Monday, January 14, 2013

The Millionaire Next Door

I liked the premise of this book a lot, but like a lot of "business" books, it could be summed up pretty easily.  Indeed, since the book praises thrift so much, one could start by saving the money and reading the Wikipedia summary instead:

The basic idea is that you should spend less than you earn.  Even if you have a high paying job - "a good offense", without saving your money - "a good defense" - you're never going to accumulate much.  Especially avoid spending for "status" items like fancy clothes or cars - save and invest the money instead.

This is backed up with statistics, demonstrating that many people who are wealthy keep a tight rein on their spending habits.

The book also spends a lot of time dwelling on the adult children of the wealthy, which I found less interesting, given that my parents, while wonderful people, have not accumulated that kind of money, and neither am I likely to.

The other nagging doubt I'm left with is that it's easy to say "save save save", but, as they say, "you can't take it with you", either, so spending some on the finer things in life seems like it has some value too.  Say, a nice vacation with your family that will always be happily remembered: that's something that is certainly not an "asset" in the accounting sense.  I suppose the answer lies in the discussion of budgeting for things in your life, but could have been discussed and elaborated a bit more.  I'd certainly like to be financially independent too, but if the cost is living like a monk... at a certain point maybe you have to say it's not worth it. 

In any event, I liked the central message of the book about not "trying to keep up with the Joneses" and living frugally, but I'm not sure I'd say the book is worth your time or money when a good summary is readily available.