A couple days ago I finished reading The Millionaire Next Door. The book came recommended as one of the fundamental books to read when it came to personal finance along with the likes of ‘Rich Dad, Poor Dad’ and I have to agree with that assessment. I found the book to be full of common sense but also quite eye opening. I know that this is a bit of a contradiction but unless you look at your financial matters in a certain way you might completely miss a great deal of the common sense that the book shows. One of the key items in the book is the power of frugality and how you can turn that into huge amounts of money when you’re ready to retire.
There were a few key lessons that I learnt from the book:
Financial awareness, budgeting and planning take time but the benefits are worth it.
I’ve always understood that to get a handle on your money you need to devote some time to this, but what the book pointed out is that the people who are financially independent are the ones that spend double the amount of time the non-affluent do when it comes to their money issues. I found this to be a surprising increase in time especially since when I got into more financial trouble I was forced to spend time ensuring everything got paid. I guess I wasn’t spending nearly enough time and I’m probably still not spending enough time. But at least I know this.
Live below your means, being frugal has great benefits.
Ever since I’ve received a steady paycheck I’ve been pretty much a hyper consumer. I might not have all the technical gadgets or fancy cars, but for me going out with friends was how I spent my money. Granted I have a lot of great memories from this and enjoyed it but the reality here is I’ve always liked spending the money I made. But being frugal will allow you to save up money for investing which in turn will make you more money. The book also gave me a mental poke when it comes to being a hyper consumer, I’ve known that this was the reason I’ve routinely been short on money but the extent of this was emphasized for me when I read this book. I’ve been spending less money lately and even more now that I’ve read this book.
Being a business owner makes you more likely to be a millionaire.
Recently I’ve been toying with the idea of starting to try out some of the business ideas that come rattling out of my head. This book reiterated my desire to do this by pointing out that the majority of the millionaires the authors talked to were business owners. As long as you keep track of your money and spending and your business succeeds then it makes perfect sense.
Overall I have to say I quite enjoyed the book even though the chapters on inherited wealth didn’t have much bearing for me; at least not any time soon. I would recommend reading this book to anyone who is just finishing school. It’s an eye opener that at the very least will get you thinking about what impact your spending habits might have.
[tags]Book Review, The Millionaire Next Door, frugal, consumerism[/tags]