The Automatic Millionaire Book Summary by David Bach (English)

The Automatic Millionaire Book Summary – Do you think that being a millionaire is impossible for you? Do you think that you will never get that rich or that you will never go out of poverty? Well, this book will amaze you. Here you will learn simple steps you can do to invest in yourself and have a better future. Saving $5.00 a day is enough for you to become rich and successful. Saving $5.00 a day is enough for you! to have financial freedom and happy retirement. Right now, you can start your journey to become an Automatic Millionaire.

Who should read this summary?

  • Employees
  • People living from paycheck to paycheck
  • Young adults
  • College students


David Bach is a best-selling author, entrepreneur, and motivational speaker. He is a trusted financial expert. David is also the founder of Finish Rich Media and co-founder of AE Wealth. Aside from being a television personality, David also offers podcasts, financial classes, and speaking events.

The Automatic Millionaire Book Summary


Anyone can be a millionaire. Believe it because it’s true. This book will show you how a small amount of $5.00 can change your life.

First, you will learn about the latte factor.

Second, you will learn how to pay yourself first.

Third, you will learn how to make it automatic. if you follow the principles in this book, you and your family will have a better future. Do you want to be a millionaire? Do you want to be rich, happy, and successful? Read on to find out how.

Meeting the Automatic Millionaire

The author David Bach was in his mid-twenties when he met his first automatic millionaire. It was when he was teaching an investment class for a local adult-education program. Jim McIntyre was a 52-year-old middle manager for a utility company. He was one of David’s students. One day, Jim asked David if he could make an appointment with his wife to discuss their financial situation. Jim plans to retire the next month. He worked in the same company for the last 30 years. He is earning $40,000 a year. David did not see Jim as someone rich, but he remembered his grandma telling him not to judge a book by its cover. And so, a few days later, Jim and his wife Sue arrived at David Bach’s office. They looked like average hardworking Americans. Jim was wearing a short-sleeved polo shirt. Sue, meanwhile, has blond highlights on her hair. She is a beautician. She is 2 years younger than Jim. What David noticed about the couple is that they look like high school sweethearts. They look like teenagers holding hands and bubbling with excitement. Before David can say anything, Jim talked about the things he would do once he retired. He is retiring so young, and David wanted to know how Jim was able to do it.

David said, “Guys, let’s not get ahead of ourselves. Most people I’ve met could not retire in their early fifties.” Jim and Sue looked at each other, and Jim said, “You don’t think we are rich enough, do you?” “I’m really curious about how you could possibly have enough money,” David replied. After that, the couple showed their financial documents. The first thing that David noticed is that they have no debt. As in zero. The McIntyres don’t do debt. They have two kids who have finished college. They have two homes listed. One is the house they live in, which is valued at $450,000. The other is a rental property which is valued at $325,000. David Bach found out that the couple had finished the mortgage on both houses. In their retirement accounts, Jim has a balance of $610,000 on his 401(k), and Sue has a balance of $72,000.They also owned $160,000 worth of municipal bonds. Plus, the couple has $62,500 cash in their bank savings account. David Bach was amazed. All in all, McIntyres has a net worth of almost $2 million. They were rich. They even earn interest on their investments and the $26,000 a year they earn from their rental house. David realized that Jim is indeed ready for early retirement.

David was impressed. He wanted to know how the McIntyres did it. “Did you inherit any of this?” He asked. Jim answered no. He said that what they inherited is knowledge from their parents about how to manage their money. David said, “You know, every week, I met people like you who take my classes. They look rich, but the truth is they are broke. There is one man who drives a brand-new Porsche and wears a Rolex watch. He looked loaded, but when David saw the financial statements, it turns out that the man had an $800,000 mortgage loan on his one-million-dollar home. The man also had $75,000 in credit card debt. He was only leasing the Porsche. He even pays alimony to his two ex-wives. The man has less than $100,000 in savings. Then here comes Jim and Sue McIntyre. They own a Ford Taurus, and Jim is using an 18-year-old Timex watch. They are happily married. Their kids are successful. Jim and Sue are retiring early.”What is your secret?” David asked. The couple answered that David already knows it, and he teaches it every day. The first step is to pay yourself first. It means investing money for your future first before anything else. As soon as you receive your paycheck, put in the money for your 401(k) and other investments.

The second step is to watch your latte factor. The small things you spend every day adds up, and it’s better to save the money and add it to your investment. If you buy a $5 latte every day, it is equal to $150 a month and $1,800 a year. You might tell yourself you cannot save, but if you just quit on your $5 latte every day, then you already have $1,800 on your investment. The third step is to make it automatic. You do not need willpower or self-discipline. The secret is to make it automatic. Arrange it so that a certain percentage of your salary automatically goes to your investments every month. Before you even touch your money, the percentage for your investments is already deducted. You can set this one-time, and for the next months, your money already goes automatically to your investments. Willpower and discipline are against our human nature. But if you automate it, you cannot spend the money anymore. That is how you pay yourself first. Before taxes and before anything else, part of your salary already goes to your 401 (k) or Individual Retirement Account. You can also invest in stocks, mutual funds, or index funds. What’s important is to set it and make it automatic. That is how you could be an Automatic Millionaire. We will discuss more each step in the next chapters.

