I completed reading ‘The Millionaire Next Door.’ The book is classic for a reason. It contains so many time-tested personal finance lessons.
The analysis of those millionaires’ personalities shows how they actually don’t live like how we assume millionaires would live.
My idea on wealth and being rich was incorrect. I realized anyone can be a millionaire with bit changes in mindset and actions.
We can see if we are already a millionaire. Let us look at how to calculate our net worth and then in which category we fall.
Net worth is monetary value of assets over that of liabilities. Assume 35 year old Dorji has Nu.297,500 shares, Nu.650,000 Car, saving balance of Nu.2500, and personal loan of Nu.500,000.
So Dorji’s Net worth = 297,500+650,000+2,500 – 500,000= Nu.450,000. If he has p/m salary of Nu.37,000, his networth should be Nu.1,554,000 (Age x Annual income/10).
Dorji is in UAW category. But he would be in PAW if his net worth is more than Nu.1,554,000; the millionaire next door!
Characters or Actions of those Next Door Millionaires
No economic outpatient care
Most of the next door millionaires are first-generation. They didn’t inherit wealth. Their parents also didn’t give them economic outpatient care.
They had UAW life that gave mindset of winners and survivors. EOC has proven to cause cobra effects most of the time.
Live well below their means
Living below means is an important thing in building wealth. These next door millionaires also live below their income.
They save most of their income, purchase second-hand cars, and other things only if they’re necessary.
Manage resources well
Resources are time, energy, and money. They use them efficiently to get maximum returns. They have accountants, attorneys, financial advisors, and investors.
They use time to study and seek opportunities. They put their savings in assets. More than 90% of the world’s millionaires own stocks.
Social status doesn’t matter
They don’t live extravagant lives; no flashy lambos, rolex, or gold chains. Proving to be rich is the fastest way to be poor.
Financial security and freedom are more important than social status. They keep healthy go-to-hell fund, car fund, retirement fund.
Grab market opportunities
They use resources well to outsmart others. They’re always invested and grab emerging market opportunities.
They also own profitable businesses but then legally pay very less or zero tax to the government.
Enter the right occupations
Just imagine having to wake up to work on something you really don’t like, yet you’ve to do because you need money.
However, in another situation, imagine you working on something you really love and also you get good money. These next door millionaires are in second type occupations.
Education > money for kids
They didn’t receive an EOC from their parents. They also don’t pamper their kids with money either.
Instead, they spend on their education teaching them the value of perseverance, hard work, discipline, and frugality.
Conclusion: Is Millionaire Next Door book for Bhutanese
This book is the work of authors after they studied 1,000 millionaires for 20 years! But is it a good read for Bhutanese and even more so for aspiring millionaires from Bhutan.
I feel Bhutanese need to know about parenting, economic outpatient support and retirement planning given in the book.
Our economic support shouldn’t deter our kids from realizing the value of hard work, discipline, and frugality.
Yet without a proper mindset, you might live as if there is no death and then die without actually living. We know there is more to life than just money.
However, being poor is definitely hard. And becoming rich isn’t easy either. If money can’t buy happiness, neither can poverty. So the choice is ours.
Money at hand is like a sack of corn seeds; we can either plant them for more or consume them.
