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The Automatic Millionaire: Build Your Personal Wealth, One Coffee Cup At A Time


October 26th, 2021 21:24

The automatic millionaire knows a secret that the rest of us still may not have been made privy to! What is it, you wonder? Regardless of the size of your paychecks, you already make enough to make yourself rich! And when we say rich, we mean millionaire-kind of rich.

Yes, you heard us right! 

Self-made millionaire, CEO, and bestselling author, David Bach, writes in his book The Automatic Millionaire that getting rich is way easier than we might think. David Bach talks about numerous unnecessary expenses that we incur on a daily basis and how, for some of us, they become a part of our daily routines.

The Automatic Millionaire, written by David Bach, focuses on guiding people through this journey and it directs them to start small. These expenses have turned into something that we may find very difficult to let go of. 

The Automatic Millionaire: The Latte Factor

To put things into perspective, consider something as small as buying your morning coffee from a cafe while on your way to work. These are the kind of “daily luxuries” that are being talked about in the book ‘The Automatic Millionaire’.

We spend a little amount of our expenses on these “luxuries” every single day, and because these are the kind of expenses that happen on a daily basis, most of us only take into consideration the small amount that we spend every day and often forget the bigger picture

The Automatic Millionaire tells us that we often fail to realize how much money we spend in the name of such small expenses, monthly and even annually! Don’t believe us? Then consider this—let’s just say your morning coffee is worth five dollars. 

This means that in a week you spend around $35 and around $150 a month. Now, let’s get a bit calculative, shall we? Let’s assume you get an average of 10% return per annum on your savings or investments. 

If you take those five dollars a day and save them, you’d end up with around $1,885 in a year. In 10 years, this amount could multiply into around $30,727, and in 30 years, you would have around $3,39,073. 

So, now we hope that you can imagine the potential that small investments, such as a cup of coffee, have! This is the Latte Factor, a phenomenon made famous by David Bach. 

According to Bach, the key is to not focus as much on the rate of return that an individual is getting, but on the amount of money that they would end up saving in a particular tenure of investment. This simple concept can, indeed, teach us a lot about achieving financial freedom.

Bach’s Latte Factor is, therefore, something we’re all already familiar with. It seeks to battle the myth that one must make more money in order for them to be rich. 

Essentially, The Automatic Millionaire is based on a pretty straightforward idea that in order to earn true wealth, you are going to have to redirect your money from spending on small things on a regular basis to paying yourself first. 

Basically, what you will be doing would be more than saving—it would be investing in your future! And let’s be honest, who wouldn’t want a comfortable and easy-going life 20 years down the line? 

While there are supporters of the ideology propounded by The Automatic Millionaire, there are also dissenters, who argue that simply giving up one’s daily luxuries is not going to help them save big or solve their financial woes. 

One dissenter, Helaine Olen, argues that the bigger issue, at least for most Americans, is the fixed costs. There are some expenditures that the people in the United States find the most difficult to cut back on, such as the cost of housing, healthcare, or the cost of education. 

She ran the numbers and claims that as of the 2000s, on average, around 75% of American families’ discretionary income was being spent on these three fronts.


As for the theory given to us by Bach in ‘The Automatic Millionaire’, while we feel that both the supporters and dissenters are correct in their own viewpoints, we also agree with the fact that even our small wins would one day add up to give us big results

So, get ready to cut back on all your little unnecessary expenses and direct that amount towards an investment account where your money will grow over time. Get ready to change your life, one coffee cup at a time!

Frequently Asked Questions

1. When was The Automatic Millionaire written?

  • The Automatic Millionaire by David Bach is a bestselling personal finance book published in 2004.

2. What is your latte factor?

  • David Bach describes the small amounts we spend here and there as the Latte Factor. The word originates from the notion that if we added up the cost of our daily lattes and saved it or invested it, we could build up our wealth significantly faster.

3. How long is The Automatic Millionaire?

  • The expanded edition of The Automatic Millionaire is 288 pages.

4. Who wrote Automatic Millionaire?

  • David Bach is the renowned author of the book ‘The Automatic Millionaire’.

5. What does The Latter Factor focus on?

  • The Latte Factor is a term representing the small, repeated savings of which people can make into habits that can aid the growth of wealth over time.

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