Ever heard Winston Churchill's iconic quote, We make a living by what we earn—we make a life by what we give? Dive into the transformative journey inspired by this wisdom, where building wealth is not just about accumulating money but also about enriching lives through giving. Discover how legendary investor Sir John Templeton and countless others harnessed the power of tithing and charitable contributions to achieve financial success and profound fulfillment. Ready to explore the path to becoming an Automatic Millionaire while making a meaningful impact? Let’s get started!

The Automatic Millionaire

In his mid-twenties, while teaching an investment class, David, the author, met Jim McIntyre, a middle-aged manager at a local utility company. Jim requested a financial review, which surprised David since Jim didn’t seem like someone who’d seek financial advice, especially given his modest income and conservative financial habits. But Jim and his wife, Sue, were planning his early retirement at fifty-two, which seemed improbable.

When they visited David's office, he discovered their impressive financial situation: two homes worth $775,000 combined, no debt, over $600,000 in Jim’s 401(k), Sue’s $72,000 in retirement accounts, $160,000 in municipal bonds, and $62,500 in cash. Their net worth was nearly $2 million, with additional income from rent and investments. David was stunned by their wealth.

Curious about their secret, David asked if they had inherited any money. Jim laughed and said they only inherited knowledge. Their parents taught them to live by simple financial rules: pay yourself first, avoid debt, and invest regularly. They saved consistently by setting aside a portion of their income automatically, ensuring they didn’t have to rely on willpower.

Jim and Sue’s disciplined yet simple approach included automatic payroll deductions for savings and investments, accelerated mortgage payments, and never buying on credit. They even automated their charitable donations.

Their method of wealth-building was straightforward: automate everything. This approach didn’t require constant discipline; once set up, it ran on its own. Inspired by their story, David automated his finances too, and it worked. He became an Automatic Millionaire.

Jim and Sue’s story highlights the power of making financial success automatic. By deciding to be wealthy and creating a foolproof system, they ensured their financial stability and happiness. Now, anyone can follow their example and start their journey to becoming an Automatic Millionaire.

Can Automating Your Finances Make You a Millionaire?

Ever heard the saying, "It's not about how much you earn; it's about how much you spend"? It’s a lesson that the McIntyre family knows well. Jim McIntyre never stressed about his income; instead, he focused on his small spending habits. This approach, he believed, held the key to financial freedom.

Many people think earning more money is the golden ticket to wealth. But ask anyone who received a raise if their savings grew significantly. Most will say no. Why? Because increased income often leads to increased spending. This phenomenon keeps people stuck in the "rat race," spending everything they earn and sometimes more, leading to stress and debt.

Consider the story of a friend of David's who saw his income rise from $50,000 to over $500,000 a year but found himself more stressed than ever. His savings didn't grow, but his lifestyle did, with luxury cars, private schools for his kids, and costly vacations. Despite his high income, he’s still running in the same place financially.

This brings us to The Latte Factor, a concept that has gained international recognition. It highlights how small, daily expenses can add up to significant amounts over time. The idea originated in a class David was teaching when a student named Kim challenged his advice on saving small sums like $5 to $10 a day. She argued that living paycheck to paycheck made it impossible. But when they broke down her daily spending, it became clear she was spending over $10 a day on non-essentials like lattes and muffins.

David showed her that by saving just $5 a day and investing it with a 10% annual return, she could amass nearly $1.2 million by retirement. Her eyes widened at the realization: "Are my lattes really costing me nearly two million dollars?" The class collectively answered, "YES!"

The Latte Factor isn't just about coffee; it's about identifying and reducing unnecessary daily expenditures. Imagine investing $10 a day instead. Over 40 years, that could grow to nearly $1.9 million. Even small savings can compound into significant wealth over time.

To harness the power of The Latte Factor, start by tracking your daily expenses. Use tools like Mint.com or Acorns.com to monitor and manage your spending automatically. Recognize that becoming rich doesn't require a massive income but a commitment to saving and investing systematically.

Take the challenge: Track your spending for a day, identify your Latte Factor, and start redirecting those small daily expenses into investments. You might just find that this small change leads to significant financial freedom. So why not start today? Your future self will thank you.

Unlocking Financial Freedom: Discover the Power of the Latte Factor

Here’s some exciting news! If the idea of the Latte Factor has opened your eyes to the possibility that you already make enough to start building wealth, then this next step will truly liberate you. We're about to ditch the dreaded budget for good. You might be thinking, "Isn't tracking my spending the essence of the Latte Factor?" Nope. The real goal isn’t to budget but to realize you already earn enough to start saving and investing—and yes, even to become rich.

Most of us are told by well-meaning people—parents, teachers, spouses, financial experts—that budgeting is the key to financial success. But were these budget-preachers rich and happy themselves? Rarely. The truth is, very few people are natural budgeters. Even if you are, pairing with a born spender means your budget’s doomed from the start.

