Stealth Wealth: Updated Lessons from The Millionaire Next Door
True and lasting wealth, 2024 style
The Millionaire Next Door is an all time classic in personal finance literature. Reading this book arguably changed the course of my life more than any other book, has, ever.
I’m not being dramatic.
I found the book by happenstance in the tiny bookshelf tucked under my parents’ home office desk when I was in high school. I think I was 15. As someone who was more concerned with boyfriends and prom dresses at the time, I am still surprised that somehow, I devoured all of it immediately.
From that moment on, I just looked at people around me differently. I was exposed to this little idea: that flashy might not always equal wealthy.
After a decade working in professional wealth management, in the multi-family offices of the ultra wealthy, and directly 1:1 with hundreds of families and young professionals, I know even more now.
More often than not, flashy = broke.
The billionaires strode into our offices in moderately dirty tennis shoes, with backpacks and facial scruff.
The people that depleted their wealth at breakneck speeds were the ones with all the signs of success: the houses, the cars, the hair, the shoes. When they walked into the room, the air around them felt expensive.
But guys, come on. Being able to buy expensive stuff doesn’t make anyone special anymore. It’s called debt. And it’s pretty accessible to everyone, everywhere, these days.
I am not opposed to nice hair or nice cars or nice homes, I’m all for it. I just have some peculiar rules about all these things, informed by working with truly wealthy people, and truly broke people, and actually seeing their numbers.
My rule for buying something flashy is pretty simple:
Do you have the cash for it, right now?
Does using that cash take away from any other fundamental things, like your emergency funds, your retirement savings, or your kids college savings?
Do you have any consumer debt?
Will you look back in 5 years and regret this?
If the answer is: yes, no, no, no, then hey: go forth and enjoy the car.
I have many, many times wishes the authors would publish a 2024 update to this book (Sadly, Mr. Stanley has passed away, but Mr. Danko, if you want a partner and a project, sign me up!) because wow, has the financial environment changed a lot in the past decade.
Anyway, here is my hunch on what that book update would find, drawn from behind the scenes dives into peoples finances, from all across the financial spectrum, for a decade.
What are the common traits of young individuals who are truly financially stable and building lasting, long-term wealth?
Modest Lifestyle and Spending Habits
They live in a modest, comfortable place, like a 3-bedroom house in a good neighborhood, or an apartment in a nice part of the city—not a mansion. They probably bought it before 2020, and it’s likely doubled in value since then.
They never, ever carry a credit card balance. They pay off their credit cards monthly, but more likely, weekly.
They definitely have an iPhone that is old, probably at least 3-5 years old, and it probably has a chip in the top corner.
They do not “hack” stuff—not credit card points, travel, or anything. They know that is a pretty low ROI on attention and time.
They are mindful of their spending, trying to buy quality things that will last but that don’t cost a fortune. They are decidedly not trend-following fashion people. They probably don’t wear stuff with logos on it.
Financial Strategies and Investments
They have all of their savings and investments automated. They know that relying on willpower or memory to accomplish something is a surefire way to ensure it never happens.
They probably invest in low-cost index funds and ETFs to minimize fees and maximize returns, never picking and choosing stocks, day trading, or listening to any Reddit threads about what to invest in.
They pay for quality tax and financial advice because it saves them loads.
If they hold some crypto, they sure aren’t following it regularly and it’s probably just a little.
If they didn’t pay all cash for their cars, they could have. If they didn’t, they’re probably more than comfortably cash flowing the payments while the chunk of savings earns higher interest or returns elsewhere than the interest rate on the car. They also drive their cars… forever.
They track their money regularly but not obsessively. They probably have a centralized app, list, or sheet that shows balances across all of their assets and accounts, and they probably check it a couple of times a week for less than a minute.
Personal Habits and Mindset
They either never got into social media or quit years ago. Time and attention are their most precious resources, and they are mindful of it being stolen from them.
They read, probably a lot—whether it’s books, audiobooks, podcasts, or the news. They like to learn stuff.
They get stuff done, are reliable, and don’t overthink things. They are decidedly not perfectionists.
They have a quiet confidence and will always look you in the eyes when you talk to them.
They think many, many steps and years ahead. They write down their plans and focus on habits to get them there.
Family and Future Planning
They are on track for sending their kids to college and probably also actively saving for the kids’ down payments on future houses, too.
They may take vacations, but the photos won’t end up on a website anywhere, and they’re probably to see family more often than not.
They talk about money with their kids, freely, modestly, honestly, regularly. It’s not taboo. They involve their kids in practicing good money management skills. Money doesn’t stress them out, so the kids grow up with a “of course we can” positive attitude about personal finances.
They are effective communicators, able to express their thoughts clearly and listen actively to others. They do NOT spend a lot of time complaining about stuff.
They can disagree with people and not hate them.
They are connectors — they do favors, lend a hand, and share wisdom freely.
Not only do they want to compound their investments, but they also know they can compound their income, too. They are mindful of their income-generating power and have a plan for how to increase it over time.
In today’s financial landscape, true wealth isn’t about showing off; it’s about making smart, deliberate choices. It’s about living modestly, investing wisely, maintaining a grounded mindset, and planning for the future.
Real wealth is built quietly and steadily, through thoughtful habits and decisions.
So cheers to your slightly cracked iPhone screen, you’re on the right track.
I enjoyed this article and agree.