Yahoo Finance ‘Automatic Millionaire’ Author David Bach: 3 Painless Habits That Build Wealth
You may be richer than you think you are. This is part of the messaging in author David Bach’s financial book “The Latte Factor,” which takes a deep dive into how small amounts of money can change your whole life.
In a YouTube interview with money expert Marie Forleo, Bach talks about the three secrets of financial freedom that are hiding in plain sight. These three painless habits really do work to build wealth.
Learn: Suze Orman: Young People Could Retire Millionaires by Doing This One Thing
Read: How To Get $340 a Year in Cash Back – for Things You Already Buy
Sponsored: Owe the IRS $10K or more? Schedule a FREE consultation to see if you qualify for tax relief.
Pay Yourself First
Paying yourself first means that the first person who gets paid when you receive your paycheck is you.
Bach said getting into this mindset is the single most important financial lesson you can ever learn. “Most people pay all their bills first, they try to save last. It doesn’t work.”
Here’s how paying yourself first works. When your paycheck comes in, a percentage gets taken right off the top. This goes into an account you cannot touch.
Those that start saving one hour a day of their income in their twenties will be financially free for life. In the video, Bach cited a study from Fidelity about how the average self-made American millionaire who becomes a millionaire by age 59 was able to get there because they saved 14% of their gross income.
Discover: 7 Tips Frugal People Use To Save Money When Dining Out
Make It Automatic
The second secret to building wealth is don’t budget. Instead, automate whatever it is you’re saving for. Bach, who previously worked at Morgan Stanley, said all but one of his clients saved their money through automation.
No matter what it is you’re saving for, whether this is for an emergency fund, a dream vacation or retirement, focus on what you’re going to save automatically and automate that money into that specific account.
Live Rich Now
If paying yourself first and automating your savings are the “how” to building wealth, Bach said living rich now is the “why.”
Living rich now means asking yourself what you want to do with your life that you’re not doing. Contrary to what you may think, Bach said living rich now does not require a bunch of money. There are certain daily practices, like taking a moment to be present and meditate or write in your journal, that can be considered moments of living rich.
To feel rich, you need to not feel trapped. If you don’t think you’re able to fully embrace living rich, try asking yourself what it would feel like not to feel trapped.
“One thing I tell people to do is think about what in your life right now is making you feel trapped,” said Bach. “How can you eliminate that? What do you need to add to your life today, that probably doesn’t even take money, that would make you feel better about your life today? That’s living rich.”
More From GOBankingRates
Check Your Finances: You Might Be Making One of These Extremely Common Mistakes
6 Signs You're More Financially Savvy Than the Average American
This article originally appeared on GOBankingRates.com: ‘Automatic Millionaire’ Author David Bach: 3 Painless Habits That Build Wealth