The Latte Factor

Most people think that the secret to getting rich is to find more ways of increasing their income as quickly as they can. People say, “If only I could make more money, I’d be rich.” How many times have you heard someone say that? But ask anyone who got a raise last year. Ask them if their savings have increased. Their answer would probably be No. Why? It’s because the truth is, that the more we earn, the more we spend. This should not be the case. No matter what your income is right now, you can be an Automatic Millionaire. The McIntyres also started with a basic salary. But Jim said that the trick is to watch your little spending habits, to watch the things you don’t really need that you spend on every day. What most employees do is, go to work, make money, and spend money. Go to work, make money, and spend money. Most employees are working up to 50 hours every week, and still, they have no savings. It is time to break this cycle and save yourself from a future of poverty.

For example, David Bach has a friend named Gary who got promoted and increased his income from $50,000 to more than $500,000 over the years. But as Gary’s income increased, so did his expenditure. He bought nicer clothes and nicer cars. He ate at fancier restaurants and went on more extravagant trips. The fact is that Gary is not wealthier. In fact, he is more stressed today than when he has a smaller salary. Why? It’s because now, Gary has to maintain his expensive lifestyle. He has a country club membership to pay for. He also has to pay for his kids’ private schools and also their nannies. There is even the huge house and its mortgage. Gary cannot imagine living a simple lifestyle anymore. And so, he is stuck in the rat race. He has zero savings. Now, let’s discuss how David Bach created the Latte Factor. He once had a student in his investment course. The young woman’s name was Kim. She raised her hands in class and said, “David, your ideas are good in theory, but they cannot be applied in reality,”

“What do you mean?” David asked. “How can you say that?” “I am an employee living from paycheck to paycheck. I barely make ends meet each month. How can I save $5.00 every day? That’s not realistic.” Everyone in the class agreed with Kim, and so David started with his demo. He picked up a chalk and went to the blackboard. “Okay, Kim. Please go through your typical expenses on a regular day.”Kim said that every day, on her way to the office, she buys a double non-fat latte. She just cannot start her day without it. The latte costs $3.50. Kim also buys a non-fat muffin to go with it, which costs $1.50.That is already $5.00 spent. At 10 AM, Kim and her colleagues have a break, and they go to a juice stall. Kim buys her favorite juice, which costs $3.95. She also requests a juice boost. It is a dose of Gingko Biloba added to her drink. That costs $0.50. Then Kim also buys a PowerBar, which costs $1.75.David Bach wrote it all on the blackboard. So, in total Kim spends $11.20 every day, and that is even before lunchtime. That’s her Latte Factor. If Kim could just cut back on this little spending, she could save it and invest it in her retirement account.

Let’s say, $5.00 every day is equal to $1,800 saved in one year. On average, the stock market brings a return of 10% every year. By the time Kim is 65 years old, she would have almost $1.2 million in her account. And if her company matches her contribution by 50%, Kim would be saving close to $3,000 a year. If only every year, Kim has that automatic contribution, and it is compounding by 10% every year, by the time Kim is 65, she would have $1,742,467 in her account. Kim realized that her lattes are costing her almost $2,000,000.The concept of compounding is powerful. Einstein said that compounding is the 8th wonder of the world. If you could save 10% of your annual salary, then it gets a 10% annual return, and you keep your investment for the next four or five decades, you will be a millionaire. It is not impossible. You could start with $5.00 every day. That is the latte factor. If you are not a coffee lover, then you can cut down on cigarettes, candies, soft drinks, fast food, pizza, or anything. Find that small habit you do every day that you can quit on.

Learn to Pay Yourself First

The Latte Factor opened you up to the idea that you can start building wealth today. You already earn enough to start saving and investing. You already got what it takes to be rich. The next misconception we will talk about is budgeting. Most people believe that budgeting is effective. But do you know any budgeter who is successful and happy? There is a simple reason why budgets do not work. They are not fun. To budget means to deprive yourself now for the sake of your future. But just like dieting, this kind of budgeting has a setback. Anyone who budgets and deprives themselves is meant to break down and go on a shopping spree. That is why David Bach introduces a better method. That is to pay yourself first. It’s very basic and simple. What most people do once they receive their salary is to pay others first. They pay the landlord, the government, the credit card company, the telephone company, etc. they budget their money so that they can pay for everything. What is left is the small amount that they keep for savings.

