The Automatic Millionaire Mindset (Why “Boring” Money Wins) with David Bach
David Bach explains his Automatic Millionaire system: set up automatic transfers to savings, invest in boring diversified funds, and let compound interest do the work. He credits the approach with creating millionaires over 20 years and says a recent brush with meningitis convinced him to get his own finances in order.
Chapters
What would you say is a belief for you that you had to break in order to be the person that you are now?
Know that you don't need to be rich to become an investor. It doesn't need to be perfect and it doesn't need to be complicated. Don't spend time, especially as an entrepreneur, trying to pick which cryptocurrency to buy, which meme coin to buy, which NFT to buy. Just focus on your business and have your money be born. Good things happen to boring money. When your money's sexy, when something's like exciting to talk about financially, usually something's wrong with it.
David, welcome to the podcast. Thank you so much for coming on.
Thank you for having me. I'm really thrilled to be here.
I'm so excited. Well, last time I saw you was in Florence and you have this beautiful. For anyone who can't see of this beautiful Florence background that I'm getting to look at, but I think that that is, that's actually kind of where I want to start. We're going to go off topic because, you know. Yes. You've written ten New York Times bestsellers, which is absolutely mind blowing. Insane. I'm going to dig into that. Insane. But you live in Florence now. David, what would you say are your top three favorite things about living in Florence?
Oh, wow. First of all, behind me, for those who can't see, is a picture of the Ponte Vecchio. That's not actually the point of Vecchi Live. It's classic green screen. But my favorite things about living in Florence, I love living in Italy. Billy's an incredible country. So I like the pace of life in Florence. I came from New York City. In New York City. I was there for 18 years. I'm a city kid. I lived in San Francisco before that. I. There's a slower pace in Italy. There's a slower pace in Florence. You learn how to slow down. At least I have gone through the learning process of how to slow down to the speed of life. Right. Because like, I'm a very high energy person like you, very high energy of an entrepreneur all my life. Go, go, go, go, go. And in Italy, you learn to slow down because if you can't learn to slow down in Italy, Italy is not the right. Europe's just a different pace. In Europe, people work to live, they don't live to work. And I, you know, we got to meet through your friend Rob Murgatroyd. And I know Rob's gone through the same experience. It's like it, it Transforms you, if you let it transform you in a good way. So living in Italy has transformed me because of the people, speed of life, the beauty, the food, the friendship, the fun. Like that's it. I mean. And so a lot of my life is, in a way, it feels like being back in college. You know, freshman year in the dorms, it's a. It's one party after another.
That's one thing I see with following Rob is I'm like, you're so social there. Like, you're, you're so incredibly social. What would you say the social life has done for you? Just creatively entrepreneur wise? What does that look like?
Oh, wow. Well, first of all, it's totally different, right? Again, I live in New York 18 years. My wife is there 30 years. We were both high power career people and we had friends in New York. But, you know, everybody's so busy that it's really hard to have a real social life and totally real, deep, meaningful friendships. You plan a party in New York, you plan it two months out. It's this big deal to get people rsvp, who comes, who shows up kind of thing. Here you. It's a Thursday and you send out a message to 20 friends about having dinner on Saturday. And 20 friends get back to you in 10 minutes and say they'll be there. Right? Like so. So, because so many of us have moved from somewhere else and we've all kind of moved here because we have kids and we're family focused and we put our kids in their international school. We have more time on our hands because a lot of us have kind of had reached that point of some financial independence. We have a lot more time to hang out together. And we do. We have a lot of, A lot of. It's almost overwhelming how much social stuff it can be. Because in the beginning you just want to do everything. You want to go everywhere, you want to travel, you want to see everybody. And then you sort of have to learn to slow down. But it's. I could do three things a day if I wanted to, easily. We could go out every single night if you wanted to. So I don't know. It's beautiful. We've made some really, really good friendships here, like, kind of like going back to the days of college because you have so much time. Like, you really get to know people because they're away from their environments too. And then I think the last thing is that you make these kind of friendships that when people, A lot of people come here for a year or two and Then they move back to wherever they came from, and they kind of came here for a sabbatical. Those friendships become friendships for life. You know, I can go travel all over the US and kind of around the world now. People who I've met here, when I go there, I can go see them. And it's like catching up like it was yesterday. So that's really special. I highly recommend it. You and Chris would love it.
Rob is always like, what, what are you thinking? You thinking of coming over here? What would you. If you could bottle something up for all of us entrepreneurs over here, because you were us, if you could somehow allow us to get a piece of it, how could we translate some of.
