How David Bach Became a Millionaire (and the Rest of Us Can, Too)
Jennifer Barrett
Tagged in: ,
Tap to Read Full Story

What’s the fastest way to $1 million? David Bach ought to know. He reached the milestone by his 30th birthday and went on to write several bestsellers about how others could “finish rich,” too, along with “The Automatic Millionaire,” which he has just updated.

We talked to him about how he hit that milestone, the most important step to building wealth—and the beliefs that hold so many of us back.

You became a millionaire by 30. What did you do to get there so quickly?

I paid myself first. And right out of college, I bought a home with my best friend. We put down $10,000 and rented out the bedrooms to cover our mortgage.

I also worked my butt off in my 20s, first in commercial real estate and then at [what is now] Morgan Stanley. Not all my friends were doing that, but when I look at my friends now who are the most successful, it’s those who were busting their butts in their 20s, too.

You’ve said paying yourself first is the most important step to building wealth. How much should you keep for yourself, and what should you do with it?

Ideally, you want to keep at least one hour a day of your income, which works out to about 12.5 percent of your pretax income…and save and invest it, automatically.

What’s the simplest way to do that?

There’s a blueprint in the book. But, basically, you want to automate your paycheck being deposited. It’s shocking how many people don’t! Then sign up for a 401(k) or open up an IRA. Have money automatically moved into those accounts and into savings for emergency purposes and then into a ‘dream’ account, which is money to pay for your dreams.

You should also automate your credit card bills and other regular bills like your car, rent, mortgage, phone bills, gym. And tithe (or donate) automatically.  

final-headshot-david_bach_e_142-copyWhen did you first become interested in investing?

My family talked about investing all the time. My dad was a stockbroker and financial advisor. But my grandma helped me buy first stock at 7 years old. It was a transformative experience.

What did you buy?

We were eating at McDonald’s and she said to me: There are three types of people. There are those like you who come eat here, those who work here for minimum wage and those who own this place. If you want to be wealthy, she said, you want to be an owner… She said to me, you’re going to save money from your allowance and from Hanukkah gifts. And I’m going to help you buy this [stock].

That was a major lesson at a very young age.

I can imagine. You write that ‘regardless of the size of your paycheck, you probably already make enough to become rich.’ So, what’s holding so many of us back?

I truly believe the biggest thing that hurts people financially is a lack of financial education. This stuff has not been taught in school. If it was, I deeply believe most people would do better. When you know better, you do better.

What do you say to people who say they don’t have enough money to save?

People say, if I make more money, then I’ll save. Or they say, I can’t afford to save. [But] it’s about saying, over and over again: You can’t afford not to.

You don’t go from not running to running a marathon. You work your way up. Savings is very similar. You probably do have enough money. You just have a Latte Factor. It’s not really about giving up coffees or something [else], but looking at where your money is going and realizing, I may actually have enough to save.

There’s an enormous disconnect between people’s values and how they spend their money. It’s about getting total clarity around your values and making sure the way you spend and invest aligns with that.

This interview has been edited and condensed.



    Inspiring story! Wondering, is there any Acorns success story I can read of people who made money on the app? I just downloaded it, have always been interested in stocks, but don’t have time to research which one I should invest in (which probably cringing to hear for some). Acorns has lots of good reviews, but I can’t seem to find any success stories or case studies for Acorns. Anyone made money off it, or it is just a really good savings app?

    Acorns is pretty new to the finance investing world. I would give success stories from it a few years and then you have to take into account the amount invested versus what you are willing to invest.

    Hi Cyrene, I agree with Carol below in saying that the app is a little too new for any real “success stories,” but what I can say is that in the year and a half since I’ve downloaded the app, I’ve invested around $1,125 and made about $75 (I’m in the most aggressive portfolio). That doesn’t seem like a ton of money, but it’s a solid 6% return, which is waaay more than the typical savings account. And the savings component is all automatic, so I don’t think about it at all. I’m actually really impressed by how much I was able to save (and earn) without ever really needing to put any brainpower into it.

    And of course, as your balance grows, so will your potential returns.

    I round up card charges, debit card transactions as well as auto bill pay from my bank account. I also automatically invest $100.00 each Tuesday. I have had my account for almost two years and now have about 17k in there. I would call that a success story.

    Hi Cyrene, I started using Acorns in early 2016 and was able to put aside a couple hundred dollars every month of the rounds ups and a few one-off deposits to start building. After my commission checks picked up I realized I needed to pay myself before I saw the money in my account. So right before payday, I would deplete my checking account and send that money to acorns, with the paycheck arriving the next day.

    I was able to save over $13k in 10 months just by focusing on growth of my deposits and not the performance of the portfolio. This is where Acorns shines, low fee, and a platform that encourages and excites people about saving. Include that with returns potential and it’s a great service to leverage.