That approach is absolutely financially backward. Because of paying everyone else first, most employees are left with no savings anymore. In America, for every $1 earned, 27 cents automatically go to federal income withholding taxes. Then, depending on the state, Americans pay 5 cents more for state income tax. After that comes Social Security Taxes and Medicare. Thus, 40 cents out of each $1.00 earned goes to the government. That means only 70% of your salary remains for you after taxes. So, do not pay the government first. Pay yourself first literally means pay yourself first. It is saving and investing money for your future first. What you could do is create a pretax retirement account. Examples of these are 401 (k) and IRA or Individual Retirement accounts. You could arrange it so that your retirement account goes paid first before your taxes.

Whom do you work for? Do you work for yourself and your family? Or do you work for the credit card company, the bank, or the telephone company? How much of your salary goes to taxes, your bills, and your savings? You might realize that much of your time and energy go to expenditure. That most of what you earned does not go to your family, your retirement, and a good future. Start to pay yourself first. Create a pretax retirement account. Put in 10% of what you earn in it. And make your monthly or yearly contribution automatic. Set it one time and put it on default. Every month, 10% of your income should go to your retirement account. For example, your annual income is $50,000. That is equal to $4,200 a month. That means you should save $14 a day. If you invest it in a retirement account for 35 years and you have an annual return of 10%, do you know how much money you would have? It’s $1,678,293.78. That is one million and more.

Now Make It Automatic

You don’t need to budget. You don’t need discipline. Make it automatic so that your savings go straight to your investments. Set it up one time, and the money will go to your retirement account or index fund every month. This is what Jim and Sue McIntyre did for thirty years. They created a Pay Yourself First system that automatically invests 15% of their income. Actually, they only started with 4% of their income. Then they slowly increased it to 5%, 7%, 10%, then 15%. The couple did not need to write checks every month. They did not need time, discipline, or budgeting to do it. The automatic system has already been set, so their money is well-allocated. David Bach himself also started small. When he was 25 years old, he began to save 1% of his salary. After 3 months, he made it to 3%. Then when he met the McIntyres, David realized it, and he told himself, “Enough is enough. I want to start young and finish rich.”He increased his savings for investment to 10%, then 15%, and 20%. David became a super saver. He was able to adjust to it. He realized that he could live a simple lifestyle and save more money for retirement. David was amazed at how he can live with less. He said it gets easier as you go along.

The key idea in making it automatic is that you cannot spend what you don’t have in your wallet. Since you paid yourself first and invested in your future, your money will not go to unimportant things. You should not depend on your company, the government, or your family to give you a stress-free retirement. Only you can do that for yourself. So now, let’s learn how you could fund your own personal retirement account and make it automatic. If you have a retirement account at work, use it. In America, the most common retirement account is called 401 (k). It is where your company matches your contribution every month, and your investment earns a 10% return every year. By making it automatic, your money will compound over the years, and you will be a millionaire upon retirement. Most employees assume that the company automatically enrolls them in the retirement plan once they are hired. But don’t count on it. Take it upon yourself to go to your human resource department to learn about the retirement plan.

Arrange for your contribution to be deducted before taxes and also set the percentage of your income that will go to it. If your company does not offer a company retirement plan or 401 (k), then you can create an Individual Retirement account or IRA. You can apply for it in a bank or brokerage firm. You can even submit your application online. There are 3 ways to pay your automatic investment for your Individual Retirement Account. The first is through payroll deduction. Your company will deduct the percentage of your salary and take it to your Individual Retirement account. The second is through deducting from your checking account. Your company will deposit the amount to your checking account. Then your bank or your broker can transfer the amount to your retirement account. The third way is through online banking.

You can set your monthly contribution as a monthly bill payment. Your bank takes your money to your retirement account. The bigger percentage to go to your retirement account, the better. Challenge yourself to save more because there are really many things that you can cut on. If you can save up to 10%, 12%, or 15%, then imagine how happy your retirement would be.

Always remember the miracle of compound interest. You need to start now. Because the earlier you start, the more time your money will have to compound. Don’t be like the people who say, “I can’t afford to save 5% of my income”, “My company does not match the contributions, so it’s not worth it,” or “Investing in stocks is foolish,” or “I’ll start saving next month.” With this attitude, you will never become an automatic millionaire. Instead, you should tell yourself, “No matter what happens, I will pay myself first.” “I will start to save 10% of my income, then try to increase it as much as I can.”The best time to save for tomorrow is today!


You learned about the story of the Automatic Millionaires, Jim and Sue McIntyre.There are three clear steps on how you can become Automatic Millionaires like them.

First, find out your latte factor. What is that one small habit, that one small thing that you spend every day? You can quit on it and instead save the money on your retirement account.

Second, pay yourself first. Save the percentage of your income and put it in your investment account. Pay yourself first before the government, the credit card company, or the telephone company.

Third, make it automatic. Set it one time and let your money go straight to your retirement account every month. If you make it automatic, you don’t need to budget or discipline yourself anymore. You cannot spend the money that’s not in your wallet.

Now you know how to become an Automatic Millionaire. Let the miracle of compounding interest work for you. Start saving $5, pay yourself first, and make it automatic. You are on your way to a happy stress-free retirement.

Leave a Comment