What Does It Take to Actually 'Finish Rich'?


It’s been two decades since David Bach wrote “Smart Women Finish Rich,” the book that went on to sell a million copies and spawn his bestselling “Finish Rich” series. Now Bach is back with a new edition for the 20th anniversary.

We spoke to the well-known personal finance author and co-founder of AE Wealth Management about what keeps so many of us from getting on track, and why the principles he lays out in his book are as relevant as ever (no matter your gender).

We all know the basics: Spend less than you earn, save for emergencies, invest money for later. But many of us still aren't putting these into practice. Why is that?

No one has time or discipline. You have to set plans up to be automatic. The entire secret to saving is automation.

When people save automatically for college or to buy a home or retire—or all of the above—they actually get it done. The challenge is just in taking action. A lot of people know what they are supposed to do, but they don’t do it.

So how do you change that?

It comes back to financial education. This stuff is not taught in schools, so unless you have someone who got in front of you and pushed you early on to do these things, it’s challenging.

Think about a 401(k). Most people start work and get an email to sign up. But if someone doesn’t tell them why they need to do it, they may never do it. Or if an employer auto-enrolls them, then they may think they’re done. [But] it could be just a default contribution of 3 percent, so they’ll end up with a low savings rate.

Most people don’t have someone who pushes on them. Often decades go by before they realize it’s time to get serious with their money. If you can get young people to save and invest early on, their whole life will be different.

What advice do you give when it comes to investing?

Have a diversified portfolio with stocks and bonds. When it comes to your money, boring is really good.

If you were to distill the principles of finishing rich down to a few steps, what would those be?

Number one: You have to pay yourself first. Save at least one hour a day of your income (that’s about 12.5 percent of your gross income). And save it automatically.

And don’t ever carry bad debt like a credit card balance or a car loan. Drive a car off a lot and it goes down in value 30 percent. If you’re buying real estate, that’s different. You borrow money to buy assets that go up not down.

What’s the best money advice you ever got?

Benign neglect. It came from Bob Gardiner, or Robert 'Stretch' Gardiner, the former head of Dean Witter [which later became Morgan Stanley, where Bach worked]. He came and spoke to our clients. And I said, 'Can I take you to the airport?' I wanted to spend more time with him. I asked him for his best advice and he said the secret to building wealth is to buy quality and don’t buy crap. And if you buy quality and leave it alone, it will make you wealthy.

What’s been your best investment?

The most important investment—and I heard this in an acceptance speech by Tom Hanks—is to bet on yourself to win. The moment I heard that, I got chills. I thought I need to bet on myself to win.

No one else knows what you can do, and you won’t know unless you try. The way to live and to not look back with regrets is to go for it—to bet on yourself.