Budgets fail because they’re not fun. They ask you to deprive yourself today for future gain, which goes against human nature and the barrage of marketing messages urging you to spend. Just like calorie-counting diets, budgets often lead to burnout and binge spending. Instead, control your money; don’t let it control you.

If you want to get rich, do what most people don’t: Pay Yourself First. Forget about paying everyone else first—landlords, credit card companies, and the government. This backward approach leaves you with little to nothing. Instead, prioritize paying yourself by using a simple, automatic system. 

Americans often try to:
1. Win it (lottery)
2. Marry it
3. Inherit it
4. Sue for it
5. Budget for it
6. Pay Yourself First

Forget the first four—they’re unreliable. Budgeting is painful and rarely works. The sure-fire way? Pay Yourself First.

When you earn a dollar, the first person you pay should be you, not Uncle Sam. This wasn’t always the case; before 1943, people paid taxes the following spring, often failing because they couldn’t budget well enough. The government solved this by automating tax deductions, ensuring it got paid first. You need to do the same—automate your savings.

Set up a pretax retirement account like a 401(k) or IRA and fund it with at least 10% of your gross income. This way, you’re saving before the government or anyone else takes a cut. If you save $14 a day, it adds up to significant wealth over time—potentially over a million dollars.

Next, the important question - How Much to Save? To be:
- Dead Broke: Don’t save.
- Poor: Think about saving but don’t do it.
- Middle Class: Save 5-10%.
- Upper Middle Class: Save 10-15%.
- Rich: Save 15-20%.
- Retire Early: Save at least 20%.

Can 'Paying Yourself First' Really Make You an Automatic Millionaire?

Ever wonder why knowing financial strategies hasn't transformed your life? It’s because knowledge alone isn’t enough. The secret lies in making your financial habits automatic. This can be done using the "Pay Yourself First" principle.

Consider Jim and Sue McIntyre, who became Automatic Millionaires by saving a portion of their income automatically every month for over thirty years. They started small—just 4%—and gradually increased it to 15%, all without writing a single check. This automatic system, free from the need for discipline, took the stress out of saving.

David, too, stumbled upon this concept in his twenties. Initially, he saved just 1% of his income, but inspired by the McIntyres, he upped it to 10% and then 15%. Today, David and his wife save 20% of their income automatically. This habit, started small and scaled up, has become their "new normal."

What makes this feasible? You can't spend money you don't see. By setting up automatic transfers to your retirement accounts, you can save consistently without feeling the pinch. Even starting with just 1% of your income can set you on a path to financial independence.

If you have a retirement plan at work, like a 401(k) or 403(b), take full advantage. These accounts let you contribute pretax dollars, sometimes with employer matches—essentially free money! Automatic payroll deductions ensure you pay yourself first before the government takes its share.

Automation is key. Consider Donna and Mark, who thought saving $5,000 a year was impossible. By leveraging pretax contributions, they realized it only reduced their take-home pay by $3,500—a manageable $145 a month each. This small sacrifice set them on a path to a secure future.

Don't let lack of a workplace plan deter you. Open an IRA or a Roth IRA. The Roth IRA, particularly popular, offers tax-free withdrawals in retirement. Automate your contributions to make the process seamless.

Business owners, you have even better options with SEP IRAs or Solo 401(k)s, allowing higher contributions. Automating these can supercharge your savings.

Invest wisely by diversifying. Use tools like the Automatic Millionaire Investment Pyramid to guide your asset allocation. Consider target-dated funds, balanced funds, or robo-advisors for a hands-off approach.

Remember, the goal is a boring, automated financial life. Diversification protects you in bad markets and ensures steady growth. Embrace automation, start small, and gradually increase your savings. Your future self will thank you.

Take action now: enroll in your retirement plan, automate your contributions, and invest wisely. This one change will set you on the path to becoming an Automatic Millionaire.

Master the Art of Becoming an Automatic Millionaire: The Power of Automated Financial Habits

Imagine a life where you never have to worry about money again—a life where your financial future is secure, and you can sleep well at night. Sounds like a dream, right? But it’s entirely possible if you take just two steps: Pay Yourself First and Make It Automatic.

Let’s talk about emergency funds. Life is unpredictable. Jobs are lost, health fails, markets crash. The key to weathering these storms is to have a financial cushion. This chapter explores how much you should set aside for those proverbial rainy days and where to stash that cash.

Take the "Sleep Well at Night Test" right now: jot down your monthly expenses and compare them to your savings. Do you have at least three months’ worth of expenses saved up? If not, you’re not alone. Most Americans don’t even have that.