That back here 100%? I would not. First of all, I would not wait. So don't wait to quote, unquote, retire. Like in the Automatic Millionaire book. This update, I talk about the idea of taking mini retirements. And so a lot of my entrepreneur friends hear me talk about how I did this and see how it's changed my life. And they go, oh, but I could never do anything like that. And I go, first of all, I didn't just do it right. Like, I planned it 18 months in advance. So there was a whole planning stage. How to get the business ready to run without me, how to bring my kids and move them to another school. We were only going to go for nine months originally, but I would tell somebody, you don't have to go for a year. What I would say is, if any part of you wants to go live in Europe or move somewhere else, go for three months. Like. Like, if you. If you and Chris are like, you know what, that would be actually really cool. All right, then the question is, do you really want to do it? Where do you want to go, and when do you want to go? And as an entrepreneur, like, your year, probably this year, is very booked up. But if I went into your calendar and started looking at the middle of next year, I bet between June of next year and the end of next year, I'd find white space. And so, like, if it were specifically you and Chris, I'd be like, okay, well, where do you want to go? Let's work on it for 18 months out. I have friends who I've coached over a period of time that took seven years for them to take a break, but now they. But they've taken it. Right? So a lot of times you get the idea, but it takes you a while, kind of has to formulate. I just wouldn't wait because people take their life and their health for granted. And I wouldn't, I wouldn't wait five to 10 years. I would figure out how to do it next 36 months. Because once you do it once, you will realize that there's a whole world out there for you that you'd probably never even thought was possible.
Oh, I, I love that advice. And that's a great, that's a great place for us to open.
You.
This is your 20th anniversary of the Automatic Millionaire. You've written 10. Is, is that insane to you?
You know, it is insane because the time has gone by like this so fast. I've been doing this for 33 years. This is my 10th New York Times bestselling book. But this was the first. This was the book I launched on Oprah 20 years ago.
Wow.
You know, when the book launched on Oprah, it was the number one best selling book of the year and it spent 31 weeks on new York Times bestseller list. It sold millions of copies. And this is the fifth time it's been updated. So to put it back out in hardcover for a 20 year anniversary edition and put it back in another generation's hands is like, super, super satisfying. And it's been incredible to hear from readers too. Like, you know, how their lives have transformed.
Did you have any inkling, like, tell me. Just the, the process leading up to this. So this is insane to me that it's now updated the fifth time as well. And the reason for that is because so much has changed while so much has also stayed the same. Which we're going to dig it. We're going to dig into that. But it is crazy that a book on money that you wrote 20 years ago and even though there's updates is still like, people, this, there's so much wisdom in this book that's so life changing. Like, where were you at when you launched this book? Did you know that this was going to be what it is?
Oh, Laurie, you ask such good questions. Because from an entrepreneur standpoint, like, if I go back in time, I had a very successful career at Morgan Stanley and I was a financial advisor living in the Bay Area. And I had written two books. I'd written my first book for women in money was called Smart Women Finish Rich. Yep. And that had started my career. That was like my whole mission in life. I wanted to teach a million women to be smarter about money so they could protect themselves, protect their families, and teach their kids about money. Like, I had this whole mission and that was the beginning of my career and my business Outside of Morgan Stanley was I created a financial education company to teach millions of women about money and ultimately did that and then create a program for couples and money. But in the beginning, it wasn't a real business. It was like, I wrote Smart Women Finish Rich and wrote Smart Couples Finish Rich. And I was a financial advisor running around the country trying to spread the message. And I came to the point where I was like, all I really want to do with my life is teach people about money. I don't want to be a financial advisor anymore. And I was flying back and forth to New York constantly to do television shows is before you could do things like what we're doing, and you would have to go to New York and go on a TV show to get the message out. And I said to my wife, you know what I want to do? I want to move to New York, and I want to just really, really try to go big time with this. And to her credit, she's like, well, if you really want to do this, and let's go. This is. You know, we didn't have kids yet. And that was the first entrepreneurial leap. Right? I mean, that was me leaving total, secure, safe career. Yeah. Like many of your listeners who have done right or in the process of doing. Like, I didn't leave my day job until my other business was getting going. You know, I stayed at Morgan Stanley and worked on a plan there for four years before I really left. Before I was like, okay, I can leave Morgan Stanley. So when I moved to New York with my wife, we knew no one, and we knew we had about a year's worth of financial run rate. Right. Like, we knew the business had this much money coming in for a year. I was leaving my Morgan Stanley career wasn't going to be easy to go back to that career. So when we went to New York, we had a. We, in my mind, had to make it work. Like, even though I didn't necessarily blow up the bridge behind me, I felt like I did right. When I landed in New York, it was like, I didn't have the idea for the automatic millionaire book. My idea was, I'll move to New York and get on national television, and that will change my. That'll change my life. That'll give me the ability to reach more people. Then I got the idea for the automatic millionaire book. And so everything kind of started to happen. I was on all the morning shows. I was on the Today show, cnbc, cbs, Fox. And then I got the automatic millionaire book idea. And then, you know, Things just took off.
What was that kind of all in moment for you? Like, I know a lot of entrepreneurs, like, sometimes it's hard to differentiate between, you know, like the excitement for it and if you should do it. Like, what do you tell people when they're getting that sort of message that was coming through for you, like around Automatic Millionaire, you know, well, it's even.
