Authors: David Bach and John David Mann
Most people don’t learn about finance. Because of that, a lot of people have little savings and high debt. This book breaks finance down into three easy steps that anyone can follow: save a little bit of every paycheck into some kind of investment, have that money withdrawn from your paycheck and deposited into that account automatically, create a plan for the future.
This book is coauthored by John David Mann who wrote the Go Giver. It has a very similar feel. Sound financial knowledge is weaved into a story that keeps it interesting. The book is short and can easily be read in a couple of hours. I prefer The Automatic Millionaire (also by David Bach) over this book for its more in-depth knowledge. However, this books simplicity and story just might motivate you to get your finances into shape.
Disclaimer: These are my personal notes about what I found important. They are not a replacement for reading the book, which I recommend you do.
If you don’t know where you are going, you might not like where you end up.
The picture (goal) happens first in your mind. That picture is where it all starts. Its what guides it.
Where you stand and what you see from there is the key to putting together the right picture. That’s what creates the perspective you want.
When people make more income, they just spend it on more stuff.
The Three Secrets to Financial Freedom
Pay Yourself First
- Make sure your money goes to building your life. Pay yourself first.
- Pay at least one hour of your time per day into an investment account. Choose options that can be taken out of your pay before tax such as a 401K. Saving $5 a day with compound interest at 10% will earn nearly $1 million after 40 years. Over double that with $10 a day.
- A small amount each day can make a huge difference.
- Paying yourself first allows you to put yourself first and be better prepared to take care of others.
- Everyone thinks they understand it, but almost no one does it.
Make it Automatic
- Budgets are hard to follow and easy to break. Don’t set a budget. Instead, make your savings and investments automatic. Setup automatic withdrawals and deposits from your bank or paycheck.
- The government already uses this system to get its percentage.
- Tax deferred plans will be worth nearly triple taxable accounts in 30 years at the same rates. It’s better to pay your taxes later.
Live Rich Now
- Plan for the things you want to do. They give you reason to save and keep your life interesting.
- Create a list of your plans and dreams and a timeline.
- Is the way you spend your money lining up with your dreams and goals?
- The first two secrets are how. This is why.
Myths of Money
Myth 1# Making more money will make you rich
Most people don’t have an income problem, they have a spending problem. As your income grows, your money problems grow with them.
What sets you for life isn’t more income but smarter saving.
Myth #2 It takes money to make money
Wealth can be built in small pieces everyday. For just $5 or $10 a day. If you find your already struggling to pay bills, you may need to give up something like your daily coffee.
Myth #3 Someone else will take care of you
You must take care of your own finances and know where you stand financially. You have to be honest with yourself. No one will watch out for your financial needs but you.
Women should consider it more than men because they will live longer.
Money affects your entire life and can ruin relationships if it isn’t talked about.
When you own, you are taking control. When you rent, someone else has control.
Its not about punishing or depriving yourself, its about changing your habits just a little.
You can buy the things you want, as long as you pay yourself first.
The wealthy spend their money on things that truly matter.