But you can be different. Your goal should be to build an emergency basket of cash automatically. My Grandma Bach had a saying, “When the going gets tough, the tough have cash.” Cash is security; it’s your safety net.

THE THREE RULES OF EMERGENCY MONEY:
1. Decide Your Cushion Size: Aim for at least three months’ worth of expenses, but more is better. A year’s worth is ideal for true peace of mind.
2. Don’t Touch It: Only break into this fund for real emergencies—life-altering events, not everyday wants.
3. Put It in the Right Place: A money market account is a solid choice. These accounts invest in short-term government and corporate bonds, offering a good balance of safety and return.

At a seminar, a man named Bob revealed he had $60,000 in emergency funds buried in his backyard! While that’s an extreme example, it highlights a crucial point: your emergency money should earn interest, not just sit idle. 

Shop for money market accounts like you would for a car. Look at financial publications or websites like bankrate.com to find the best rates. Compare and call your bank to see if they can match those rates.

Set up automatic deposits into your emergency fund. If your employer offers direct deposit, have part of your paycheck go directly into your money market account. If not, arrange for your bank to automatically transfer money from your checking account.

For a really safe option, explore U.S. savings bonds via treasurydirect.gov. These bonds, especially I-Bonds (inflation-adjusted), can be a great way to save automatically and securely.

By following these steps, you will be well on your way to becoming an Automatic Millionaire, ensuring financial security and peace of mind.

Are You Prepared for a Financial Emergency? Discover How to Secure Your Future!

Imagine a life free from financial stress, where you own your home outright and your money works for you. It starts with three key steps: Pay Yourself First 10 percent of your pretax income, Make It Automatic, and Buy a Home and Pay It Off Automatically. Here’s why owning your home is transformative and how you can achieve it effortlessly.

Consider the McIntyres, Jim and Sue, who bought their first home young and paid it off in less than 20 years by simply accelerating their payments. They then bought a second home and did the same. By their early fifties, they owned two homes debt-free and retired early with nearly a million dollars in real estate equity. This could be you!

Why Buy a Home?

1. Forced Savings: Homeownership acts like a forced savings plan. You must make monthly mortgage payments, which build equity—an investment in your future.
   
2. Leverage: By putting down a portion of the home's price and borrowing the rest, any increase in the home's value multiplies your investment. 

3. OPM (Other People’s Money): Use the bank’s money to get rich while your own money grows elsewhere.

4. Tax Breaks: The government subsidizes your mortgage interest, offering significant tax deductions.

5. Pride of Ownership: Owning a home gives you security and a sense of achievement, anchoring you in your community.

6. Proven Investment: Historically, real estate has been a solid investment, averaging a 5.3 percent annual return since 1968.

Can’t Afford the Down Payment? Think again. There are numerous programs by developers, lenders, and the government to help first-time buyers, veterans, and even those with minimal savings. For example, HUD and state agencies offer assistance and grants, while Fannie Mae and Freddie Mac provide financing options.

Here’s a simple yet powerful strategy: switch to a biweekly payment plan. Instead of paying your mortgage monthly, pay half your monthly payment every two weeks. This results in one extra full payment each year, cutting down your mortgage term by about seven years and saving you tens of thousands in interest.

For instance, a $250,000 mortgage at 5 percent interest would cost around $483,000 over 30 years. With biweekly payments, you’d save over $44,000 in interest and pay off your mortgage much sooner.

Steps to Set It Up:
- Call your lender to see if they offer a biweekly payment plan.
- If not, you can still achieve similar results by adding 10 percent to your monthly payment or making one extra payment per year.

By embracing these steps and leveraging the power of homeownership, you can build wealth, gain financial security, and enjoy a debt-free life. Ready to take the plunge? It's time to make your money work for you and secure your place in the American Dream.

Unlock Financial Freedom: The Power of Homeownership and Smart Mortgage Strategies

Debt can feel like a never-ending trap. Many fall into it due to poor habits like racking up credit card balances and paying them down slowly. But there's hope—you can break free from these habits and avoid debt as the Automatic Millionaires do.

Jim and Sue McIntyre avoided credit card debt thanks to their Depression-era parents. The Great Depression taught them the harsh realities of poverty and the importance of saving. Borrowing money only made sense if it was for something that could increase in value, like a home.

Ever heard the Texas saying "big hat, no cattle"? It describes people who look wealthy but are drowning in debt. Many Americans appear rich but own nothing—they're slaves to credit card debt. In fact, the average American family owes about $8,400 in credit card debt. Paying the minimum each month on an $8,400 balance at 18% interest will cost you over $20,000 and take more than 30 years to pay off!

Store cards are a dangerous trap. That enticing 10% discount for signing up can lead to years of debt. A $1,000 shopping spree could take 13 years to pay off if you only make minimum payments, costing you more than double the original amount.

