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.