Book Review: The Automatic Millionaire

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auto-mThe Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich

Bach, David. The Automatic Millionaire. Doubleday, 2003.  *Canadian Edition

Summary: Bach suggests average people (middle class) have the potential to retire wealthy if they take a few hours and automate their finances (specifically investments).  If a person sticks with this strategy over a lifetime they will retire as a millionaire.

Topics addressed: Planning ahead for retirement, saving sources, rainy day fund, debt-free homeownership, debt-free lifestyle, tithing.

Book Strengths:

1Fundamentally sound approach to wealth building. He suggests:

What you’ll learn is how to become a millionaire – steadily and surely – over the course of your working life.  It’s the tortoise’s approach to wealth, not the hare’s.

The Proverbs highlight a similar approach:

“Dishonest money dwindles away, but he who gathers money little by little makes it grow.” (Proverbs 13:11, NIV)

2. Highlights the value of small change for a long term plan. Bach writes:

How much you earn has almost no bearing on whether or not you can and will build wealth.

He calls this principle the ‘latte factor’.  Bach suggests we need to focus on cutting small dollar amounts out of our spending.  He shows how such small changes result in significant financial results in the future.  It will make you think twice before making a quick stop to pick up something on your way to or from work.

3Suggest the convenience of automation. Have your money drafted right out of your checking account before you even know its there.  He suggests if you are responsible for doing something you likely won’t keep up with it.

Book Weaknesses

1.  Bach suggests automating everything – including tithing.  The advantage of automation when it comes to saving is it is painless and you often don’t even know you are doing it.  This level of ignorance is not appropriate for giving.  In the act of giving we need to continually remind ourselves of what we are giving and why.  I don’t suggest automating your giving.

2.  The book has a lot of negative things to say about budgeting.  I suspect if you want to sell a lot of books you had better minimize budgeting.  Here are some of the things he says about budgeting ‘goes against human nature’.  This I think is a positive part of budgeting.  Our human appetite needs to be curbed not satisfied.  The budget does help our spending and our saving.

3.  Proposes that renting a home is horrible while owning is essential.  Here are some quotes:

You can’t get rich renting

The fact is, you aren’t really in the game of building wealth until you own some real estate

As a person who spent my first five years of marriage renting I obviously see some value in renting.  What does Bach suggest?  Playing the leverage game.  His genius plan involves using other people’s money since real estate prices almost always go up.  You can even buy a home with 0% down.  This allows you to be in a home much faster.  Blahhh.  Good thing 2008 has passed to teach us some important flaws with this type of thinking.

My conclusion:

Overall I enjoyed the book and thing it has some helpful suggestions.  Like almost every financial book you will probably find one piece of information that is worth the purchase price of the book.  Read and enjoy the first five chapters.  During the last few chapter I spend more time writing criticism notes than underlining helpful sections.

This book is recommended for:

  1. A young person who has yet to start saving for retirement
  2. A person who has been saving, but their saving is sporadic
  3. Anyone wanting to learn how to set up a personal retirement account (IRA in America  or RRSP in Canada)

Final thoughts.  Before proceeding to implement any retirement plan I suggest you read Part I and Part II of Is it Biblical to Save for Retirement?  This will give you a biblical context with which to use when considering your retirment alternatives.


  1. Korwin says

    There are loads of books much better than this one to do a review on. I wouldn’t give it much credit as it really doesn’t carry any solid biblical principals. And most of all, it was a book built on the housing boom that is now strongly correcting. This book was shoved onto people mostly by mortgage companies trying to convence people to buy (I worked for Wells Fargo and saw it all of the time). I would suggest books by authors such as Ron Blue, Randy Alcorn, Austin Prior, Larry Burkett, Dave Ramsey, etc.

    • Craig says

      @Korwin. Thanks for your comment. Let me respond to a few of your comments. First, I am currently reading through a list of books that J.D. Roth at recommended – this book was on that list (I blogged about this In that post I mentioned I plan to review the books I read from that post.
      As for your other concerns I both share and expressed some reservations. I suggested you read my article series Is it Biblical to Save for Retirement. I suggested this mini-series because I felt like the book lacked a biblical foundation (the book never claimed to be written from a Christian perspective).
      Finally, I mentioned one of the book weaknesses was his stance on renting (#3). However, I was wondering if you might think that I reviewed The Automatic Millionaire Homeowner. This book heavily emphasizes the real estate portion, but the book I reviewed only had a few pages on the topic.
      I have read articles or books by all of the authors you mentioned and I give them all thumbs up. In the future I hope to have the opportunity to review some of those documents.
      Thanks again for your comment. I’m thankful to have you as a reader.

  2. Korwin says

    Don’t take the previous comments too critically as I greatly appreciate your blog as the content has been very solid! I turn to your blog for solid personal finance as I turn to my pastor (Piper) for solid bible teachings. Keep up the good work!

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