66. The Millionaire Next Door: The Surprising Story of America's Wealthy - Thomas J. Stankley and William D. Danko

How do the rich people in this county become wealthy? Not in the ways that you may think! In this fascinating book, the authors share their research based on interviews spanning over twenty years with America's millionaires (those with a net worth of more than $1 million). An important point to make: your net worth is definitely not the same as your income. In fact, the authors use an interesting formula in computing one's net worth: "Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be." So someone can have a really high income but low net wealth ... which is actually the case of a huge percentage of America's high income earners. Too often, the high income earners become overly concerned with displaying a high social status and therefore don't accumulate the net worth that they should, relative to their incomes, to be considered "wealthy." "It is much easier in America to earn a lot than it is to accumulate wealth." Take this into consideration:

"... approximately 70,000 Mercedes were sold in this country last year. This translates into about one-half of 1 percent of the more than fourteen million motor vehicles sold. At the same time, there were nearly 3.5 million millionaire households. What does this tell us? It suggests that the members of most wealthy households don't drive luxury imports. The fact is that two out of three purchasers or leasers of foreign luxury motor vehicles in this country are not millionaires."

... and I bet 90% of those people live right here in flashy Atlanta! The authors share fascinating information, summed up into seven common denominators, among those who successfully build wealth. There's no point in my listing them all here because they won't make much sense without context; but they include living below their means; allocating time, energy, and money in ways conducive to building wealth; believing that financial independence is more important than displaying social status; and choosing the "right" occupation.

An interesting overall point: 80% of America's millionaires are first-generation millionaires - i.e. they did not inherit their wealth from their parents! Maybe if some of us were as quick to invest in the stock market and real estate as we were to go buy a Benz as soon as we come across any money, we would be a lot better off.

This book is definitely top-5 status. A must-read!