The automatic millionaire: Summary, Lessons, Action steps (2023)

What do you get in this post: in this post, I have covered all chapter’s lessons, the Top 10 lessons, action steps, and many more.

It also includes at the end of the chapter What action do you need to take?

Are you excited like me?

So, stay tuned till the end.

For just 1 page summary you can click here.

Why do you have to read The automatic millionaire book summary?

Reason:

#1 New York Times, Businessweek, wall street journal, and USA Today best seller.

A powerful one-step plan to live and finish rich.

“David Bach’s no-spin financial advice is beautiful because it’s so simple. If becoming self-sufficient is important to you, then this book is a must.” —Bill O’Reilly, anchor, Fox News, and author of The O’Reilly Factor and The No Spin Zone

Benefits:

“Go Green, Live Rich is as much about saving money as it is about preserving our world of natural wonders for future generations. This is the rich-green book of a promising tomorrow.” —Matthew Modine, Founder: Bicycle for a Day

Want to know how?

Favorite quote:

“Remember, inspiration unused is merely entertainment. To get new results, you need to take new actions.”

Let’s get started.

For just 1 page summary you can click here.

The automatic millionaire Book summary in 3 sentences.

“You actually didn’t have to do anything other than decide at the beginning that you wanted to be rich; you didn’t have to worry about having any extraordinary willpower.

Why do so many people believe we require a budget? because other people have told us that.

Pay Yourself First is the guiding principle of wealth creation.

The five key takeaways from The automatic millionaire.

The Latte Factor urges us to start paying attention to the slightest expenses. Even if you give someone a treat, purchase a drink, or eat any kind of fast food. You should track it.

Over time, money compounds. Over a lot of time, money compounds dramatically!

Establish your monthly savings goal. It is advised that you aim to contribute at least 5% of your monthly net income to your rainy-day fund.

The truth is that until you own some real estate, you aren’t really playing the wealth-building game.

Make money work for you rather than making it work for you by treating money the way the wealthy do.

The automatic millionaire Chapter 1 summary: Meeting the automatic millionaire.

The author uses his friend as an example to describe how he became wealthy at a young age. And upon seeing him, he was moved.

He has shared one of his friend’s best lessons in this book.

“There’s no possibility you’ll forget to do it—or, worse, change your mind and purposefully not do it—if you don’t have to think about it. There is no way you can be tempted to act improperly after the choice has been made for you.

“You actually didn’t have to do anything other than decide at the beginning that you wanted to be rich; you didn’t have to worry about having any extraordinary willpower.

“Setting yourself up for success” was the key. Why make it difficult to get wealthy when you can make it simple? Anybody can become an Automatic Millionaire as long as they know what to do and can set things up to be done “automatically.”

The automatic millionaire Chapter 2 summary: The latte factor: becoming an automatic millionaire on just a few dollars a day.

“The problem is not how much we earn…it’s how much we spend!”

The majority of individuals think that the key to being wealthy is all about figuring out new ways to increase their income as soon as possible.

It nearly never matters how much money you make whether or not you can and will become wealthy.

Watching the tiny things—minor spending habits you have that you’d definitely be better off without—is the key to improving your financial situation.

Most individuals find it difficult to believe this. Why? as they are trained to believe the opposite. Spending every dollar of our wages has nearly become patriotic in our society.

This concept is promoted even by the government.

Politicians claim that lowering taxes is the best method to inspire the economy because, if you give people a little extra money in their pockets, they’ll naturally spend it.

We don’t consider how long it took us to earn the money we so casually spend on this or that “little thing” with.

Even worse, we don’t recognize the amount of wealth we might have accumulated if we had invested a small portion of our income rather than wasting it.

What is the latte factor?

This implies that you must account for each and every penny.

You must believe that this is a simple activity, but it is actually quite challenging.

Because we frequently feel that something is not necessary when we spend less money. The money spent on little things, however, actually adds up.

For instance, if you spend $1 on ice cream, you could say, “Why should I keep track of it?” That’s where you go wrong.

The Latte Factor urges us to start paying attention to the slightest expenses. Even if you give someone a treat, purchase a drink, or eat any kind of fast food. You should track it.

The visual example:

USE THE POWER OF THE LATTE FACTOR

$5 (average cost of a latte and a muffin) × 7 days = $35/week = approx.

$150/month.

If you invested $150 a month and earned a 10% annual return, you’d wind up with

1 year = $1,885

2 years = $3,967

5 years = $11,616

10 years = $30,727

15 years = $62,171

30 years = $339,073

40 years = $948,611

Becoming rich requires nothing more than committing and sticking to a systematic savings and investment plan.

The automatic millionaire Chapter 3 summary: Learn to pay yourself first.