Before the book, right? It's, it's that moment in time where, you know, you want to make a change. And that happened to me actually because of my grandmother. My grandmother, who is my first money really my, my first mentor. That's why the, the Smart women finish rich exists, because my grandmother taught me about money at a young age. And the book was very much based on her lessons because she became a self made millionaire starting with Nothing at age 30, without a college education.
Wow.
She was this remarkable woman that completely changed the direction of our family for generations. And when she, before she passed away, my grandmother had a stroke and my grandmother, we had to fly her up to the Bay Area and put her in a nursing home. And I was finishing Smart Women Finish rich. And I asked my grandmother a question about, you know, did she have any regrets in life? And what happened was she shared with me that she did. And she went through five of them. And when she took me through her regrets, she went all the way back to age 17 and she could remember them all very specifically. She was 86 at the time. Wow. And she said, the lesson's not in my regrets, it's in why I have them. And she's like, so that's my last lesson to you. And she said, the reason I have these regrets is that I came to a fork in the road in my life and there was a choice to take the safe road or take the risky road. And every time I got to the fork in the road, the little girl inside of me wanted to take the risk. And the big girl inside of me said, no, let's take the safe road. And all five of my regrets are what could have been if I had taken the risk. And so she put her hand on me and she's like, David, you're still young and you're going to come to forks in the road. And my last gift and lesson to you is, let your little boy come out and play when you get to that fork in the road. And you. And she said, you know, it won't just be the big boy, that's you. It'll be your parents, you, company society. There will be other people telling you why you shouldn't go for your dream. And I'm here to tell you, not knowing I'm probably going to never get out of this bed, that you, at that fork in the road moment, should let your little boy come out and play. And I went back to my office, Lauren, and sat in my garage underneath my office in Orinda Theater Square, and started crying in the car and. And looked in the rearview mirror and told myself, okay, three years, David, and we're getting you out of here, and we're going to go do what you really want to go do with your life, which was I wanted to go teach at the time, a million women about money. And so that was the moment. But in between the moment of that and then actually doing it is all the stuff that goes on with, as an entrepreneur. So much fear, right? Like, it's scary to walk away from what you have to the unknown. It's. And by the way, you do this over and over again as an entrepreneur. This. I don't know that the fear actually ever goes away. You just become a little bit tougher, you know, I mean, you've gone through so many rides up and down, and you learn. You also, like, kind of learn the lessons of, like, okay, when things are really bad, that doesn't mean they're staying bad. Right. Things get. Things improve. Almost everything horrible that's ever happened to me during my career, there's always been something beautiful at the end of it. Right. Like, out of everything that's gone wrong, something else good comes from it. So I keep reminding myself of that all these years.
So it's, it's. That is a belief that has served me, that has never let me down. What a beautiful story did that get you? You know, you wrote, smart women finish rich. What made you so passionate about helping women? I know you said it's your grandmother, but are we really that, like, are women so different from how we think about money? What have you found through the years and how we view money and what we need to know.
You are different. And I'll tell you what's different. I'll tell you what, what my motivation was. So I didn't know how different things were as I grew up with a grandmother that was in charge of the family finances. Okay.
Yeah.
So. So I just thought it was normal that women were in of the money. My grandmother was teaching us how to buy stocks at age seven. Wow. She, she, she was in charge of the finances of my family, of her family. And then she taught my father how to invest and he became a financial advisor. I. I just thought this was how. W. I just thought this how it operated. So I come in the business with my dad, who's a financial advisor, and in the first month, I sit in meetings with him. And unfortunately, or. Or, you know, depends how you look at this. In the first 30 days of my career as a financial advisor, I sat in three meetings almost back to back, in less than 30 days, like, week after week with widows where the husband had died. And in all three cases, the husband had died suddenly. It wasn't like they had been sick. They. They dropped dead. And in the third, in every meeting, the wife would turn to my father and say, marty, my husband Bill told me, if anything happens to me, I just come in here, and you would take care of me. So tell me what I need to know. Where, where, where, where? How. How do I read a brokerage statement? Where. Where is my money coming from? How do I write checks? So, like, the third. The third meeting like this, I. Lori, I closed the door to my dad's office, and I go, what is going on in here? And he said, what do you mean? I'm like, dad, you have all these clients dying, and you're sitting down, meeting after meeting at the worst possible point in their life, teaching these women how to read their broker statements. And he said, oh, well, David, your grandmother was not the norm. I go, well, what do you mean? He's like, well, we have all these clients that are older, but the husbands are in charge of the finances. The wives might come to some of the appointments. It's really the husband who's been in charge of the money. And I said, well, that's dad. It's not a good system, right? You can see the writing on the wall here. So I went to lunch with my mom. My mom had been involved in the business, told my mom what was going on. Third meeting I've had with a widow, and I said, you know, I think I'm going to teach a class for women and money and just invite the women clients. And my mom had