How To Become An Automatic Millionaire

by Pam on May 4, 2011

The Automatic Millionaire: A Powerful One-Step Plan To Live And Finish Rich by David Bach

If you want to become a millionaire without ever having to create a budget, be disciplined or live extremely frugally, I would recommend that you read Davd Bach’s book entitled The Automatic Millionaire.  In his book, the author suggests that anyone, regardless of their income, can become a millionaire in their lifetime.

You may be wondering how this could be.  Well, Bach suggests that you set everything up automatically and then you are free to just live.  For example, set up automatic contributions into your retirement savings account and your emergency fund savings account.  Set up automatic biweekly payments into your mortgage, and so on.

By setting up your contributions and payments automatically, you don’t have to worry about not saving enough.  You are automatically making sure that you are getting paid first and foremost and then you are paying your bills with what is left, instead of the other way around.

Rather than creating a budget and arguing with your spouse about it when you just can’t seem to stick to it, Bach suggests not even bothering with a budget.  If you are already automatically paying yourself first, then you no longer need to create a budget.

Also, for those of you who think that you have to be a supremely disciplined person in order to save properly for retirement, emergencies, etc. this is not the case.  When things are all happening for you automatically, there is no need for any sort of extreme discipline on your part.  Just stick to your autopilot strategy.

The author suggests that if you want to be rich when you retire, you should automatically contribute 20% of your income right off your paycheck into retirement savings.  If you cannot save 20%, then start at 10% and then increase it gradually.  He also recommends that you tuck away 5% automatically every payday and put it towards your emergency funds.

If you want to become an automatic millionaire, you will also want to buy a home and pay off the mortgage aggressively.  Set up biweekly payments instead of monthly payments to shorten your amortization and decrease your interest costs.  Automate double up payments towards your mortgage whenever possible.

Interestingly, the author also brings up the idea of “the Latte Factor”.  This refers to all the little things you spend your money on that make you think that you actually cannot save.  For example, that trip to Starbucks every morning, or that Power Bar purchased at the vending machine.  These types of purchases, when you consciously consider how much you are spending, really do add up.  Instead of shrugging and saying you simply cannot afford to save, think of your own Latte Factor, and soon you will come to realize that you can afford to save more than you think.  Besides, can you really afford not to save?

This book is really refreshing.  So many books I have read about becoming a millionaire suggest that you need to run your own business, etc. in order to become financially successful.  This book suggests that any regular Joe, yes, even a regular employee, can become a millionaire if they want to.  And all it takes is about a half an hour of your time to talk to your bank and get everything set up automatically.  The tips in this book are realistic and practical and not at all difficult.

Check out this book and learn how to work your way towards becoming an automatic millionaire.  And while on your journey, be sure to make sure you are giving back as “givers attract abundance into their lives rather than scarcity.”  Set up everything automatically today so you are free to spend more time doing the things you enjoy in life while having the peace of mind in knowing that you are preparing for your future.

 

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