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My Book Reviews

Category: Personal finance
Published: 2001
Read: 2004
Reviewed: May 2010

Co-written by Dr. Stanley, "The Millionaire Mind" is the sequel to "The Millionaire Next Door" and consists of surveys of millionaires. Just like the first book, the author talks about the different characteristics of the wealthy (lifestyle, home, education, academic achievement, choice of vocation, consumer habits, spouse) and shares profiles and case studies of real people. This book also focuses on personality characteristics of the wealthy (attitude, leadership, people skills, integrity, morals, honesty, courage).

One of the common themes that runs through the book is that the success of the millionaires who were surveyed was not based on intellectual traits. They were often not good students (their average GPA was unspectacular) and they didn't have high IQs. Another theme is the effect of the choice of spouse on your wealth. There were a few comments which I thought were noteworthy:

  • "Snobs do not make great entrepreneurs."
  • "I have never interviewed one successful business owner who is not cost sensitive...Paying very close attention to expenses, is the foundation of productivity."
  • "Never borrow long-term with the prospects of short-term income."
  • How the author talks about personal finance in terms of income statements and balance sheets.
  • Financial success is about control - either you control money or it controls you
  • Having a family compliments wealth-building (this was somewhat surprising to me).

This book has many problems. First, at 400 pages, this book is way too long - especially considering that the majority of the book's content is very similar to his previous book. Second, the content of the book is highly anecdotal, since the replies to the surveys were based on self-assessed characteristics: like honesty, integrity, and courage. There may also have been a high level of self-selection since only a certain number of millionaires that were given the survey actually responded.

Another problem is that the book focuses on an even more exclusive subset of rich people than the last one. Hence, the people profiled in this book will be almost exclusively business owners. This makes the book less relatable since the millionaires that are profiled will all have similar stories - as well as the fact that the book will ostracize any readers with a "normal" job who are looking to build wealth through wage-earning and passive investments. It is not terribly difficult to become a millionaire working as an employee, but you can't really reach a $5-$10 million net worth solely on wages (with corporate executives being an exception).

The book does make a smart move by concentrating on the "soft" skills instead of technical skills. Below is a quote that succinctly describes the importance of people skills in being successful:

"I think success really involves...the people you meet. No one can be successful by themselves. It's the relationship that you develop with the people around you."

Unfortunately, the authors still didn't take this idea far enough. There are plenty of business books that teach their readers how soft skills can help you succeed at your career, which can then help you become wealthy. But this connection between soft skills and financial success always seems to be illustrated as an indirect relationship (with the exception being the world of salesmen). The direct connection between people skills and financial wealth still seems to be an under-appreciated concept. For example, this book points out that many of the millionaires they profiled were business owners, but the author didn't bother to ponder whether these people were millionaires because they were business owners - or because they were good with people (for example, because they were great salesmen). This authors seems to almost recognize the importance of people skills when someone makes the casual observation that "snobs do not make great entrepreneurs."

The book also ignores the basic fact that the rich often get an education about money at home, a point that Robert Kiyosaki didn't miss in his books. Considering that personal finance is not taught to kids while they are in school, the factor of whether or not someone received a financial education at home seems like it would be one of the highest correlating factors when it came to wealth-building. I would be very interested to see a study of people who grew up in millionaire households where they looked at the kids that received an financial education from their parents and compared them to the ones that didn't.

Another point to ponder is the cultural influence on wealth. For example, in America, wealth will tend to be more based on risk-taking and breaking the rules. But if this book were written in Japan then wealth might be based on the opposite - conformity. With a title like "The Millionaire Mind", some people might infer that wealth is based on objective, intrinsic skills, when it is really based more on subjective, cultural values which are situational. But these philosophical issues tend to be pretty broad in scope and are understandably left out of the book.

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