation of the lot. Why not wait two or three years then buy what you want.
  • This one may spark some controversy but it seems to make sense. The millionaire next door has an even-thrifty-er spouse.


Overall, the book is a great reminder of how habits are the key. As hard as it seems for the majority of Americans, saving money really is where it starts. Are their any other points I left out? Other great books about the habits of wealthy people? Leave your comments below.

Photo: Tax Credits

About Author

Douglas Dowell

Douglas Dowell J.D. is a commercial and multifamily investor. His blog will focus on legally raising private money, risk mitigation with due diligence and management science. He is also an avid student of success principles with a focus on modeling success factors.


  1. Not that I have hit the millionaire status yet, but the article is timely since one of my tenants recently told me if he had my money he would have a lot more fun with it. A girl on each arm, a hotel room in Vegas, and a Corvette.

  2. Douglas, The Millionaire Next Door is one of my all-time favorite books, I first read it probably 10 years ago and bought the audio CD’s several years back. I listen to the CD’s while I’m on long road trips and I believe it helps me stay focused on the goal. I have to tell you something however, your initial quote should be credited to Albert Einstein, not Tony Robbins.


    • Thank you for the heads up on who I should’ve attributed the quote Scott. Albert has taught a lot about success.

      I really think that is a great way to use this content. Eye on the prize. Slowly but surely its affecting my habits.

  3. Hi Douglas, I love self help books, the millionaire next door is not one of my favorites. I think it is focused way too much on saving as the mans to become wealthy, which can take 20 years if your lucky. I like the books like Tony Robbins, Jack Canfield, John Assaraf, Jim Rohn, Zig Ziglar that teach you can be wealthy in a couple years or less with the right attitude. They also teach it is okay to have nice things and want nice things especially if it makes us happy.

    There is no source that can link the insanity quote to Eistien, it is an urban myth. The earliest people can find it in writing is 1980. I personally think that quote is the most overused quote in history and ridiculous. If that quote were true 95% of the world would be insane, because 95% of the world does the same thing over and per expecting the same result. I personally think the quote should read the definition of success is changing your actions when things aren’t working or something like that.

    Douglas, I am not trying to bash your article, I hear many people use that quote including most of the authors I like, I personally think it is silly. I do like many of the ideas in te millionaire next door, it is good to save money on things that you don’t care about whatever they may be:suits, cars, watches, but I think it is important to spend money on the things that we do care about and make us happy and enjoy life.

    • I am also very interested in the other side as well Mark. The abundance focused approach is really been helpful to me as well. T Harv vs Dave Ramsey?

      I like T Harv as my offensive coordinator maybe. Dave Ramsey for Defense perhaps.

  4. I love Harv! He is of the same mold of the other authors I mentioned. I think when someone is first starting out and very short on money the Ramsey techniques are great. I personally like houses and cars and those can get expensive. My main goal is increasing income.

    • I am with you Mark. I like airplanes…fast airplanes lol. Its a very interesting debate for sure.

      I do actually find where your focus goes energy goes statement compelling. If you have an abundant nuerology than energy will yield physical results.
      For me, the book is about balancing out my vision with some conservativism.

  5. many places to draw wisdom ; )

    I don’t remember where I learned this but whenever I purchase something, I first ask myself if I love it or need it (criteria for what we keep in our home as well). Second, I reflect on the the value of the time I gave (time I’ll never get back, our life having finite time etc), to make the money that will pay for the thing. Adopting this mindset has helped me become more frugal…and also feel good about buying something that really make me happy.

  6. I tend to think somewhat as Mark does. We’re flooded with folks working far longer than planned who thought they could save their way to a decent retirement. Want frugal? Marry a woman from NE Ohio. OMG! 🙂 Our two cars total 20 years old with over 250k miles.

  7. Good article Douglas!

    “The Millionaire Next Door” combined with actually looking at what the rich buy and own is very illuminating. The Federal Reserve Bulletin, which is published every three years[1], shows that most of the people in the top 10% of net worth own real estate and business equity. They have debt as well, showing that they recognize the value in leverage. But they don’t own huge chunks of mutual funds.

    Adopting the cash-only approach of Dave Ramsey isn’t the key to building wealth. I appreciate Dave’s way of getting out of the black hole of consumer debt, but then he goes into a really weird approach of nothing but 12% growing mutual funds and an 8% withdrawal rate. Dave may be successful, but I don’t think he is retiring on mutual funds. Instead, I think he can retire on all the rental property he bought with his business equity and book sales.