The purpose of The Latte Factor is not to persuade you to stick to a budget plan. It’s intended to enlighten you about the fact that you already make enough to begin investing and saving. Even better, you already have a comfortable income.

It’s time to confront the following significant myth that prevents most people from obtaining true wealth: the notion that budgeting will solve this issue.

Why do so many people believe we require a budget? because other people have told us that.

Put yourself on a budget, and everything will be OK, you were probably advised by someone.

Who though, told you this? Are your parents a professor? a partner? a financial professional? The people who gave you this advice undoubtedly had the best of intentions.

Yet were they wealthy? Were they joyful and lovable? Were they themselves successful budgeters?

In conclusion. Nothing is inflated. Zero hype. All you need to do to get wealthy is decide to do something that the majority of people don’t do. PAY YOURSELF FIRST is the solution.

It’s true that not everyone is as enamored by the concept of Pay Yourself First as they ought to be. In actuality, it enrages a lot of individuals. Maybe you’re one of them.

You may have a list of excuses in your head for why you can’t pay yourself first. I need more than this, you could be thinking. Where is the wealth-making formula?

Where are the stocks or mutual funds that will look after me? How can I invest my way to a 10% annual return? Have those times not passed?

How can I purchase a home with no down payment? I require the guidance of that nature.

Please put your faith in me. You must decide to pay yourself first before anything else can help you become wealthy.

If you allow the government and everyone else to get their hands on your paycheck before you do, no amount of reading, listening to tapes, ordering motivational products, or subscribing to newsletters will help you.

Pay Yourself First is the guiding principle of wealth creation.

On this page, you committed to Paying Yourself First.

Now, you must decide two things.

1. HOW will you do it?

2. WHERE will you put the money?

These questions are addressed in the following chapter. Let’s move on. Your point of view has evolved. Let’s now examine how to alter your behavior. You are prepared to become a Millionaire Automatically.

The automatic millionaire Chapter 4 summary: Now make it automatic.

The primary priority of the Automatic Millionaire is paying yourself first for the future. Setting up a mechanism to automatically fund your own individual retirement account is required.

You have fantastic possibilities that what comes next will be simple if you work for an organization. I make this claim because tens of thousands of American businesses provide their workers with so-called self-directed retirement plans.

With the aid of these programs, you are able to make tax-free contributions to your own retirement account.

A 401(k) plan is the most popular type of self-directed retirement account.

One of the most important retirement accounts is the 401(k).

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People who aren’t serious about becoming wealthy state the following:

I’m only able to save 4% of my income, so I can’t save anymore.

  • “I don’t need to enroll in my plan because my spouse is already enrolled in his or her plan.”
  • “It’s not worth using our plan because it’s not very good.”
  • “Since my employer doesn’t match retirement contributions, I don’t think it’s worthwhile to enroll in the plan.”
  • “Stock investing is dumb.”
  • I’ll save more money afterward.

Real wealth creators state the following:

• “I’ll always pay myself first, no matter what.”

• “I will make every effort to contribute the maximum amount permitted to my retirement account and pay Myself First at least 10% of my income.”

• “I’ll see to it that my husband does the same.”

• “I understand that a falling stock market gives me the opportunity to purchase equities at a discount, and that’s a positive thing.”

• “I am aware that today is always the best time to save for tomorrow.”

Over time, money compounds.

Over a lot of time, money compounds dramatically!

WHAT IF YOU DON’T HAVE A COMPANY RETIREMENT PLAN?

Do not fret. You shouldn’t need more than an hour to complete the task at hand.

Most people who have a source of income can open an IRA—also known as an individual retirement account—at a bank, a brokerage, or even online. An IRA is not a standalone investment, much like a 401(k).

Instead, you can use your Pay Yourself First funds to make tax-deferred contributions of up to $5,500 per year ($6,500 per year if you are 50 or older) into a financial holding tank.

When you start an IRA, you must first choose how much money to deposit before investing it.

The automatic millionaire Chapter 5 summary: Automate for a rainy day.

Making it automatic is the greatest method to contribute to your rainy-day fund.

Check to see if your employer will direct deposit your paycheck before doing this. (Again, all you have to do is ask if the firm offers payroll direct deposit by contacting your benefits office.)

If they agree, you can set up an automated deposit of your entire or partial paycheck wherever you choose. Your account number is all your company needs.

Establish your monthly savings goal. It is advised that you aim to contribute at least 5% of your monthly net income to your rainy-day fund.

Do the arithmetic and provide your company with the precise amount, since they will likely want it.

Make arrangements to have your checking account automatically fund your money market account if your employer won’t make an automatic deposit into it.

Two strategies exist for doing this.

Either you can instruct the bank where you have your checking account to make a specific dollar amount transfer into your money market account every two weeks,

or you can instruct the bank or brokerage firm where your money market account is kept to make what is known as a systematic withdrawal from your checking account,

in which money is automatically withdrawn from your checking account on a specific day each month and transferred into your money market account.

