Automatic Millionaire, written by David Bach was a book about money management.

It advocated a
thrifty lifestyle that planed ahead for unforeseeable circumstances. While I felt that the book was in
many ways a rehash of the things that I had already learned, the importance of the lessons are in no way
diminished.

One of the greatest pieces of wisdom I gleaned from the book was the importance of saving money
before one made decisions about what to buy. I have always practiced this in my life, and have found
this simple rule to be invaluable. Its importance has a snowball effect. Saving acts as a corner stone to
the rest of the wisdom given in the book. Without it there would be no money left to practice the other
rules of finical success.

The second chapter of the automatic millionaire covers the importance of restraint in spending.
The strongest focus of this restraint is on “little things” such as what one eats for lunch. The
point is that when small amounts of money are saved on a regular basis, the total becomes a
large amount. Overall this saving creates a large pool of available funds which can be invested
to for greater earnings. This leads to a snowball effect that makes every cent saved now into
hundreds later in time.

In the sixth chapter David Bach, argues that home ownership should be a high priority. He
elaborates that paying a loan is comparable in cost to renting, but contains the added benefit of
building equity. This point is supported by data that shows homeowners to be richer than
renters. He also compares home ownership to a kind of forced saving, further emphasizing the
importance building equity. The benefits over renting are immense. Without the cost of a rent bill
weighing down a paycheck, money can be used to make mortgage payments. This is in many
ways just a bank account that has a very hard withdrawal process.

One gripe I hold with the automatic millionaire is its over eagerness to implement automated
systems. While automation is great for relieving stress, overuse of it can make understanding
ones financial position difficult. Automation also makes it harder to adapt quickly to a changing
market, which can lead to disasters.

While I didn’t come to like the automatic millionaire I can still recognize its value. The fact that
many of the plans that the book advocates where already being used by me, both reassures me
of my financial steadiness, and speaks for the books validity.