For 2017, I decided to mix reading books for PropelHer’s Book Club with money-focused books. I wanted to demystify the good ones from the not-so-good ones, which led to me reading The Automatic Millionaire.
The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach comes highly recommended (#1 New York Times, Business Week, Wall Street Journal and USA Today Bestseller, as well as having sold over 1.5 million copies). Having read the book I would say it sold so many because we live in a world where people want a get rich quick scheme and automatic makes it sound like you can make money easy.
David is very honest from the outset stating that The Automatic Millionaire is “the tortoise’s approach to wealth, not the hare’s”. Slow and steady wins the race, but it is important that you make the process automatic – “if your financial plan is not automatic, you will fail”.
He states that “regardless of the size of your paycheck, you probably already make enough money to become rich”. This is because David believes that “becoming rich requires nothing more than committing and sticking to a systematic savings and investment plan”.
The whole book is based around the idea of automation. However, there are a few other strands including compound interest – “The miracle of compound interest is the Automatic Millionaire’s power tool for wealth”.
In line with many money-making books, The Automatic Millionaire tells you that you should ‘PAY YOURSELF FIRST. David encourages you to set up a pretax retirement fund and automatically transfer 10% of your wages into it.
Another key strand is HOME OWNERSHIP. David believes you should “buy a home and pay it off automatically”. He makes it very clear that “you can’t get rich renting”. However, it isn’t just about having a mortgage, but how to pay that mortgage off as quickly as possible. He suggests halving your monthly mortgage and paying that figure bi-weekly. This results in you paying your mortgage off earlier, as you end up paying the equivalent of 13 monthly payments a year.
Overall, I was disappointed by The Automatic Millionaire.
It didn’t bring anything new to my knowledge of financial planning. However, I have been a big fan of automating your financial process for years now. Chapter 9 has a useful blueprint, which to be honest you could read and get the gist (and self yourself a few hours). Also, after reading The Millionaire Fastlane (read my review here) the idea of waiting until I was ‘old’ to be rich just didn’t sit well.
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