I’ve started a new savings routine that is blowing me out of the water. That sounds weird to say, but it’s true. It’s an idea I directly lifted from a book called “The Automatic Millionaire” by David Bach.
The crux of the idea is that you put 10% of everything you make into a savings or retirement account. Everything.
If someone hands you a dollar, you put a dime into savings. You make $1,000, well, $100 goes into your savings account. 10%, all the time. From the savings account, you can distribute the money in a few ways:
- Leave it in there to serve as a cushion (it’s a good idea to have 3-6 months of expenses saved)
- Transfer to IRA
- Save up for a goal (down payment on a car/house, repairs/renovations, etc)
- Pay down student loans or other debts
- Simply save it for peace of mind
After I read “The Automatic Millionaire” I started putting this into practice. It’s been about 2 months by now, and I’m kind of amazed at how much I’ve already been able to save – automatically.
It also signaled a shift in my mindset.
- It meant creating a new habit loop.
- It meant exploring new goals.
- And most important of all, it was a demonstration of commitment toward my own future.