Sunday, September 30, 2007
The Millionaire Next Door
The Millionaire Next Door was my weekend read. I was expecting to learn something about financial planning, but the book said I was on the right track and to me most of what they said was just common sense to me. They said you should have a net worth, not counting what you inherited, of 1/10 your age times your yearly income. Using my husband's age (since he's older) we comfortably make that standard--which I think is good since I computed it on our present income and he just got a substantial raise. Surprisingly enough, in looking at net worth, it seems that what you spend is more important than what you make. In other words, there are plenty of high-income people with low net worths--they spend it as fast if not faster than they make it. The basic thesis of the book is live beneath your means, save your money, budget, invest for the long term in things you know and don't teach your kids to spend too much money. If you are interested, the book in now on my bookmooch list.