In either instance, the entire process is fully automated, and you should typically be able to make the arrangements online.

The automatic millionaire Chapter 6 summary: Automatic debt-free homeownership.

BUY A HOME AND PAY IT OFF AUTOMATICALLY.

We’ll examine the benefits of home ownership in this chapter, as well as how to make automatic payments for your house so you can become debt-free before you’re too old to take advantage of it.

Therefore, let’s begin.

Regardless of your age, you want to own the home you live in. Why? It’s easy. Renting won’t make you wealthy. According to a proverb, landlords gain while tenants remain poor.

Consider this. Renters frequently spend half a million dollars or more on rent over the course of their lives ($1,500 per month for thirty years comes to $540,000), yet ultimately end up with nothing they own.

Alternatively, you could spend the same amount on a house and pay off your mortgage, which would result in you owning your house outright.

The truth is that until you own some real estate, you aren’t really playing the wealth-building game.

Renters’ median net worth was $5,400 compared to homeowners’ $195,400, according to the Federal Reserve’s Survey of Consumer Finances, which was released in September 2014.

In other words, homeowners had an average wealth of more than 36 times that of renters.

You aspire to be a millionaire, then? There are only three things you actually need to accomplish, as I previously stated: Decide to set aside 10% of your income for yourself, make it automatic, and purchase a home that you can pay off early.

Tax breaks are the best benefit you receive. The government gives you a significant incentive to become a homeowner by allowing you to deduct the cost of the interest you pay on your mortgage (up to a limit of $1 million).

The more the government contributes to your property purchase, the higher your tax bracket. Particularly in the early years, when the majority of your monthly payment is used to pay interest, if you are in the 30% tax bracket, the government is essentially subsidizing roughly a third of your mortgage payment.

The automatic millionaire Chapter 7 summary: The automatic debt-free lifestyle.

What, in your opinion, do the majority of people do when their credit card statement comes each month? You are correct if you mentioned that they only pay the bare minimum.

Try to estimate how much it will ultimately cost you to pay off an $8,400 load on a credit card with an 18% interest rate if you only make the minimum payment each month.

The solution is $20,615! But hold on, it’s worse than that.

AT THIS RATE, IT WILL TAKE YOU THIRTY YEARS TO PAY OFF YOUR BALANCE!

You would end up needing to make 365 monthly payments until an $8,400 credit balance is paid off if you only make the minimum payment each month.

That equates to payments for thirty years and five months.

And that’s on the assumption that you never make another purchase with the card, that you never accrue late fees, and that you never have to pay an annual service fee.

Could you picture it? For a credit card with an 18% annual interest rate, that’s thirty years and five months’ worth of payments. Many credit cards have substantially higher rates; some go as high as 29%.

The main truth is that paying simply the least amount owing on your credit cards will prevent you from becoming an Automatic Millionaire.

By doing that, all you’ll do is enrich the credit card corporation at the expense of your continued poverty.

HOW ONE DAY OF SHOPPING CAN TAKE THIRTEEN YEARS TO PAY OFF.

Consider the widespread technique that many merchants use where they offer you a discount in exchange for agreeing to sign up for a store charge card.

Wouldn’t you like to save 10% on your purchase today?

A typical buyer will think, “Oh, great—I saved $100!”

If the interest rate is 18%, it will take you 153 payments—or roughly thirteen years—to pay off the $1,000 balance.

By then, the clothes will be long gone and you will have paid more than $2,100 for your $1,000 purchase.

The store gets a wonderful deal, but you get a terribly bad one.

So, this is what the author advises you to do when the friendly salesperson asks if you want to receive a discount by applying for a store credit card:

JUST SAY NO

Repeat after me.

No.

No, I don’t want a credit card.

No, I don’t want a 10 percent discount.

No, I don’t want six months’ free interest.

No.

NO.

NO!

The automatic millionaire Chapter 8 summary: Make a difference with automatic things.

“We make a living by what we earn—we make a life by what we give.” —Winston Churchill

Money is good; I hope you achieve your financial goals. I’ve seen both the affluent and the poor, and the rich are better, as the adage goes. But having money won’t make your life meaningful. Really, it won’t.

Why do we strive for financial success? We do it to elicit emotion rather than the goods that money can buy us, however lovely they may be.

Although we might think we want a nice automobile, a million-dollar bank account, a big house, money for retirement, or money for our kids’ education, what we truly want is the sensation these things provoke in us.

But look at this incredible item. Although you should give purely out of altruism, the truth is that those who give often receive abundance in return.

More of what you give will return back to you. More happiness, love, money, and significance in our lives come from the flow of plenty.

Generally speaking, you feel wealthier the more you provide. It’s not just a feeling, either.

