David Bach’s Top 10 Tips for Getting Richer
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Jamie Stone
Edited by
Angela Corry
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David Bach, the renowned financial expert and author of bestsellers like “The Automatic Millionaire” and “Smart Women Finish Rich,” has helped millions of people take control of their finances. His practical advice focuses on simple yet powerful strategies that anyone can implement to build wealth.
Here are Bach’s top 10 tips for getting richer:
Pay Yourself First
Bach’s most famous principle is “paying yourself first,” which means automatically directing a portion of your income to savings before you pay bills or spend on anything else. He recommends saving at least 10% of your pre-tax income.
“When you pay yourself first, you’re essentially saying, ‘I’m more important than the electric company, the landlord, and the phone company,'” Bach explains in “The Automatic Millionaire.”
Follow the “Latte Factor”
Bach coined the term “Latte Factor” to illustrate how small, daily expenses add up over time. By identifying and reducing unnecessary spending (like daily coffee shop visits), you can redirect that money toward investments.
“Becoming rich is not a function of what you make but what you don’t spend,” Bach writes in “Smart Couples Finish Rich.”
Automate Your Finances
Automation removes emotion and discipline from the equation. Bach recommends setting up automatic transfers to savings accounts, retirement funds, and investments.
“When your financial life is automated, you’re much more likely to stick with your plan because you don’t have to think about it,” Bach states in “The Automatic Millionaire.”
Buy a Home Instead of Renting
Bach is a strong advocate of homeownership as a wealth-building tool. “The fact is, you aren’t really in the game of building wealth until you own some real estate,” he writes in “The Automatic Millionaire Homeowner.”
Eliminate and Avoid Debt
High-interest debt is a wealth killer. Bach recommends using the DOLP (Dead On Last Payment) system to prioritize debts, paying the ones with the fewest payments left first to build momentum.
Create Multiple Streams of Income
“The average millionaire has at least seven sources of income,” Bach often points out. He suggests developing side hustles, rental properties, or passive income streams to accelerate wealth building.
Invest in Your Retirement Accounts
Maximize contributions to tax-advantaged retirement accounts like 401(k)s and IRAs. “The miracle of compound interest means the earlier you start saving, the less you’ll need to save overall,” Bach emphasizes in “Start Late, Finish Rich.”
Live One Level Below Your Means
While many financial experts advise living within your means, Bach goes further, suggesting you live one level below what you can afford. This creates a significant margin for saving and investing.
Increase Your Value in the Marketplace
“The best investment you can make is in yourself,” Bach often says. Continuously learning new skills and increasing your value can lead to higher income, which accelerates wealth building when combined with disciplined saving habits.
Give Back
Perhaps surprisingly, Bach emphasizes that charitable giving should be part of your financial plan. “Those who give the most, get the most,” he writes in “The Finish Rich Workbook,” noting that generosity often creates unexpected returns through connections, opportunities, and personal fulfillment.
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