I was sad to hear of the passing of Thomas Stanley, the author of the hit 1990’s book The Millionaire Next Door as reported from this Yahoo! Finance article. My Dad first gave me his book shortly after I graduated from UC Santa Barbara in 1996.
The premise of the book was both simple and counterintuitive. Stanley and his co-author were hired to study the habits of affluent investors (specifically “mass affluent”). The authors expected to encounter the type of wealthy people who spend freely on cars, jewelry, homes, etc. While those spenders are certainly a portion of wealthy people, Stanley put it best when he said “if you are earning a high income and spending it all each year, you aren’t wealthy – you are just living high.”
Stanley referred to UAWs and PAWs – underaccumulators of wealth and prodigious accumulators of wealth. Obviously, the goal is to be in the latter category!
This book captures a lot of what I find most impressive about my clients. They tend to be entrepreneurial, live beneath their means (and have spouses who support those difficult decisions), value their professional advisors, and are big on delayed gratification. I guess that last trait is really important for people doing estate planning – since the peace of mind of knowing that your affairs are in order is truly the ultimate in delayed gratification!
If you haven’t read the book, you can obviously tell that I highly recommend it. It’s a very accessible personal finance classic. Thomas Stanley, you’ve left a legacy and you will be missed.