To tackle debt, you need a plan:
1. Stop Digging: Ditch the credit cards. Carrying them around is like an alcoholic carrying a bottle of vodka.
2. Renegotiate Interest Rates: Call your credit card companies and ask for lower rates. Threaten to transfer your balance to a competitor if they refuse.

3. Pay for the Past; Pay for the Future: Split your savings. Use half to pay off debt and half to save for your future.
4. DOLP System: Rank your debts by the number of payments needed to pay them off. Focus on the smallest DOLP number first.
5. Make It Automatic: Set up automatic payments to ensure you're consistently paying down your debt.

Beware of quick fixes. Reputable credit counseling, like the services provided by the National Foundation for Credit Counseling (NFCC), can help you create a plan to pay off debt. Always check their credentials and make sure their solutions won't harm your credit rating.

By following these steps, you can regain control over your finances and, ultimately, achieve financial freedom. Remember, breaking free from debt is a journey, but with determination and the right strategies, you can make it happen.

Are You Trapped in Debt? How Can You Break Free and Achieve Financial Freedom?

“We make a living by what we earn—we make a life by what we give.” This powerful quote from Winston Churchill sets the stage for understanding that true wealth is not just about accumulating money, but also about giving back. Let's explore how giving can enrich your journey even more.

Becoming an Automatic Millionaire isn't just about reaching your financial goals; it's also about reducing stress and enjoying life now. One way to feel like a millionaire right away, even if you aren't one yet, is by embracing the concept of tithing. Tithing, giving a portion of what you earn, is a practice as old as civilization itself. It's not just about percentages—it's about the joy of giving.

You might be familiar with tithing from religious contexts, where giving 10% of your income is common. But the essence of tithing is deeper than tradition; it's about genuine generosity. Remarkably, those who give often find that abundance flows back to them in unexpected ways. Americans, for instance, donated $358 billion to charity last year, with most contributions coming from individuals.

If you're inspired to start giving, here's a simple five-step plan to get you going:
1. Commit to Giving: Choose a percentage of your income to donate consistently.
2. Make It Automatic: Set up automatic transfers to your chosen charity.

3. Research the Charity: Ensure your funds are used effectively by researching through platforms like GuideStar or Charity Navigator.
4. Track Your Donations: Keep records for tax purposes.
5. Consider Donor Advised Funds: These funds allow you to invest money for future charitable giving while getting a tax deduction now.

Volunteering your time can also be a powerful way to give back if financial contributions aren't feasible. Websites like VolunteerMatch can help you find opportunities that resonate with you.

Remember, many of the world's wealthiest individuals, like Sir John Templeton, started tithing long before they became rich. Templeton, a billionaire investor, was a dedicated giver even when he and his wife earned just $50 a week.

By incorporating these steps, you can become an automatic tither, enriching your life and the lives of others. Decide on your contributions, pick trusted charities, automate your giving, and track your donations. This journey of giving will not only enhance your financial well-being but also bring profound joy and meaning to your life.

Becoming an Automatic Millionaire: Embracing the Power of Charitable Giving

You've learned how to secure your financial future by setting aside portions of your income for emergencies, retirement plans, and debt repayment. These strategies are timeless and foolproof if you automate them. Here's your quick guide:

1. Pay Yourself First: Deduct at least 5% of your paycheck into a retirement account like a 401(k) or IRA automatically. Ideally, aim for 12.5%—equivalent to one hour of work each day. Even during market downturns, keep investing; buying stocks at a discount can be a game-changer.

2. Direct Deposit of Paycheck: Arrange with your employer to have your salary directly deposited into your bank account. It’s quicker, more secure, and saves you the hassle of manual deposits.

3. Fund Your Emergency Account: Ensure you have a cash cushion of at least three months' expenses in an FDIC-insured account. Automate at least 5% of your paycheck to flow into this fund until it's fully stocked.

4. Dream Account: Save for your dreams—be it a house, car, or vacation. Automate contributions to a separate FDIC-insured account. If your dream is three years away or more, consider investing the money more aggressively.

5. Automate Credit Card Payments: Synchronize all your credit card due dates and use your bank’s online bill-paying service to make at least the minimum payments automatically, avoiding late fees and penalty rates.

6. Pay Monthly Bills Automatically: Automate payments for fixed bills like rent or car payments through your bank’s online services. For variable bills, set them to charge your credit card automatically.

7. Automatic Charitable Giving: Set up regular contributions to your favorite charities, between 1% and 10% of your paycheck. Most charities are happy to arrange this, making your giving consistent and effortless.

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The Automatic Millionaire

David Bach

9 Key ideas

23 MINS

4.5 (1.9k)

Ever heard Winston Churchill's iconic quote, We make a living by what we earn—we make a life by what we give?

Let’s get started!

Key Ideas

#1