been in charge of the database back in the day. She's like, oh, that's a great idea. She goes, but, you know, it's not just widowhood, it's divorce. So she's like, all my friends are getting wiped out by divorce. So, Lori, what happened is I basically create a class for my women clients, and I started talking about these issues. What are the issues that affect women? Number one, you live longer. You don't live a little longer. On average, you live seven to 10 years longer than a man that's in your life. My dad passed away a year ago. My mom is 84. She lives in a beautiful senior living facility. Go to any senior living facility around America. Go into the dining hall where they have lunch or dinner, and you will notice that 80% of the people there are women. Because you, you outlive men significantly. All my grandmothers outlive the grandfathers. So you live longer. So you need more money. That's number one. Number two, you have less money put aside for retirement. Why? Because, on average, women take a period of time off for having children, childbearing years. And that impacts how much money they set aside for retirement accounts. So there's less money put in retirement accounts and there's less money put in Social Security. So women have financially less money set aside. Husband gets sick first, money the wife, often they go through the money when the husband's sick, so the wife is left with less. And the other issue is divorce. When women and men get divorced, if you don't know where the money is, you don't get half. So women often have their income levels drop and their net worth drop following divorce, and a man goes up. So these are all the things I talked about for years. And my message to women has basically never changed, which is, I don't care if you're married to the local bank president, I don't care who you're married to. You need to be in charge of your own finances. And today what's different is women are staying single longer. More women are running company, more women are starting businesses than men are. And yet often women still delegate the finances. And if there's one thing you should never delegate in your life, it is your financial well being. I'm here to tell you whether you're married, single, widow, divorced, if you want to be powerful over your life, you have to be in charge of your finances, period. Like, drop the mic, end a discussion. These are some of my last podcasts I'm doing. You have to be in charge of your money. You have to be in charge of your economy. And it's not enough to be a successful entrepreneur if you're not actually dialing in your finances personally. And we can. And so many entrepreneurs don't take care of their personal finances.
What have you seen around when you start working with women or when this whole conversation started? Do you have to work with a lot of mindset first? What does that look like?
Oh, it's a very good question. So in the beginning, when I First started doing these seminars, they were our clients, right. So but they would bring friends and women would get up in the room when I'm telling these stories and they would tell more stories. They go, what he just said is totally true. And you know, and so the beauty of teaching set well, you do women events. You know what this is like, the energy in a room when it's just women without men is totally different. Totally. Because what happens is you will, you share at a completely different level. You bond differently. So for me, being the only man in a room, I was sort of just like, you know, almost like a fly on the wall. Even though I was teaching in the front, I was also listening. Right. And so I think people who came to my events were already pre selected. They came there because they wanted to be better with their money. They came there because they knew that there was something they needed to do. I don't know that I meet many women that say, you know, this isn't important. I think 30 years ago there wasn't as much of a realization as how important it was. And I think today, whether you're in your 30s, your 40s, your 50s, or your 60s, you've seen your mom go through financial issues, you've seen the impact financially of divorce, you've seen how women are living longer. You know, these things are real issues. It's just often people aren't are dealing with it. And I think my experience has been women make better investors than men. They are way better at being long term focused. They're not investing on tips in gambling. All the studies show women actually have better performance on investing. And when women get involved managing their own money, they realize, you know, this actually isn't that complicated and I can totally do this. And then it's very empowering. And then they tell their friends about it.
Mm, yeah. One, it's one of the most empowering things. It's funny because it's one of the scariest things to look at. If you haven't looked at it for some reason, I don't know why, it just is. And then once you start, it's like you don't ever want to stop because you realize so everything comes from that. You can do so much with money. So I know throughout your career and throughout your life, you have probably changed the way that you perceive money based on all of your life experiences and what you've learned and what you've gone through. But I know that when you and I got got to meet in person in Florence, we were, I was a Part of Rob Murgatroyd and Kim Murgatroyd's mastermind. And you were coming in to speak and you had just gone through a pretty life altering experience that kind of changed the way that you looked at money. And you almost, you almost weren't able to come. Can you kind of tell me about that?
Yeah. Well, first of all, it was such a special small event to meet you at and I had just really recently had met Rob and he had asked me to come and talk to that event as really like as a friend, as a favor.
Yeah.
And I had said yes, but I had almost died and been in the hospital a couple months right before. I had gotten meningitis and ended up in the hospital for 17 days. Was in a coma for four days.
Oh my God.
So, you know, when I came out of the hospital, first of all, I wasn't all better by the time I saw you. I was, I was, I was able to be able to be there, but I wasn't fully. My brain was fully turned back on again. And you know, I have always talked about the idea that you should live your life to the fullest.
