80% of America's millionaires are first-generation rich.They share other characteristics as well. The wealthy, on the other hand, generally have a high income and a frugal mindset. But those with low incomes who spend are in the biggest trouble of all. They need to learn to play financial “offense”. Sure they have the money now to fund their hyperconsumer lifestyle, but what happens when that money goes away? It's also difficult for low-income frugal folks to acquire wealth. High-income spenders live in a house of a cards. It's as if people can be classified based on the following table (which is my own invention based on the authors' findings): It's refreshing to read a book that makes it clear that both are required to succeed. Most books focus on only one side of the wealth equation: spending less or earning more. In order to accumulate wealth, in order to become rich, one must not only earn a lot (play “good offense”, according to Stanley and Danko), but also develop frugal habits (play “good defense”). They live hyperconsumer lifestyles, spending their money as fast as they earn it. Most people with high incomes fail to accumulate any lasting wealth. Many people who earn high incomes are not rich, the authors warn.
This is a subtle but important difference. Instead, it profiles people who have already become millionaires. It is built on years of research, on a body of statistics and case studies. Some personal finance books promise to show the reader how to become a millionaire.
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