THE MILLIONAIRE NEXT DOOR (animated book summary)

let's be honest we're all interested in the wealthy but what do you think of when you think of a millionaire fast cars expensive suits and clothes huge mansions in the hills think again very few millionaires will ever spend a lot of money on luxury items and supercars they usually live in modest neighborhoods where the cost of living and social pressures of consumerism are lower this book essentially splits everyone into two categories under accumulators of wealth you AWS and prodigious accumulators of wealth PA WS u AWS have a low net worth relative to income and the opposite is true for PA WS POWs grow wealthy by living well below their means these are people who do not fit into the stereotype of millionaires they live in modest neighborhoods Drive practical sedans and have blue-collar jobs as opposed to the expensive lifestyle associated with the idea of a millionaire on the other end you AWS are typically well-educated professionals with high-paying and high-profile jobs such as doctors attorneys etc who feel the societal pressure to keep up with and reflect their social standing these people will typically squander their money driving luxury cars and living in luxury neighborhoods it is this lifestyle which causes them to have a low net worth because they spend most of their income so how do the rich get rich what's their secret and what do they do with their money we all want to know how we can achieve even just a tiny sliver of their wealth The Millionaire Next Door shows you the simple spending and saving habits that lead to more cash in the bank than most people earn in their lifetimes this book is essential to help you avoid critical mistakes on your way to financial independence so as it turns out becoming a millionaire isn't the hardest thing in the world it simply requires planning well living below your means and avoiding a few stupid mistakes so how do we do this if you're truly committed to unlocking financial freedom start by using these three rules to improve your chances of ending up with a million dollars in the bank rule number one start saving as much as you possibly can for moment you first start earning more than you need to live most people think that the only way to become a millionaire is to earn at least a million a year but even if you're one of the top earners in the world taxes will eat away roughly fifty percent of your income annually then after you deduct living expenses the cost of rent or a mortgage and a few vacations you might end up with just two hundred thousand if that but if you truly want to be a millionaire you never even have to earn near that much not with this rule anyways the moment you earn more than you need to live save as much as you responsibly can and avoid spending money on non necessities having a good budget and living a frugal life is really all you need to build wealth especially if you start young around fifty five percent of all millionaires credit their wealth to simply being deliberate about their finances and having discipline when it comes to saving rule number two determine if you're achieving your full financial potential you can calculate if you're not reaching your full financial potential with this simple equation multiply your age with your pre-tax annual income and divide that by ten whatever this number is reflects how rich you could be right now if you've already cultivated good spending habits for example if you win $50,000 at age thirty you're expected wealth comes out to a hundred and fifty thousand dollars now take this with a grain of salt since you know it takes younger people longer to reach their expected wealth because of compounding interest so for all the youngsters out there don't feel bad because a six year old will have reaped the benefits of interest they get on their interest for much longer but this is a decent indicator of how well you stack up and can keep you from becoming caught up in keeping up with the Joneses there are so many people who appear wealthy but in reality spend all their money on Keeping Up with this illusion they buy things they don't need with money they don't have to impress people they don't like try to get closer and closer to your expected wealth over time not by saving excessively to the point that you can't enjoy life but by avoiding spending money too much in the first place rule number three avoid financial dependence on other people is what we call economic outpatient care you know how rich kids typically can't handle their own finances and never have to worry about spending money excessively that's what economic outpatient care or EOC is all about as much as affluent parents mean well when they support their children with their own hard-earned money the reality is it hurts their ability to handle money almost half of all wealthy Americans sponsor their children and grandchildren with over 15,000 a year which leads to them having luxurious lifestyles which they technically can't afford growing up I was never really crazy with money but I know for a fact that I still didn't know how to save and grow my money until I started earning it on my own because that's when you truly see the value of a hard-earned dollar the problem with regular ELC is that it eventually just blends in with your annual income making you believe that you earn more than you do the lesson to be learned here if you have rich parents don't waste their money at least invest it wisely and if you are a rich parent don't spoil your kids you really are doing them a disservice in the long run at the end of the day the lessons learned in this book are essential for everyone from the 22 year old who's about to take his first job after graduating from college to the 35 year old who settled well into her career but wants to do better and even for the 19 year old with wealthy parents who's never had to work a day in their life most people really could save half of their income or more if they just didn't buy as many useless things as they do this book is about how to make that happen the most important message to take away from this is just about anyone can become a millionaire if you live below your means and invest well at the end of the day it doesn't matter how much you make what matters most is how much you save if you make a hundred thousand dollars a year but you spend a hundred and twenty-five thousand dollars a year you will never build wealth but if you make sixty thousand dollars a year and you live on thirty thousand dollars investing the rest over time you'll be in great shape if you want to be wealthy do what wealthy people really do have a budget invest and most Courtley prioritize living below your means and financial security over social standing thanks so much for watching guys if you liked the video make sure to LIKE comment and subscribe and I'll see you in the next one make it a prosperous day

Channel: The Millionaire Mastermind

Views: 67,718

Keywords: the millionaire next door, millionaire next door, thomas stanley, dave ramsey, credit card, debt, save, budgeting, finance, rich people, budget, how to save money fast, book summary, money, how to make money, passive income, how to invest, personal finance, investing, how to become a millionaire, investing for beginners, investing strategies, how to be a millionaire, become a millionaire, self-made millionaire, how to build wealth, how to get rich

Id: RFcl9VMMFnk

Length: 6min 56sec (416 seconds)

Published: Mon Oct 14 2019