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Financial planning has been around looking at your values, looking at what's most important to you and living your dreams now. And I had talked about, in fact with your group, but groups that whole year I talked about this idea of like, if you only have three years left to live, what would you do? Like, stop assuming you have your whole life right. Here I am telling people, stop assuming you have your whole life. Ask yourself, if you had three years left to live, what would you want to do? What would you regret not doing? Doing. Then ask yourself, what if you had a year to live, what would you regret not doing? And do those things? And I was already living that life. You know, that's why we lived in Florence. That's why I've done so many things I've done is because I've constantly asked myself that question. And almost dying in my 50s was like another reminder of like truly don't wait to live your best life. That's the spiritual side on the, on the business side and the financial side. I had the whole wake up call of like, whoa. Like I've been managing our own, my money, our, our family's money. I'm, I'm a f. This is what I do for a living. Of course I've managed our own money and Alicia was complete. My wife is completely uninvolved. She, she knew the money was there, but she's exactly what I talk about in my books. Had I died then she would not have known what, who. She wouldn't have wanted to manage the money, she would have had to go out and find a financial advisor. And so my realization in the hospital was, and people should ask themselves this question, if my partner died tomorrow, what do I need to know about the finances? And the answer is everything and everything. Especially when you have your own businesses like you and Chris both have. You have your own. You have separate businesses. What would Chris need to know about your business? What would you need to know about the business? What would he need to know about the finances? What would you need to know about the finance? Everybody needs to run these fire drills. And so when I ran that fire drill, being in the hospital, not sure how long I'm going to be in the hospital, not sure if my brain was going to turn back on, not knowing the password to my phone, my computer, my bank account. None of that was coming back to me. Once I got out of the hospital, I fixed everything. You know, we hired a financial advisor. I engaged my wife in the process of hiring a financial advisor. She now gets involved in all the calls with the financial advisor. We redid our will. We cleaned up our trust. We cleaned everything up as it really should have already been. But I wasn't expecting to get sick at 55. Right. And, you know, in Smart Women Finish Rich there I talk about the average age of widowhood is 59. 59. And I am 59. And I've had three best friends, Lori. Three true best friends, my best friend, two best friends from high school, and my best friend from college, my roommate. They've already passed away. Wow. Three guys passed away under the age of 59. So, you know, one thing I wanted to say, because I know most of your listeners are women, is like, these things really matter. Actually, you know, like, if you were going to end this podcast and we said nothing else and you just were like, what if you're married? What would I need to know if my husband died tomorrow? You would need to know everything. Yeah. Smart Finished Rich is like a bible. You can take it out, you can open it up, and you can literally go through it like a manual. Like, this is all the stuff you need to know. Sorry I cut you off.
No, I love it. Every book is a masterclass. And I think that's the great thing about, you know, especially you re releasing this, is you can sit and get. So, like, get a masterclass in Automatic Millionaire and Rich Women Finish or Smart Women Finish Rich. But what would you say is a belief for you or a belief from when you grew up that you had to Break in order to be the person that you're. You are now like a money belief.
Oh wow. Such a good question. I can tell you exactly. Okay, I, I believed when I was young that if I made more money then I would be rich. I believed the myth that you had to make more money to save and invest. So, so when I came out of college, first of all, I was in credit card debt like so many people, but I came out of college and, and I had a, I was in commercial real estate and I was being paid like twelve hundred dollars a month. Right. It was a draw against commission. And I thought if I can make $50,000 a year, I'm gonna be, I'm gonna be, I'm gonna be rolling. Yep. And then I made $50,000 a year and I was not rolling. I was like, well of course, Laurie, it's not enough money. I need to make 75,000. But when I made 75, I spent 85. And then I'm like, well of course it's not enough, I need to make a hundred. And then I got to 100 and I still was spending everything I made. That's actually when I met the McIntyre at. The automatic millionaire book is based off of this ordinary couple that came into my office able to retire in their early 50s and their income was $53,000 that year. And they had total financial freedom. And here I am, this, this kid who's making a bunch of money and I'm still living paycheck to paycheck. So I was under the mistaken belief that you have to make more money to save more money. And that's what a lot of people think. And I can tell you that you can be broke on any income. You have to make the decision to change the way money flows to you. The automatic millionaire is a masterclass in paying yourself first, putting your finances first, whatever it is. And in business you've got to make sure profit dollar number one goes to you because we have a lot of entrepreneurs listening. They're self employed and they've been working with accountants who tell them how to run all their expenses through the business. And as their income goes up, they keep increasing their expenses so they don't pay taxes. And at the end of the year they're still broken so they have more stuff, have a nicer house, they have nicer cars, they have nicer clothes. But if the business doesn't keep going up, they then turn upside down when the economy changes. So it's not what you make, it's what you keep Matters.
Okay, so you say there are 10 specific things that we should be doing right now with our money. Do you want to walk through some of the ones that you think are most important for my demographic?
