Do You Live Next Door To A Millionaire? Or Is It You?

Two decades ago, Thomas Stanley and William Danko set out to interview wealthy people for their best-selling book The Millionaire Next Door. They started out in the affluent neighbourhoods on streets dotted with extravagant homes with luxury vehicles parked out front and in-ground swimming pools in the backyards. They were shocked to find out that the people living in these homes were not wealthy at all. Many of these upscale homes had huge mortgages. The luxury cars were leased and, while the occupants had high salaries, they had very little net worth. They only seemed wealthy.

Instead, they found millionaires in modest homes in reasonably priced neighbourhoods, working and living next door to people who have a fraction of their wealth. They were living well below their means and not calling attention to themselves. They didn’t have the big-spending lifestyle most of us associate with rich people.

Millionaire Next Door

To be clear, for this purpose a wealthy, or high net worth, individual is described as someone who has at least $1 million in investable assets that is not inherited. These assets do not include their home or cottage.

Also not included are the ultra-high-net-worth, super wealthy individuals with a bankroll of more than $100 million who actually represent only a small minority of Canadians.

The road to riches

What can the average Canadian learn from the habits of the wealthy? Danko and Stanley found these factors common to wealthy people:

1. They live well below their means

When I first read this book years ago I thought – what a bunch of cheapskates with their Timex watches, $50 suits, and 10-year-old Ford trucks! If I had that kind of money, I’d at least upgrade a little. I’ve known a few people who had a large amount of assets and spent hardly anything, ultimately leaving their wealth to relatives, and often distant ones at that.

I understand now that the millionaires mentioned do tend to be frugal, but they enjoy luxuries that are meaningful to them, and only once they are well on the road to security and financial freedom.

2. They chose the right occupation

Many are small business owners or entrepreneurs, but you don’t have to own a business to get into this circle. Often they are hard-working, well-educated, middle-to-high income earners.

I’m not suggesting you choose a career primarily for the high salary. But, it’s obvious that if a person is educated and trained in some sort of profession, they will do much better than say, a cashier or shipper-receiver.

3. They have a good marriage

Dual incomes enable couples to get ahead financially much more quickly. However, even more important are spouses who have similar values and goals and are willing to resolve any differences and work together in building their wealth.

There is no quicker way to lose half the assets of a household than to go through a divorce.

4. They are skillful in targeting opportunities

People shouldn’t worry about the doom and gloom reporting on the news and things they can’t control. Instead, have a long term view of investing and don’t let emotions sway your decisions. Have cash available to buy when markets are down and to take advantage of any bargain opportunities.

Start saving and investing in your early years to take advantage of compounding and reinvested dividends.

Pay less for purchases by shopping for bargains and learn to negotiate. Avoid high interest credit card debt. Use smart tax reduction strategies.

Allocate your time, energy, and money efficiently, in ways conducive to building your wealth.

5. Their adult children are economically self-sufficient

Children are taught money management at an early age and encouraged to enrol in secondary education. As adults, they don’t ask their parents for money or bail-outs or help with the bills.

Final thoughts

Danko claims that it’s really about buckling down and living on less.

“How in the world can you be an investor and let compounding work for you if you are not a saver? And how can you be a saver if you are in debt? Many people who are strapped with debt are looking for a magic bullet, but continue the free-spending ways they have become accustomed to. Live on 80% of what you make, and save and invest 20%. Let the time value of money work for you.” 

Calculate how much money you will earn over your working life. Most people will earn well over a million dollars in their lifetime, but very few will become millionaires.

Accumulating wealth takes discipline and hard work.

We all want a sense of long-term security and peace of mind as well as the comfortable lifestyle that wealth provides.

Saving diligently, being frugal, setting aside a portion of your income for the future and investing wisely are the strategies to becoming the millionaire next door.

Do you think you live next door to a millionaire? Or, is it you?

Print Friendly, PDF & Email


  1. CanTex on September 21, 2016 at 5:51 am

    In our case I married the daughter of a poor farmer. That and paying off mortgage and car loans very quickly. Oh and escaping the corporate grind to start my own business, with a large majority of the business income being saved. We’ve now moved from the saving side to the spending side so we have homes, not extravagant, in the GTA and Texas. It’s hard to get into the spending mindset after so many years of saving.

  2. Bob Turnbull on September 21, 2016 at 6:23 am

    Lets not overlook the value of a good pension in determining the millionaire next door. A $3,000 per month pension or $36,000 per year would represent having $1,000,000 investment portfolio based on a 3.6% return. Of course this investment portfolio disappears after your death and/or the death of your spouse, but it is still a very significant asset.

  3. Marko Koskenoja on September 21, 2016 at 6:38 am

    Another good article! I followed the principles referenced most of my life and it worked for me.

  4. Brian on September 21, 2016 at 8:15 am

    Affirmation that my financial path was the right one to be on. (Although admittedly not knowing much about financial strategies and investing). Just following the basic principle of living below your means, saving what we could and doing things for yourself rather than hiring it out. Having a stable relationship and being on the same page as your spouse is also critical. Thanks

  5. Penny @ She Picks Up Pennies on September 22, 2016 at 9:09 am

    I think it can’t be said enough that people who are really successful with money leverage it as a tool to get/do what they want. They know how to make money work for them.

Leave a Comment

Join More Than 10,000 Subscribers!

Sign up now and get our free e-Book- Financial Management by the Decade - plus new financial tips and money stories delivered to your inbox every week.