Thomas J. Stanley is the author of Marketing to the Affluent, Selling to the Affluent, Networking with the Affluent and Their Advisors, The Millionaire Next Door, and now finally, The Millionaire Mind.
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I have read two of Dr. Stanleyís earlier works. Had I been rating his first book, Marketing to the Affluent, I would give it five stars. Dr. Stanley has some very interesting points to make. He shows us that a lot of people with a high net worth arenít stereotypical rich people. In fact, there are two categories of wealthy people that may be surprising: owners of blue collar businesses, and salespeople.
There is a lot of money in operating blue collar businesses. The owner of a service station, carpeting store, or wholesale plumbing supply business might be quite wealthy. If you drive through the ugly part of town where there are junk lots and industrial supplies, you are probably driving past the workplaces of many millionaires.
Sales people can earn a lot of money if they are good. The problem is that most people who go into sales arenít very good at it. Dr. Stanley refers to the really good ones as ESPs, an abbreviation for Exceptional Sales Professional. The good stockbrokers, real estate agents, insurance salespeople, and all other types of sales people, make six figure incomes.
Dr. Stanley also teaches us that most people spend everything they earn. Although this is something we ought to know just by observing the world around us, usually we donít realize it. Most people earning $100,000 a year spend all of their money. In some ways this makes no sense at all. If other people get buy on $30,000 a year, why does someone earning more than three times that have to spend every cent he earns? Why canít he save some of it? People are just locked into this never ending cycle of yuppie consumerism. They have to live in a brand new house, drive an expensive SUV, go on expensive vacations, and then before you know if theyíve spent all of their $100,000 annual income (which after taxes is a lot less than $100,000).
People with just upper five figure incomes can easily become millionaires if, instead of spending every cent, they were to put a percentage of their money into the stock market every year. Itís a pretty simple formula for becoming a millionaire. It also goes to show us that a million dollars doesnít mean as much as it used to. These days one has to be a decamillionaire to have the comparative wealth of a millionaire from two generations ago.
So far, my comments on Dr. Stanleyís books have been all positive. The problem is that all of his books build upon the same basic concept. It is as if, instead of writing five books, he just wrote the same book five times over. Furthermore, The Millionaire Mind contains a lot of moralizing, a lot of dubious statistics to back up the moralizations, and many references to Robert Sternberg, an author whose works lack any real scientific merit.
Dr. Stanley has devoted a good portion of his book to bashing people with high IQs. He tries to lead you to believe that people with lower IQs are more successful than people with higher IQs. This is absolutely false; there has been a lot of research which shows that IQ is positively correlated with earning power, and this correlation has been getting stronger.
One can spot the relationship between IQ and wealth from the statistics within Stanleyís own book. Ninety percent of the millionaires in his sample had college degrees, and 52% had graduate degrees. This is far out of proportion to the educational levels of the general population. And there is a strong correlation between intelligence and the amount of education one has completed.
Of the millionaires in his sample who reported their SAT scores, the average was 1190, a figure significantly higher than the score of the average person who takes the SAT.
It is indeed true that the correlation between wealth and test scores isnít so high as one might think. But Stanley, instead of exploring the real reasons for this and offering suggestions on how highly intelligent people might increase their net worth, chalks this up to the false conclusion that intelligence has nothing to do with earning money.
I would like to fill in some of this missing information. People who are intelligent often chose careers that donít allow them to maximize their income. For example, one has to be very intelligent to earn a Ph.D. and become a college professor, yet professors donít make that much money. We hear many sad stories of Ph.D.s who are working in low paying menial jobs because they canít find work in their chosen field. From Stanleyís perspective, anyone who would try to become a college professor is actually pretty stupid. Stanley obviously values money over most all other things. While he is right in asserting that it is not fair to judge someone a loser because they donít have a super-high IQ, itís also not fair to judge someone a loser because they donít make a lot of money.
Stanley bases a lot of his anti-IQ rhetoric upon the works of Robert Sternberg. A full condemnation of Sternberg is outside the scope of this review, however I must point out that there is a wide body of research literature that shows that Sternberg is wrong. The best book about intelligence is The g Factor by Arthur Jensen.
Stanleyís book has a lot of other statistical nonsense. He reveals that the millionaires he surveyed were more likely to have shopped at Walmart or Kmart during the last 30 days than at Saks Fifth Avenue or Brooks Brothers. If you think about it, this is a pretty meaningless statistic. Walmarts and Kmarts are everywhere, but many cities donít even have a Brooks Brothers or a Saks Fifth Avenue. If a rich guy runs out of toilet paper, where is he going to go to buy some more? If there is a Walmart or a Kmart nearby, he might go there. And rich people run out of toilet paper just like poor people do.
Nineteen percent of his sample shopped at Brooks Brothers in the last 30 days. This is a pretty high amount considering the specialty nature of Brooks Brothers and the fact that you donít really need to buy clothes every 30 days. Most people in lower income brackets have never even heard of Brooks Brothers and certainly never set foot in one.
Stanley looks favorably upon wealthy people who clip coupons before going to the supermarket. I guess that this does reveal something; people used to being frugal continue being that way even after they no longer need to be. My opinion is that one of the advantages of being wealthy is that you donít have to waste your time with clipping coupons. A person with a $200,000 a year income is not saving a significant portion of his annual income by clipping coupons. This is a waste of time for someone with that kind of income level.
In conclusion, I give this book three stars. Itís worth reading for some of the insights, especially if youíve never read a book by Dr. Stanley. But read the book with a critical eye, and donít take everything he says as the gospel.
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