The phrase Automatic Millionaire does catch a lot of attention. Who is not interested in becoming a huge success, much less an automatic one? You may point this as a reason why David Bach's work "The Automatic Millionaire" has become a New York Times' bestseller but there's more to this book than you would think. Bach should have had a disclaimer that comes with it as contrary to what you perceive, this isn't a make money fast scheme. Yes, it gives you with effective strategies on how to reach your financial plan. Nevertheless what the author promotes is a gradual but sure way to build up wealth for you to retire comfortably. The word automatic does not in any way pertain to a short timeframe to accomplish your goal rather it describes the system that ensures the build up of your savings.
The book is founded on basic principles that almost everyone is aware of, paying yourself first. For individuals who are unfamiliar with this concept, the idea is simple. A percentage of your gross income, at least 10%, have to be set aside for your savings, retirement plan, or other investments. Pretty fundamental isn't it? But how many of you actually practice paying yourself first? It shouldn't be that difficulty however there are a lot of financial commitments to be met and there is inadequate left to save. This way of thinking is what Bach aims to alter. Before you dole out cash to cover your bills, to repay your mortgage, or to buy your groceries, you must make sure that you have already stashed away that 10%. Aware of the challenges that most people are having – think of lack of willpower and discipline- Bach proposes a system for you to follow. Make preparations with your employer and bank to have that portion of your income transferred automatically to a bank account. You can then allocate that money to your savings or investments. The idea here is, your money is transferred before you even have the opportunity to see it. This helps you avoid the temptation of spending rather than saving it. It may appear challenging to build your budget around what's left. Given enough time, you will get used to this arrangement.
Another subject matter that Bach tackles is the profit potential to be had if you cut down on your incidental purchases like designer coffee and cigarettes. The author illustrates how much you will be able to save if you give up your $4 a day latte habit. This potential is increased if you funnel the money to a tax deferred retirement plan such s 401 (K). You will greatly benefit from compounded interests and will possibly earn hundreds of thousands of dollars in 40 years' time.
One of the problems that most face is mounting debts. Debts drain you financially and have several indirect impacts on your finances. Bach has some sound advice on how to eliminate your debts and stay debt free for life. Average individuals will find the suggested action steps easy to understand and achievable.
Becoming a millionaire is not as impossible as we perceive it to be. With the right mind set, realistic financial plan, and an effective system, even average individuals can realize the dream of attaining financial freedom.
