Secret to Growing Wealth: Automate!

This is a Book Reivew by Jeff Tompkins, Jr.  The opinions expressed herein are the reviewer’s own and meant only for informational purposes.

The Automatic Millionaire by David Bach

Reviewer: Jeff Tompkins, Jr.

Let’s face it, unless you’re a Marine, you’re probably not that crazy about the word “discipline.” It smacks of rules and constraints. Most of us just aren’t that keen to always do even those things that we know are good for us. Particularly in our financial lives. We know we should save more, spend less, invest smarter. We should be disciplined in these areas to achieve financial security.  So how do we get disciplined? According to the The Automatic Millionaire, by David Bach, we automate .

Bach focuses first on the idea of paying ourselves first. By this he doesn’t mean setting aside a couple of twenty dollar bills under your mattress each payday.  That would require discipline and the central theme of The Automatic Millionaire is that no one is disciplined enough to regularly save that way. Instead, Mr. Bach argues that the only way to get around our lack of discipline is to automate paying ourselves first, effectively taking our lack of discipline out of the equation.

Automating ones savings is becoming more and more prevalent in a tech-dominated world. It’s automatic, because once you set it up you don’t have to do a thing each month for it to continue putting funds into your 401k account or other savings vehicle. It’s the first money out so before you do any spending at all, you are saving.

Bach writes “becoming rich requires nothing more than committing and sticking to a systematic savings and investment plan.” It IS simple, but still, according to Bach, one in four people who have access to a 401k plan are not participating at all. In a world where we can automate our bill paying, our lawn watering, our grocery shopping, and soon even our driving, it makes little sense not to automate investing for the future.

There are two sides to the wealth accumulation coin—saving and spending. Bach, while not a fan of budgets, does point to a spending phenomenon he terms the “Latte Factor” that represents all the small, mindless ways people sabotage their ability to save and invest.

The only bone I have to pick with The Automatic Millionaire is Bach’s attitude towards budgeting. He says, “Budgets don’t work in the real world, because they aren’t fun.” He points to the fact that it isn’t human nature to want to be controlled by a budget, because we want to be in control ourselves. This book did not convince me on that point so I will continue to contend that a budget provides smart boundaries and guardrails to keep spending in check.

The Automatic Millionaire, (expanded and updated 2016, Crown business) will not necessarily present you with any earth-shattering financial revelations but it will offer new ideas for how to kick-start your savings and curb wasteful spending. The Automatic Millionaire is a quick and easy read that is worth your time.

★★★ Some good information. Check the library, first.

image_print

Please note: I reserve the right to delete comments that are offensive or off-topic.

  • Jill kuczek

    I agree with you on the budget – just work the “fun” into it, and you’ll be fine. It may not be fun to do, but I still think it’s necessary.

  • Lee Eakin

    Pay your bills in full online twice each month, say the 10th and 25th . That way your debt free twice each month. Put the amount of cash your comfortable with in your wallet on these same days. Save the rest in an account of your choice and watch your wealth grow.

  • Sojourner

    My husband and I started saving 1 paycheck each month for 20 years and retired full-time at 50. Living conservatively and paying cash for everything (cash is visual, credit cards are not). During this time we took two years off to sail the Caribbean. Paying ourselves first was difficult in the beginning but then it became
    a habit. We did not deprive ourselves but carefully considered every purchase and looked at the
    long-term and asked ourselves what’s important in the larger picture. We now travel 4 to 5 months each year, still live conservatively and are still having the time of our lives.

  • Kimberley Hunter

    People need to know that budgets can be fluid. It’s okay if they don’t look the same from one month to the next. All that matters is that you don’t go into debt, and that you have a cushion for when you lose your job or can’t work.

  • tboofy

    I bought the book but never finished it. It was just “meh” in my mind. I already figured out that automating savings was the best way for me, and that seemed to be the central focus of the book. Not much new there.

  • Jane

    I love my monthly budget! I always felt I was careful with my money, but when I started doing a written budget, I was amazed at how much further I could stretch my paychecks!