Contributed by Tanya Schiavone
The premise of the The Automatic Millionaire is that we are already millionaires! After reading it I know it is true. All of the tips and tricks David Bach writes about are not new to me, but I had not ever put them into action. When I talked to my friends about these ideas, I found out they also were aware but had not tried any of them out. Why is it so hard to follow this advice?
The main reason why we don’t become (or believe we can become) millionaires is because many of us live from paycheck to paycheck and extra money is limited. So, how can we become that Automatic Millionaire?
The first step The Automatic Millionaire recommends is to track your expenses, even if it is just for a day. You will find what he calls “the latte factor.” The latte factor is that we all spend little bits of money on little things we don’t need to. The idea is that you spend $3-5 on a latte, then you buy a muffin for $3, then you eat lunch out for $10. Before you know it, you have spent an extra $10 a day. You could make your coffee at home; it would cost less a year to buy a fancy latte maker. You could pack your won lunch and snacks but we give ourselves the excuse that it is too hard to prepare.
What if instead we invested this money into an IRA? How much would you have by the time you retire? 1-2 million dollars. Your lattes are costing you a million dollars. After hearing that, maybe they don’t taste so good anymore. The best way to save is to make it easy as possible. What if you set up your paycheck to deposit money into an IRA and your savings account? You won’t even notice the money is gone. That’s just one of the tips I learned about in The Automatic Millionaire.
Do you have any tips on how to save money effortlessly? We invite you to share your ideas in the box below.