Applying three concepts from The Automatic Millionaire

Paying yourself first is a particularly effective strategy for people who don’t have a budget. In an ideal world, everyone would have a budget that is reflective of their goals and values.

Pay yourself first

Most banks allow you to easily set up an automated withdrawal from your checking account on every pay-day and have that money placed into a savings or investment account. By doing this you are taking the concept of paying yourself first and automate the process.

Put it on Automatic

The idea behind the latte factor is that seemingly small and routine purchases like buying a latte can add up to large sums over time.

The “latte factor”

Pulling it all together

Here are a few steps we can take, using these concepts to change our relationship with money.

Step 1: create your financial goals.

– When do you want to retire? – When would you like to be out of debt? – Do you want to build an emergency fund?

– How much do you need to save to retire by 65? – How do you make sure you are out of debt in 5 years? – How do you build a 3-month emergency fund over the next two years?

Step 2: work out how much you need to save each month to achieve these goals.

Step 3: Automate monthly savings you figured out in step 2.

Step 4: Stop spending money on “stuff” you don’t value.

Step 5: Start spending money on things you do value.

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