    The rich aren’t basking in the wealth of mutual funds. And Warren Buffett only supports index funds if you aren’t going to do anything else. He is often misquoted as supporting index funds[2]. He actually stated in his 1996 shareholders letter is: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals. Should you choose, however, to construct your own portfolio, there are a few thoughts worth remembering. Intelligent investing is not complex, though that is far from saying that it is easy. What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”

    Pair that with the fact that if you look at any of this big funds, you will find 5-30 big companies as the primary holders in familiar companies like “Google, Apple, Visa, Coca-Cola, Pepsi, Wells Fargo, JP Morgan, Proctor & Gamble, and so on.”[3] If you spend a small amount of time, it’s possible to put together a fund on your own without having to pay Fidelity or Vanguard $xxx/year for the rest of your life. Instead, spend the amount needed to make the buy, and check the free DRIP box to get automatic increases over time.

    [1] –
    [2] –
    [3] –

    • Douglas Dowell

      I agree with your premise Greg. I think Dave is great for getting control of the budget but NOT for the “offense” part of the plan.

      I agree with your take on what Warren suggest. I took his advice as to mean study study study and choose wisely. Most people are not taking responsibility and end up at the mercy of wall street.

  8. I am the Millionaire Next Door and I can check off all 7 of those traits (except I don’t have adult kids yet). I would point out the two biggest contributors where:

    1. They live well below their means
    7. They chose the right occupation

    From living frugally my wife and I used all the extra income from my high paying occupation to plow into real estate over the years.

  9. Great article and thoughtful criticism. I am sorry but I think Mark and Jeff have deep misunderstanding. The way I reads “They live well below their means” clearly implies as means improve you may improve your lifestyle. Most “next door” millionaire will have these seven traits but there will be few lucky with exceptional ability who will earn in short span fastest private jet, expensive cars and mega-mansions. And even #7 acknowledge this by stating those lucky may be in the right profession at the right time with all their exceptional abilities.

    • Thanks for the comment Mahesh,

      It seems to me the inspiration behind massive success is what Mark and Jeff focus on. If you focus on abundance then you get abundance. If you focus too much on frugality the danger is you limit your success because you have a lack mentality.

      • As 95% of population carry trait #4 and if all of them follow theory of abundance (wealthy in a couple years or less) then proportion of millionaire to bankrupt will match that of winner and loser in Las Vegas. It is true that fear is our greatest enemy and it should not stop our wheels from rolling but should apply enough traction so we stay the course and do not slip and wreck. After all, we want to be a millionaire not some super human.

        • Great point! Its not that hard if you select the right strategies and stay persistent in execution.

  10. I think that the whole live below your means stuff has to be relative.
    Kiyosaki says in his stuff not to live below your means but expand your means.
    Cute little catch phrase obviously but as Mahesh points out you can improve your lifestyle as your means increase.
    What these wealthy people do is still prioritize saving and investing and don’t have every dollar coming in going back out to live some lavish lifestyle.

    I’ll guess that Donald Trump lives below his means.
    But I doubt he is going through the local grocery flyer seeing what is on sale before he sends his minions out to get stuff in a gold plated hover craft. 🙂

  11. I read The Millionaire Next Door when it was first published because my father recommended it to me. The book reinforced that to gain and maintain wealth I had to live within my means and invest my savings. Another book that helped us out is The Road to Financial Freedom by Larry Burkett. When Larry passed away Dave Ramsey was there to share the same message with The Total Money Makeover. The book of Proverbs in the Bible is full of financial and life wisdom, There 31 chapters in the book, I encourage you to read just one a day, it has helped me tremendously.

    I really like Dave Ramsey, I believe he encourages the 4 different types of mutual funds because the 15% of income that most people can save is in Roth IRAs and 401Ks. Most people don’t have the option of investing in real estate in a company sponsored 401k plan. In addition to that I doubt that everyone wants to become a land lord or realizes how many ways there are to invest in real estate. I didn’t until about 1 year ago when I found this website. I called into Dave’s show a year ago when I knew the power plant I work in was going to be sold and I would gain control of the money in my 401k. I told Dave where my wife and I were financially and we wanted to learn about real estate investing and open a Self Directed IRA to fund it. Dave encouraged me to do it, he loves real estate. His thing is to use cash because you won’t be foreclosed on if you own it. I have bought our first 2 houses in the last 4 months with my own money in the Self Directed IRA. The first was a turn key rental with the tenant in place that an investor lost to foreclosure. Ironically that investor bought it from a bank because the prior investor lost it to foreclosure.

    People I work with know about my real estate investing. A couple of them called me a “future millionaire”, I asked them why didn’t they think we were there already? I just got blank stares. Whenever I see someone driving an expensive new vehicle I can’t help but think, they must be wealthy or have a lot of debt.

    Tom Elam

    • Thanks for the comment Tom,

      I think that’s what is really great about the book. The difference between perception and reality. The brand new Beemer with a $600 per month lease payment…that’s not winning in my book.

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