I finished reading The Millionaire Next Door.

Here is a short thread of my top 5 takeaways:

1. Millionaires are split into 2 categories:
- Prodigious Accumulator of Wealth (PAW)
- Under Accumulator of Wealth (UAW)

PAWs save more than they spend, while UAWs are the opposite.

2. Millionaires pay themselves first.

Almost all millionaires invest their money in stocks, bonds or real estate.

PAW's spend almost twice the hours that UAWs do on planning their investments every month.

3. Not all millionaires are flashy.

PAW's spend the majority of their money buying income producing assets.

They drive regular cars & usually live in middle class neighborhoods.

On the other hand, UAWs like to spend their money on expensive:
- Watches
- Houses
- Clothes
- Cars

4. PAW's don't give cash gifts to their children on a regular basis.

Research has shown that children who receive cash gifts have 98% of the annual income compared to children that don't.

They also have 57% of the net worth of regular recipients of cash

5. There's a formula to determine if you are a PAW or a UAW.

Step 1: multiply your age by your annual pre-tax income from all sources.

Step 2: divide by 10

For example:

A 50 year old person who makes $100,000/year should have a $500,000 net worth

(50 x 100,000)/10 = $500,000

I would recommend this book if you haven't read it already.

It might open your eyes.

Did you like The Millionaire Next Door?