The Millionaire Next Door, a book that dashed our notions about who America's millionaires really are and how they spend their money, marked its 10th anniversary recently, and nobody noticed. No party. No 10th-anniversary edition. Nothing.
That's shocking for a runaway book that sold out its first printing in three days, held a spot on The New York Times' best-seller list for more than three years and is hailed as a staple for any personal finance book collection.
The book by Thomas J. Stanley and William D. Danko, subtitled The Surprising Secrets of America's Wealthy, was published Oct. 25, 1996. But the profound findings revealed in that book a decade ago are as true today as they were then - especially when it comes to spending money.
The book showed that millionaires spend their money smarter than other people. They still do.
Most important, the book showed that people with average, steady jobs can become millionaires over their lifetimes - that most millionaires are made, not born. Indeed, 80 percent of millionaires are first-generation rich, the authors found. They are modest. In fact, they might live next door.
The book's fundamental message about spending is this: You can look wealthy or you can be wealthy. For most people, the choices are mutually exclusive. So, in honor of the 10-year anniversary of The Millionaire Next Door, we caught up with Stanley.
During a blunt conversation, Stanley talked about common spending traits of millionaires a decade ago and in his current research, to be explained in his next book, which has the working title Looking Rich in America.
The wealthy know spending matters. Financial health is about earning and spending. Although earning a lot of money is correlated with wealth, it is not a perfect correlation. "The spending issue is significant," Stanley said. "I believe very strongly that not everybody can play great offense. In other words, not everybody can make $1 million a year or even $100,000. The typical household in the United States makes less than $50,000 a year.
"Given that, you have to look at defense. To play great defense, you have to know where all the money is going. And most people don't. So the first thing I would tell people is to account for every dime and nickel they've got and write it all down. You'd be shocked at how much money people waste. It's ridiculous."
They are thrifty. "There is still a wonderfully frugal group of people in America that we don't talk about, but they're out there," Stanley said.
"It's not an impressive lifestyle; it's just that they're not confused. The reason they don't have a second home isn't because they can't afford it. It's just a hassle."
Stanley's most recent research for his coming book is about brands that wealthy people use. "There are a lot of millionaires buying stuff at Wal-Mart. They don't have a problem with buying, maybe, socks or underwear there or at a Costco or Sam's Club. Men's Warehouse is selling them a lot of suits, I can tell you that," he said.
"People think, `If I wear a $900 suit, I'm going to look wealthy.' The problem is, if you wear a $900 suit and put the glitz on, you're not going to look wealthy because wealthy people don't do that."
They are not deprived and miserable. "On a scale of happiness, they're quite happy," Stanley said. "In fact, the more wealth you have, the higher your satisfaction." But their happiness comes not from material things but from achievement and being financially independent. It comes from satisfaction with their family and job.
Gregory Karp writes for The Morning Call.