Automating Your Personal Finances

Introduction

It's Friday morning, and two people wake up to the same notification: their paychecks have arrived. Both earn $4,000 a month after taxes, have similar living expenses, and have neither inherited money, won the lottery, nor discovered a secret investment strategy. Yet ten years from now, their financial situations could look remarkably different. One might have a substantial investment portfolio, an emergency fund, and considerably more financial security, while the other might have almost nothing saved. How is that possible? If they earned the same amount of money, where did the difference come from?

To answer that question, we're going to combine ideas from four influential personal finance books. In The Automatic Millionaire, David Bach explains why paying yourself first and automating savings can be more effective than relying on willpower. In I Will Teach You to Be Rich, Ramit Sethi shows how to organize financial accounts and automate the movement of money between them. In The Psychology of Money, Morgan Housel explores why financial success depends as much on behavior as it does on knowledge. And in Your Money or Your Life, Vicki Robin and Joe Dominguez challenge us to consider what our money is actually for. Together, these books offer something more useful than another budgeting rule. They provide the foundation for a financial system. Let's build one.