    Well it takes 10 years to reap real benefits the app hasn’t been out that long lol. Its not a savings its more of a mutual fund you give your money to someone else to invest for you and generally a bunch of different stocks. They do the research buying n selling for you. But you still get the benefit. Ive had a mutual fund for college for about 10 years my dad started when I was born. He put about 10k -15k into and when i got it there was 20k and i used it but i still earned 500$ from it. So these accounts are way better than savings where you really don’t get anything back and money is just sitting there. I like my acorns because its like my welsfargo waytosave savings puts in an desired amount per purchase but my money grows by itself. Don’t take money out like a savings tho you pay 10% of what you take out to federal income taxes. So you are saving for something your going use in the near future or a big amount with in the year use regular savings for that. I only make 11$ and I invest about 25% 401k included I saved/earned 9.5k in 2 years considering my weekly take home is 300$ thats a lot for me. So it does work but getting to millionaire status still seems impossible to me.

    Hey I’m 19 years old and I’m a full time investor, skill focus is Real Estate but I also do stocks as well. I use Acorns as a way to save money because I often have a lot of cash available to me and tend to make multiple transactions a day. I realize Acorns generally makes me 7-9% returns. I haven’t lost any of my own money using Acorns usually whatever is lost is profits. Though there are some who do lose some of their own money. I don’t know if this is the success story you were looking for but my experience with acorns has been a success.

    I have been using Acorns for about 6 months now and, honestly, on $600 invested, made $3.47 in dividends. That’s about 5%, better than the bank. And money I would not have otherwise. Unless you budget and stick to it, you spend what you make.

    ))) he saved his money from renting out their house, then was hired by Morgan Stanley, received annual bonuses couple of years – voila, another millionaire) wrote a book about it – additional money. It looks this way from reading article.
    How can financial adviser recommend you to invest everything into pension plan? I’m studying CFA 3 level with no practical experience, and can understand that this approach won’t help you to earn money. Saving is not equal to earning.

    @Evgeny I can agree that this does sound basically like the guy became a millionaire because of what he does/did, and not solely because of savings (30 is basically impossibly young for the average person to be a millionaire based solely on savings). That said, I disagree with your theory about saving. For one, even never taking a college course on the subject, I can tell you that what David is talking about is not a pension. A 401K is very different from a pension. Secondly, investing into a 401K (in diversified mutual funds, for example) is a strategy for earning. With compound interest, your savings will turn into earnings. Over the course of time what you earn in interest should outpace what you contribute into the accounts. For instance, the market has historically returned 8%-12%. Assuming the low end… if the market continues to return 8% yearly average, then if you invest 10K into your 401K every year, after 28 years you should have 1 Million dollars. If you max out a 401k and an IRA every year (23,500 as of 2017), after 19 years you should have 1 million dollars.

    While there are hundreds of stories about the multitude of ways to make a buck, I choose a proven path. I read over we 25 books about Buffett. He gives out a nugget to each author and even more in his letters. Gather enough nuggets and you can understand how he did it. For 2016 I finished with an 84% return and if you want to read about it, I will send you a free copy of my newsletter from

    So, the way to become a millionaire by 30 is to start with extra cash to invest ($10,000) and work at Morgan Stanley, where you are overpaid to rip people off.

    Being one of those 20 year olds who is working their butt off in college, it’s inspiring for me to see that it will be worth it one day. I may not be a millionaire by 30, but I am hoping that I can learn skills that will prevent me from driving myself deep into debt like some of my family.
    I’ve been on acorns for a little under a year which isn’t enough time to see real financial gain with my portfolio but for a person who is still struggling with how to budget, seeing that I have some money in an account is a huge accomplishment for me and imagining that money grow is addictive. (I have transformed my shopping addiction into an acorns addiction and no longer feel buyers guilt)
    In my opinion David is right in that we don’t learn much about finances when we are young. I never did. But it’s awesome that I was introduced to the idea of saving/investing while in my 20s so I can do better for myself then I would have.

    I am in a way different life cycle than most Acorn investors. I am already retired early after a long career in Human Resources. In managing 401k and bonus programs, I can tell you from experience that most people don’t save and do not think ahead. The reason I could retire early is that I adopted a philosophy of “hiding” money from myself. If it never hit my paycheck I didn’t spend it. I socked little amounts here and there that grew into larger amounts as my career grew and I made more money. Every raise or salary increase was diverted to savings or 401k, not in my checking account. Now that I’m retired, I am not saving. But I read about Acorn in the WSJ and loved the concept. Just because I am no longer working does not mean there aren’t still ways to save a little here and there. The roundup concept is perfect!!

Leave a Comment.