There are plenty of preconceived notions about millionaires. How they live, what they wear, what they eat, how they think. Dr. Thomas J. Stanley’s research in 1980 was (at the time) the most comprehensive national study about the size, geographic distribution, and financial lifestyles of millionaires. Let’s dive into some key takeaways from his research.
PAW vs UAW Concept
One of the major revelations in the book is Stanley’s classification of PAWs (Prodigious Accumulators of Wealth) and UAWs (Under Accumulators of Wealth). UAWs have a higher propensity to spend, tend to live above their means, and prioritize living a consumptive lifestyle. PAWs do the opposite and are highlighted with seven behavioral patterns that we’ll get to shortly.
Dr. Stanley’s extensive research developed what was the first data compilation profile of the wealthy. One major myth that was debunked repeatedly in his studies was the notion of trust fund babies or inherited wealth. Take a look at some of his key findings.
*80% of America’s millionaires were first generation rich.
2/3 of millionaires are self employed.
97% of millionaires are homeowners.
They invest 15-20% of their income.
*Only 19% receive any income or wealth of any kind from a trust fund or an estate.
The Seven Factors
Remember our PAW/UAW comparison earlier? Dr. Stanley uncovered the real gems behind the wealthy: their habits. He consolidated the habits into seven key factors. The millionaire mindset led to millionaire outcomes. Focus and dedication were evident in the below behaviors Dr. Stanley analyzed.
They live well below their means.
They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
They believe that financial independence is more important than displaying high social status.
Their parents did not provide economic outpatient care.
Their adult children are economically self-sufficient.
They are proficient in targeting market opportunities.
They chose the right occupation.
The media has always been obsessed with the rich. Myths and rumors galore abound when discussing their lives. You now know some of the fundamental truths about the affluent. The Millionaire Next Door is a good read for those who want to unpack who the wealthy really are and learn solid financial advice along the way. If you’re the analytical type who loves data, you’ll be right at home reading this. Oorah!