The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich – by David Bach

For absolute beginners, this is a good book to read on how to start a savings plan towards your first (and subsequent 🙂 ) millions. So easy to read and entertaining with real life anecdotes, I read it all in one sitting. 

Key concept taught….which I always use when talking to people who lament their lack of savings…pay yourself first. That is to say, make it a point to get your bank to do an auto-transfer of 10%, 15% or 20% (why, even more if you want to end up filthy rich!) of your salary from your account to an investment or retirement nest egg account.


A standing instruction (SI) usually works for those who find it hard to put money away every month. It costs RM1-2 per month but is really money well-spent. It relieves you of the need to have any discipline to save or to (gasp!) budget! Once the SI is in place, you can pretty much spend what you have left as you like over the rest of the month.


OK I know some of you may find this a bit too dramatic and far-fetched but think about it! Isn’t it totally empowering to just make a commitment to pay yourself first TODAY so that you can retire comfortably? Automate it! Pay yourself first, even before you pay your bills, etc. Of course make sure that you pace your spending of whatever’s left of your pay cheque so that you can still get a proper meal at month’s end 🙂


When I mention this concept to my friends. the most common reaction is always…aaahh but my salary’s too low. It’s alright if you’re already earning big bucks etc etc. But as Mr Bach points out the earlier you start saving, the shorter the time that you will need to put money away every month. The time value of money chapter shows that if you start saving in your 20’s, even if you save only a small amount every month, you would have accumulated much more by the time you get to retirement age. In comparison someone else who starts later but puts away more, may not turn out as wealthy. 

There are practical examples about the concepts of time value of money and compound interest. The author uses the Latte Factor to illustrate that your one latte a day could end up costing you a fortune after 10 years if the money could instead be tucked away into an investment account that pays you 10% a month. Or giving up that one Starbucks coffee a day will send you into the loony bin, what about giving up the 1-pack a day cigarette habit. Different strokes la! 

And once you’ve made it, the last chapter tells you to donate some of that money…10% of your annual salary. Great idea I think – the Spiritual Law of Attraction teaches us that if you give away more the more you get.  Oops! That’s a different book but you get the idea I’m sure.


Easy to grasp….but more importantly easy to put into practice.


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