Yeah, absolutely. Well, gosh, we've covered so much stuff actually as a pre. Leading up to this. But so I would go. I wrote some of these things down so I don't miss anything. Number one, decide what you want. People work in business all the time, and they're not clear about what they want. You have to decide what is that you actually really want. Yeah, what is it that you want? It does. What is it you want? Why do you want it? And then are you actually working on what you really want? And then who's done that already? Because you don't have to figure out everything on your own. Like, you teach master classes, right? You've got networking. Like, the best way to learn faster is to learn by people who've done what you want to do already. But you have to get clarity around what it is you really want to do. This is the mindset part. I fundamentally believe in manifesting, but my whole career has been about manifesting. But manifesting is not sitting on the couch with a, okay, I want this. It's actually, you have to move your feet, right? Like you. The only way ideas actually come to fruition is if you work on them. So the mindset part of it is that now if I break into the money issues, these are the things you have to do. Okay, I got. I have nine of them here. Number one, these are. These are not sexingly spit. So everyone. Okay, so number one is you need a will. You need a will or living trust. So 60% of the people listening today, because it's just a statistical average, 6 out of 10Americans don't even have a will. So you need a will. You need a living trust. Depending on the state that you're in, if your will is over five years old, it needs to be updated. Most people do wills when they have kids, and their will now is 10 or 15 or 20 years old. It's almost. In many cases, it's useless. So you have to have a will. Number two, you need your beneficiaries. I'm giving you, like, real concrete things here. You need your beneficiaries updated and correct on your IRA accounts, your retirement accounts, and your insurance policies. If you've gone through a divorce and you haven't updated your beneficiaries, there's a really good chance you've left somebody on, like your ex Husband who shouldn't be the beneficiary. Can't tell you how often I see that. Okay, number two, you need insurance if you have children. So if you are running a business and you're maybe your husband's running a business, but you don't have a large net worth yet, that's liquid, you need to buy, at least buy 1 million to $2 million term insurance policy to protect your family for a period of time. Super cheap. Go online, Google how to buy term insurance. But you need a protection plan for your family in case one of you passes away. That was the ugly stuff. That's boring. Important, but boring. Third thing you need is you need to document a box, a file folder, something that has all this information in it. So like in the case of when I was, you know, in the hospital, my wife could actually go to a file folder that's sitting on my desk. It's the orange, you know, binder with everything. You need that. All right, now into the money stuff. Number four, you need to have a pay yourself first plan. So what that means is you need to be paying yourself first at least one hour day of your income. What you should be saving is 10 to 15% of your gross income off the top away in a retirement account outside the business. So if you're self employed at a minimum, you should be setting up a SEP, IRA or a Solo 401 plan. Or if you're making a lot of money, you don't have employees, a defined benefit plan. I cover all of those things in the automatic millionaire. But you can be saving 10, 20, 30, 40, 50, even upwards of $250,000 a year tax deductible. And so you should be doing that. That's your pay yourself first plan. Now after that, the next thing is you need to be paying yourself first automatically. And the money that goes in these retirement accounts should be invested a combination of stocks and bonds. So the money's got to grow in order for it to grow. Can't be sitting in a money market account or CDs. So it should be 70%, 60 to 70%. I'm giving you really specific stuff here. 60 to 70% stocks, 30% bonds. It's a balanced portfolio, super boring. But that boring portfolio over the last hundred years has averaged over 8% annually. And even though you could be 100% stocks, I don't recommend being 100% stocks. You want to be completely diversified. And I recommend in the book index funds. So I walk through all the funds that you can buy that are Low cost. You can do it yourself or you can hire an advisor. Do it. But don't spend time, especially as an entrepreneur, trying to pick which cryptocurrency to buy, which meme coin to buy, which NFT to buy. Just focus on your business and have your money be boring. Because when your money's boring, good things happen to boring money. When your money's sexy, when, when something's like exciting to talk about financially, usually something's wrong with it. Just. Yeah, I'm just telling you, like when you're at the cocktail party and someone's telling you, I got this thing for you, oh my God, I made all this money and like, yeah, then tell me about it in five years. Let me know how it turned out for, for you. Most entrepreneurs, because we're such optimists, we always want to invest in other people's startup businesses. If you are dependent on your own business, that's your startup business. You know, every time I get on stage with my entrepreneur friends and we have conversations about investing in other people's startups and I go, how it work out for you? Right. Like I've invested in so many companies, but most of my money's been invested in publicly traded companies. So I think keep the focus on your own business, use your own capital to keep growing your own business. One of the things I tell you is debt, pay the debt down, right? So on mortgages, if you have a mortgage, if you do it as a bi weekly mortgage payment plan where you pay your mortgage half every two weeks, you'll pay that mortgage off an average of five years sooner. Just that alone will save you hundreds of thousands of dollars in interest payments. And I recommend going even faster than that because as soon as your debt's paid down, you get to a point where if you don't want to