These days, it would be tough for the typical American worker to make the typical home fit into this budget. Since then, the average home price has increased, while the typical salary hasn't kept pace.
Stanley conducted the last interview for "The Millionaire Next Door" almost 25 years ago, in 1996.
Looking at the 'twice-your-income' rule through a modern lens It's not a perfect rule - as home prices have risen faster than incomes, it's not as practical (or possible) for most Americans to choose homes in that price range as it once was. "If you're not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household's total annual realized income," Stanley wrote. In his book, Stanley offers a simple formula for buying a home for anyone who wants to make their money go further. Indeed, one of the millionaire families he interviewed had lived in the same 1,900-square-foot home for 20 years. He also learned that most of those millionaires didn't live in massive luxury homes - rather, they lived in modest homes in affordable areas. Stanley interviewed more than 500 millionaires to learn how they built their wealth, and he found that most owned their homes. In researching his book " The Millionaire Next Door," Thomas J. By clicking ‘Sign up’, you agree to receive marketing emails from InsiderĪs well as other partner offers and accept ourįor many American families, the bulk of their wealth or net worth is in their homes.Īccording to data from the Federal Reserve's 2016 Survey of Consumer Finances, the average American's net worth more than doubles if they own their home, with the typical homeowner's net worth at about $71,000, compared with the typical nonowner's net worth at about $31,000.
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