David Bach, a former financial advisor for Morgan Stanley and co-founder of AE Wealth Management, has built an empire teaching everyday people how to take control of and improve their financial lives. He has become one of the most recognizable personal finance personalities in the media, appearing regularly on national television and radio shows, while writing nine New York Times bestselling books that have sold millions of copies.
Bach has recently updated and rereleased two of his most successful books, Smart Couples Finish Rich (originally published in 2001 and updated in 2018) and The Automatic Millionaire (first published in 2004 and updated in 2016). His first book, Smart Women Finish Rich, is due to be rereleased in September for its twentieth anniversary.
In part two of this exclusive interview series, we discussed:
- the psychological barriers standing in the way of financial success
- Bach’s role models and inspirations
- how he was able to “Finish Rich”
- and why every woman needs to get involved with managing finances in a relationship.
Missed Part One? Click here to read it.
Karl Kaufman: I think anyone who gets married should get a copy of Smart Couples Finish Rich and anyone graduating from college should get a copy of The Automatic Millionaire. They’re such helpful and hopeful messages.
Many people, though, have a complicated relationship with money. They say “money is the root of all evil,” or “you shouldn’t discuss money with your friends or your family.” People are resentful of the 1% and yet most people with some kind of ambition really want to be in the 1%, or at least financially free. What do you think is the most important psychological or emotional change that the average person needs to undergo in order to be financially successful?
David Bach: I’ve taught a concept called Purpose-Focused Financial Planning for two decades, which is that you need to look at your values first before you make decisions around your money. When your values are clear, your financial decisions become easy.
You don’t have to go to therapy or take Prozac to figure out your money issues. What you need to do is be very clear about what’s most important to you. I’ve never met anyone who doesn’t have specific values that they care about. Everybody is value-based to a certain extent.
Look at your values, make goals based on those values and then make sure your financial decisions are helping you get closer to making your values real. When you do that, everything becomes easier. The reason a lot of people struggle financially is that their values are in conflict with how they spend and invest.
You have to make everything automatic, whether it’s college, or retirement, or buying a home. When it’s automatic, it’ll get done without you having to think about it. Most people are too busy, so the more you automate your financial life, the better off you’re going to do.
Kaufman: You mention your grandmother, Rose Bach, in Smart Couples Finish Rich and how she had to teach herself, and put the time and energy into learning about investing. I was lucky to have my father, Richard Kaufman, as a role model and inspiration. Much like your grandmother, he was willing to spend time teaching me how to be a successful investor. Who else would you say are your inspirations and role models?
Bach: You have your father, who’s your mentor, and I had my grandmother. She’s the one who inspired me.
She had nothing at the age of 30, she didn’t have a college degree, she was living paycheck to paycheck and like your father, she became a self-made millionaire by investing in the stock market. Then she taught those lessons to my father and he became a financial advisor. Then she taught them to me and to my sister and the whole family became a family of financial advisors that ultimately became all self-made millionaires through investing.
From an investing standpoint, I’m a huge Warren Buffett disciple and groupie. My biggest regret was not investing in
I’m also a fan of Jack Bogle. I’m a big believer in investing in things that produce value, and Warren Buffett and Jack Bogle would be my two primary money mentors.
Beyond money, from a life mentoring standpoint, Tony Robbins is probably my favorite teacher when it comes to motivation and life mastery. He was an early mentor of mine. I’ve known Tony for 25 years and he interviewed me for his book Money: Master the Game.