have, if you don't want to work, you don't have to work. And then that leads me to emergency money. Most people today don't have enough money set aside in case of emergency. They don't have enough money set aside in a money market account or a cash account today you should have six months to a year of expenses this happen. And if you're an entrepreneur, you want more, not less. We've had really since COVID we've had an incredible run here like these last three years. The economy for many, many people have just been amazing. The stock market's been amazing, real estate prices have been amazing, but things don't go up forever. So with AI and things are changing a lot of people's businesses will change a lot next year or two. And even if it's really good, right now, I would be stockpiling some cash for the rainy day. You know, my grandmother used to say, always have an umbrella for that rainy day. And that's cash. And cash is not a credit line, by the way. Credit lines are nice to have, but credit lines are not cash. You know, when people have credit lines and they think that's their cash, and then all of a sudden the bank pulls the credit line. That's not your cash. Cash is cash. So I would be taking money every month that you're. That's coming in, and I'd be setting it aside in an account that you're like, we're not touching this. It's there for emergency purposes. You know, if your partner's like, well, we need a new kitchen. You're like, yeah, not so much. Not right now. We can get a new kitchen, but it's not coming out of that account. Yeah. And I guess I'd give you two more here because I Spitfire dolls to you, But I would invest in you. So I think the best people go, you know, what's the best investment I've ever made? It's in myself. Invest in you. Invest in your learning, invest in your growth. The only way you continue to get better is if you continue to get better. And the way you continue to get better is by putting yourself in rooms where you're around other people and you can grow and learn. And rooms can be this. Listen to a podcast is a form of a room. Books are a form of a room. Classes online are a form of room. And rooms with people are a major form of a room. So putting yourself in environments where you're around people like you that are also growing, it's worth its weight in gold, right? I think people always say, your network is your net worth. Your net worth is based on your network. It's not the money that's so important. It's relationships that are so valuable. And so then that leads me to the last thing, which is own your own economy. Whether we're in a good economy or bad economy, the only economy that matters is the one you're creating. It's the only economy you have control over. You don't have any control over where things are going to go. I don't have any control over. But we have control of our own businesses, we have control of our own effort, have control of our own money flow. So take personal responsibility for your own economy, and then your Family will be in fantastic shape.
Oh, those are so good. What would you say for somebody who is just like, this is kind of a new conversation for them, and they're like, oh, my God, I need to get my finances in order and maybe they don't have anything saved. Is there one of those that you would say to focus on or. We should probably read your book.
Yeah, I mean, the Automatic Millionaire is the beginning state. Like, you open up the Automatic Millionaire. It's a book you can read in literally two and a half to three hours, and it walks you by the hand step by step. And the steps are, first of all, pay yourself first automatically, one hour day of your income. Find your, I call it your latte factor. Figure out where your money's going so that you can see the power of spending small amounts of money and redirecting the small amounts of money into investments. Know that you don't need to be rich to become an investor. The reason I think I became so popular is I started talking about this idea that, like, look, if you can invest $5 a day, you can change your whole life. $10 a day is even better. And $10 a day, you start investing over decades. The next thing you know, you turn around, you have millions of dollars in savings. So the key is to just start. It doesn't need to be perfect and it doesn't need to be complicated. I've got kids who are reading the Automatic million who are 12, 13, 14, and 15. We just got an email from a kid who's 15 years old that's read the book three years ago and shared with us how much money he saved. And then we have emails from. I know, it's, like, amazing. He went to the library and got the book. I'm like, who is this kid? And we sent him a copy of the book. But the thing I will tell you is that decades go by in many ways. In days, you blink your eyes and 20 years will go by. And so you're going to blink your eyes and be 20 years older. And being 20 years old or with some savings set aside where you're safe financially is a much better place to be than being 20 years old or wishing you had done something 20 years ago going, oh, I was on that. I listened to that podcast that Lori did, and that guy said I should pay myself first. And I really wish I had done that and that I didn't. And when I was just at Joe Polish's event, I don't know if you know Joe Polish, but he's got A great program called the Genius Network. I was in Arizona and I did Joe's event, and that's a hugely successful entrepreneur group. And I asked that room of people, how many of you wish you had started saving earlier than you did. Every single hand in the room went up and there's. We had a room of young people in another room watching us virtually. And I'm like, kids, you know, you 18, 19 old, 20 year olds, look at all the girl, look at all the adults in this room. They're all raising their hand. Nobody says, oh, you know what? I'm really glad I didn't start saving and investing when I was younger. But if you didn't start investing when you're younger, the best time to start is today. Today's the best time to start. Wherever you are right now, wherever your feet are planted, now's the time for you to plant your feet and then start walking towards the direction you really want to go.
So is this what you would tell parents who have kids or what else would you tell them?
