How David Bach Became a Millionaire (and the Rest of Us Can, Too)


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.

When 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.