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David Bach: Financial Expert Profile

David Bach has spent the past two decades teaching people how to get rich. He isn’t trying to pull a fast one though. He says up front that he is not selling get-rich-quick schemes. In fact, his advice isn’t much different from that of other financial experts. What makes Bach successful is how he thinks about saving and budgeting. By thinking about them from a different angle that most others, he has found a way to keep people engaged and interested in saving for their futures.

Top Financial Advice From David Bach

The biggest advice from David Bach is to pay yourself first. When you get your paycheck, the first place that you should put your money is toward your retirement. Once you’ve done that, pay for the essentials. These are the expenses that are fixed, like your mortgage, utility bills or car payments. Once you’ve paid all those things, live off whatever is left. Bach proposes this system instead of budgeting. Budgeting leaves people feeling like they’re restricted – like saving money is all about cutting back on the things you want to buy. (J. Money would disagree.) Bach’s system turns the paradigm around by making you think of saving as paying yourself.

How much should you pay yourself? Many experts say to put certain percentage of your salary into a retirement account. Based on his time advising self-made millionaires, Bach believes that the answer isn’t a percentage. Yes, you will be in good shape if you save between 10% and 20% as other advise. But it’s hard to think about your money that way. It’s too abstract. Instead, save the equivalent of one hour’s pay per day. Wouldn’t it be nice if your first hour at work each day was paying for yourself and not the bills everyone else wants you to pay?

Most employers offer a retirement plan like a 401(k). These accounts are tax-advantaged, which means you put money in before you even pay taxes on that money. If your workplace doesn’t offer a retirement plan, you can open your own IRA to receive the same benefits. Regardless of what account you have, automate the payment process. If you automatically put money into your account, you never have to worry about moving funds or missing days.

In his books, Bach also talks about something he calls the latte factor. People avoid saving because they don’t think they have enough to save. One of the most common things Bach hears is that people would save more if they just made more. (Then they get a raise and spend more instead of saving more.)

The answer isn’t having a huge salary. You can save even if you have just a few dollars. Many people buy a $3+ latte each day. There’s nothing wrong with drinking lattes, but imagine if you saved that money in a retirement account. Over the course of your life, $3 per day could potentially add up to over $1 million thanks to the magic of compound interest. So start saving now.

A Brief Bio of David Bach

David Bach: Financial Expert Profile

David Bach was born in Oakland, California in 1966 and earned his bachelor’s degree from the University of Southern California. After college, he worked as a financial advisor. Some of his clients were self-made millionaires – even though they had average salaries. How? Well using the advice from his clients, Bach began forming the pay-yourself-first ideas that make up so much of his financial advice.

Bach founded FinishRich Media in 1997. His goal was to inspire as many people as possible to take action, reach their goals and finish rich. Since then, he has since published 12 books. Most of them are New York Times bestsellers. He has appeared on a number of TV programs, including “The Oprah Winfrey Show” and morning news shows. From 2009 to 2012, he appeared weekly on the “Today” show’s money segment. He also travels around the country for talks, seminars and classes.

Financial Focus and Philosophy

David Bach believes that everyone can become rich. All it takes is a few things (like paying yourself first). Whenever you think about money though, you should start with your values. Bach strongly believes that if your values are clear, your financial decisions are easier.

Bach has done a lot of traveling. Everywhere he goes, he meets people who say they want $1 million, a bigger house or a nicer car. Those are all great goals to have, but why do you want those things? In many cases, people want something just because they believe it’s the right thing to do. They see someone with a huge mansion and decide that they want one too.

Instead, people should ignore the outside noise and focus on what’s important to them. If your goal is to own a home and provide for your parents when they get older, then you should create goals to help you get there. Don’t let someone else’s goals or values dictate the way you handle your own finances.

Where You Can Find David Bach

You can learn more on David Bach’s website. His blog includes financial advice and you can find information on all his books. People who are ready to jump right in can also find information about Bach’s online class. The class offers simple advice that can get anyone on the right track financially.

Recent Projects

If you are interested in David Bach’s advice, the best place to start is with his books. “The Automatic Millionaire” outlines his basic advice. It will teach you how to start saving today in order to reach your financial goals.

He published his most recent book, “Debt Free For Life: The Finish Rich Plan for Financial Freedom,” in 2011. It covers staying out of debt and topics like paying off student loans and understanding your credit score.

The Takeaway

David Bach: Financial Expert Profile

David Bach has built a career with his bestselling books and numerous media appearances. It’s easy to see why. His advice is simple and straightforward. He uses tried-and-true methods to help people save money and build wealth. His idea of paying yourself first is also different from what other financial experts are saying. The results of paying yourself first are ultimately the same as keeping a budget. The difference is that Bach changes the paradigm by helping people think of savings as something they’re doing for themselves. If you struggle to keep a budget, think about paying yourself first. It just might help.

Tips for Paying Yourself First

  • How much is an hour of your salary per day? Here’s an example. Let’s say you earn $52,000 per year. That means you make roughly $1,000 per week and $25 per hour. So you should pay the equivalent of $25 each day to yourself. (In terms of percentage of salary, this would translate to between 10% and 15% each year.) You don’t literally have to do it each day, but make sure that when you put money toward retirement, you’re putting the right amount.
  • David Bach says to forget budgeting. Pay yourself, pay the essentials and then live off the rest. This is a great system, but what if you don’t have much left over? You’ll still need to cut back on your lifestyle to make sure you cover all your expenses. If you’re looking for places to cut back, look over your credit card statements. Find things you spend money on that you might not use anymore. Maybe you still subscribe to a magazine you don’t read anymore. Maybe you pay for three streaming services but you basically only use one of them. These are perfect and easy places to cut back.
  • Make saving a habit. As Bach says, start small and don’t get hung up on how much you make. You can always save a little bit. A useful way to see the affect of a few dollars is by using a calculator. Try this 401(k) calculator to give you an idea of how much you’ll have when you retire.

All images from DavidBach.com

Derek Silva, CEPF® Derek Silva is determined to make personal finance accessible to everyone. He writes on a variety of personal finance topics for SmartAsset, serving as a retirement and credit card expert. Derek is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance® (CEPF®). He has a degree from the University of Massachusetts Amherst and has spent time as an English language teacher in the Portuguese autonomous region of the Azores. The message Derek hopes people take away from his writing is, “Don’t forget that money is just a tool to help you reach your goals and live the lifestyle you want.”
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