Well, with parents, with parents I tell you that you can teach your kids about money really easily. So Automatic Miller is a book I would give to them. But in the book I have all these compound interest charts. And I would start your kids with Roth IRAs. So, you know, for better, for worse. My kids got copies of this book and they're like, dad, seriously. And then they open the book up and the book I have a little note saying, okay, I'm giving you money for your Roth IRA. And you know, my 15 year old started a Roth, his name's James. We started his Roth IRA at 12. So he's got $24,000, Lori, already in a Roth IRA. And I showed him the calculations. You can go to this website, investor.gov and I go, James, if you save $20 a day, which I'm going to help you in the beginning do, by the time you reach your dad's age, you're going to have about $11 million in this Roth IRA account. That's all tax free money. And he's like, wow, seriously. So I would, I would start your kids young, I would teach them young. My grandmother helped me buy my first stock at McDonald's at age 7. She taught me how to think like an investor. She took me to a restaurant. She's like, there's three types of people. Those like you who come and eat here, you're a consumer. Those who work here for minimum wage, tough way to make a living. And those who own this place. And you can buy the stock in McDonald's today, and you can own McDonald's almost. And every time your friends come here, you'll make money from them. And she taught me how to buy my first stock at age 7. And my kids today, I did the same lesson for them, but they wanted to go to Shake Shack, so they own Shake Shack. So it's teaching your kids that you're a part of the American economy. Every single day, everything you do, you're spending money somewhere, and for the most part, everywhere. You spend money every single day. It's a publicly traded company. You have an Apple phone you're watching us on or listening to. It's publicly traded. You're on Spotify, listening to this podcast. It's publicly traded. You know, I can just go on and on and on. Everything that you're going to do, you're going to shop on Amazon. Publicly traded. Now, you don't have to own those individual stocks. You can buy an index fund and own them all. And I give examples of mutual funds in the book that you can buy, like VTI Vanguard's Total Stock Market Fund. You can own 3,600 stocks with one fund. Start your kids with that. Great place to start.
Well, this podcast is a great place to start because this was a masterclass. I'm so grateful for all of the wisdom that you've poured into all of your books, but especially you guys. Go and get the Automatic Millionaire. Where can we get it?
It's everywhere. All stores, Amazon, Barnes and Noble. You can also come over my website, davidbock.com and one thing we did is we put the first three chapters of the book on a podcast. David Bach, the David Box show, the podcast on our website. I can give you the link and so you can listen. Listen to the first couple chapters for free.
It's so good, and it's such an easy read. Like, you made it so understandable for everyone, which is incredible. So I'm so grateful for you. Yeah, it's really wonderful. Any last words that you want to leave with people? I know that this is which this is also. You keep saying this is like your farewell tour. So how is that feeling?
Surreal. Yeah, it really is. It's kind of feeling surreal because I've done a lot of the podcasts. I've done primarily. I've been with friends who I've known for 10, 15, 20 years. I did. I don't know if you know Marie Forleo, but I just did a podcast with her.
She's wonderful.
We were like, we Were like, in New York together and kind of crying over it. You know, it's been my career. Doing this work has been a total blessing. I have loved every minute of it. I've done this for three, 33 years. I actually don't know what the next thing is for me. People like, what's the next thing? I'm like, well, I'm going to go skiing. But I'm excited for the next part of my journey. I, too, want to grow again. And so my goal for myself, and I think it's a conversation to end with, which is, who do you want to meet? If you're getting to meet you 10 years from now, who do you want to meet? Who does Lori want to meet? Who's Laurie in 10 years? And what do you want to be looking back on over the next 10 years from now? What do you want to look back on, be proud of? And that's a big thing for me. Like, I want to meet me at 70, proud of myself for the new things that I did in the next 10 years. Because, like, you know, friends, like, you're seriously not going to write more financial books? I'm like, I'm not going to write more financial books. I've done 20 books. Like, this is my 20th go around with book launches. I might write other books, but they won't be financial books. I want to meet me as a new version. So I think, ask yourself, give yourself some quiet time here in the new year. Get quiet. I've been talking on something. Get quiet. Go somewhere and get quiet for an hour or two. And then ask yourself, 10 years from now, who do you want to meet? What does she look like? What does she look like? Because I know most of your listeners are women. What does she look like? What is she doing? Where is she living? Who is she friends with? Because if you don't think about what it is you want to look like 10 years from now, then it's just random chance, what it looks like. And I'm just a huge believer in designing your life. Because even if it doesn't turn out the way you hope it will, the adventure that you get to have, trying to have it go that direction, that's where all the juice of life is.
Oh, so good. Well, that is. I mean, now, now, now we have what we're going to do after this. That is like, literally so much, so much to think about. But it is. I think that's a question most people don't ask. And you are so right that I started doing that, like, very regularly. And if I don't, you just, like life. Life will decide for you what your life is. So I'm so grateful for you for giving us the tools and also for coming on this podcast. I feel like I get to have this, like, last little portion of you coming and talking about this, which is very exciting. I'm so grateful that I got that. So thank you again for coming on.
Well, Laurie, thank you for having me on. I'm really glad we got to do this, too. Please give Chris my best. And I hope if you come back to Italy, that you'll let me know, because I'd love to see you. And if I get out you California or Arizona, where are you?
Yeah, Newport be. Yep.
You're in Newport. So one of my best friends from Newport's coming over to meet me in Switzerland to go skiing in two weeks.
Oh, my gosh. So fun.
Yeah. So next time I'm in Newport, I'll let you know.
Okay, wonderful. And I will do the same.
All right, thank you. Take care. Have a great day.