Contrary to popular belief, giving often results in faster financial flow. Why? Because those who are generous draw abundance rather than poverty into their life.

The automatic millionaire Chapter 9 summary: The automatic Millionaire blueprint.

Consider the information in this chapter to be your “cheat sheet” for the Automatic Millionaire lifestyle you are about to begin.

1. Always pay yourself first.

Paying yourself first means having at least 5% of your income withheld from your paycheck and deposited directly into a 401(k), IRA, or other qualified retirement accounts before the government withholds its withholding tax.

The ideal amount of this deduction is 12.5% of your income, which is equal to one hour of work every day. However, you must automate the process in any way you can.

2. Automatically deposit your paycheck.

You should be able to make arrangements with your company’s personnel or human resources department to have your pay automatically deposited into your bank account if your employer employs a computerized payroll system.

It is referred to as a direct deposit. It avoids the hassle of wasting a lunch hour every week or so waiting in line at the bank with a paper check and promptly deposits your salary into your account.

By the way, this is quicker and more automatic than receiving a check and making mobile deposits.

3. Automatically deposit money into your “rainy day” emergency fund.

The author discussed the significance of keeping an emergency cash reserve of at least three months’ worth of spending in an FDIC-insured bank account (not your ordinary checking account, but a separate one set up, especially for this purpose).

You should direct deposit at least 5% of your gross pay into this emergency account until it is completely funded.

Again, make arrangements for your bank to automatically withdraw the funds from your checking account the day after your paycheck clears if your employer does not offer payroll deduction.

4. Automatically fund the account of your dreams.

A dream account is what?

The main idea is that you save money in this dream account for your home, car, wedding, a trip to Hawaii, new boat, guitar, ski lessons, culinary school, or whatever else is on your wish list.

The majority of people don’t have the cash necessary to pay for their aspirations, so either they borrow the money instead (either by charging it to their credit card or getting a loan), or they never fulfill their dreams.

Your dream account may end up being the most significant account you have because real-life excitement comes from following your dreams.

5. Make automated payments on your credit card bills.

Ideally, at least five days after your paycheck is typically posted so you know there is money in the account. Call all of your credit card companies and make arrangements to have all of your bills come due on the same day of the month.

If you ask them, almost all credit card companies will work with you to change your due date.) Then, five days prior to the due date, use your bank’s online bill-paying facility to automatically make the minimum payment on each of your cards.

6. Make all of your recurring payments automatically.

Regular monthly bills that are always the same amount (such as automobile, rent, or mortgage payments) and those whose balance is occasionally variable (like phone bills or cable and Internet charges).

The unchanging bills can be paid automatically each month by using your bank’s online bill payment service to have funds deducted from your checking account.

Top 10 lessons from The automatic millionaire book.

Once the choice is made for you, there is no way you can be tempted to act improperly.

Buy nothing on credit. Either use cash to pay for your purchases or don’t.

Our financial situation is primarily a result of how much we spend rather than how much we make.

Never attempt to spend money that you cannot actually see.

Make money work for you rather than making it work for you by treating money the way the wealthy do.

Make sure you pay yourself first with every dollar you earn.

The little, pointless things we waste money on every day can soon add up to huge sums that could eventually cost us our freedom.

The simplest rule for being wealthy is to create and adhere to a methodical savings and investing plan.

While some people fear change, others make plans for it.

Assuming that someone else in your life will handle your funds is never advisable or safe.

Action steps from The automatic millionaire.

Put clear objectives you intend to accomplish each year in writing. Setting goals in writing is effective.

You can start to accumulate riches if you own real estate.

The road to success requires failures. One is not experimenting or inventing enough if they are not failing at all.

Never is life simple. But it is a fact that leading a bad life requires just as much effort as leading a good one. Why not pursue the good life when you have to put in the work?

Wealth and money serve as a tool to assist us in achieving a specific objective; they are not an end in themselves. We won’t lead a joyful and serene existence if our financial management practices are at odds with our fundamental beliefs.

All of us eventually engage in the money game; we have no option. Whether we are on the winning or losing side is the most crucial question.

He finds money management uninteresting, which is the one real secret of an investor who does well in both good and bad economic times. Boring also works!

You only need to decide to pay yourself the first 10% of your income and set it up as automatic deductions, buy a property, and pay it off early to become a billionaire.

The oddest truth of all is that people who give back experience faster financial flow. Because givers draw wealth rather than lack into their life, this is the explanation.

More of what you give will return back to you. Giving selflessly is what fills our lives with happiness, love, and purpose.

You feel wealthier the more you offer.

You must pay off your credit card debt. Follow these five steps religiously: quit digging yourself a hole, renegotiate the interest rate, pay for the past and the future, pay off all of your debt, and set it up to be automatic.

Thank you for your time.

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