The modern idea of retirement was built on a bet that turned out to be wrong. It assumed people would spend most of their lives working and only a relatively short period of time retired. Instead, many Americans now reach 65 healthy, active, and with an entire third of their life ahead of them. Yet we’re still using a retirement model designed for a world in which old age was shorter and fewer people expected decades of life after leaving the workforce.

My guest says that outdated assumption creates some unfortunate unintended consequences. It causes people to stress excessively about money, postpone meaningful experiences with family and friends, and sometimes sacrifice the very things that make life worth living in the first place. He argues that by rethinking retirement — not necessarily eliminating it, but reimagining it — we can enjoy more of our lives now while actually feeling more secure about the future.

His name is Derek Coburn, and he’s a financial advisor and the author of Let’s Retire Retirement. Today on the show, Derek explains why the traditional retirement model came about, why it may no longer make sense for many people, and how working even a few years past 65 can dramatically change the math of retirement planning. We also discuss the surprising psychological challenges many people face after they stop working, why purpose matters more than leisure, and how thinking differently about retirement can free you up to spend more time on what matters most right now — whether that’s traveling, strengthening your marriage, or making the most of the limited summers you have left with your kids.

Connect With Derek Coburn

This article was originally published on The Art of Manliness.

Ask any marriage counselor what couples fight about most, and money will be at or near the top of the list. Research backs up clinical experience: disagreements over finances are one of the strongest predictors of marital conflict, chronic stress, and divorce.

Now take that already-volatile subject and add this to the mix: it pains one spouse to open their wallet, while the other spends with reckless abandon. One’s a tightwad; the other’s a spendthrift.

How do you handle a marriage where one of you hates spending money, while the other loves to splurge?

Scott Rick, a behavioral scientist, has spent his career studying this dynamic, and in his book Tightwads and Spendthrifts, he shares research-backed advice on how to navigate this relational rift.

The Spendthrift-Tightwad Scale

Rick’s developed something he calls the Spendthrift-Tightwad scale. It’s a spectrum, and where you land on it depends on how much spending money pains you.

Based on his studies, Rick estimates that about half of people reside in what he calls the “unconflicted middle.” Spending pains them enough to keep them from buying random stuff they see on Instagram, but not so much that their toes are poking through worn-out shoes. These folks don’t have much problem being too tight or too loose with the purse strings. If that describes both you and your spouse, count your blessings, stop reading, and go enjoy your reasonably priced lives.

But as to the other half of the population, about 25% land on the tightwad side of the scale, and 25% on the spendthrift side. Let’s take a look at what’s going on with these folks.

Tightwads: Spending Money Hurts

For tightwads, shelling out money for an optional purchase hurts. Literally. In fMRI studies, when shoppers saw a price their brain judged as too high, their insula lit up — the same patch of cortex that fires when you stub your toe. Buying plane tickets and stepping on a Lego run on some of the same neural circuitry for tightwads, which is why they’re so tightfisted. Spending feels bad. They don’t want to feel bad. So they don’t spend.

Sometimes tightwads gussy up their tightwadness by saying they’re just frugal. But Rick’s research shows there’s a difference between frugality and tightwadness. Frugal people get a kick out of saving — a little glow of satisfaction when they make their resources stretch and find new uses for old paper towel tubes. Tightwads don’t enjoy saving money. They just hate spending.

“Well,” they’ll say, “I’ve just got a lot of self-control.” Rick actually classifies extreme tightwaddery as a failure of self-control: the tightwad can’t override an irrational feeling of distress in order to make a purchase that would objectively improve their life.

So what turns someone into a tightwad?

It’s not about how much money is in their bank account. Rick has found plenty of incredibly rich people who can’t bring themselves to spend because it pains them so much.

Some tightwads are born — they just have a natural disposition to find spending unpleasant. Thank your ancestors for that. But many are made. Rick finds the disposition is common among people who grew up poor or in financially unstable circumstances. Because of their upbringing, they got keyed in early to the dangers of spending. They eventually get to a better place financially, but their brains don’t get the memo. They keep living as if they were poor, convinced their stable finances could collapse next Tuesday. Rick calls this “post-broke-ness stress disorder.”

On paper, tightwads look great. High savings, no consumer debt, good credit. But Rick’s research finds they’re measurably less happy than people in the middle of the spectrum, because all that security gets purchased with deprivation. The tightwad skips the family vacation because airfare hurts too much, never goes out to eat or to the movies, and takes cold showers because it’s too expensive to get the boiler fixed. 

Spendthrifts: Spending Money Doesn’t Hurt

Spendthrifts have the opposite problem: they don’t feel enough pain when they spend. Their psychological alarm over spending too much either goes off too quietly or too late. While the tightwad’s spending brake is stuck on, somebody cut the spendthrift’s brake lines entirely.

And the modern retail environment couldn’t be better designed to take advantage of someone without brakes. Spending used to take effort — you had to drive to the store, stand in a checkout line, and hand a cashier actual bills. Now Shopify keeps your card on file so buying a kayak takes about as much effort as liking a TikTok video, and if the kayak feels a little pricey, a Buy Now, Pay Later service will helpfully chop it into four installments so small you barely register them. Spendthrifts can do their damage from the couch, the carpool line, or even the toilet.

How do people become spendthrifts? Women are statistically a little more likely to be spendthrifts, but it’s a disposition that can be found in either sex. And like with tightwads, income isn’t the determining factor — plenty of broke people spend money they don’t have via credit cards and Buy Now, Pay Later services.

It seems some people are just wired this way; it’s a personality thing. But upbringing plays a role too. Rick finds spendthrifts often grew up in households where the parents spent freely and never set limits. Nobody ever told them “we can’t afford that,” so they never developed the sense that money runs out.

Being a spendthrift has its perks. Spendthrifts say yes to the last-minute lake trip, pick up the check at dinner, and buy the good seats instead of the nosebleeds. While the tightwad sits at home in their hole-ridden sweater, the spendthrift is out making memories. Yet Rick’s research finds they aren’t any happier. They carry a lot of credit card debt, save next to nothing for retirement, and feel plenty of pain about their spending — it just shows up after the purchase instead of before it. The spendthrift knows they have a problem and hates that they can’t get a handle on it. That makes them feel bad, so they buy something to cheer themselves up. Wash. Rinse. Repeat.

Why Tightwads and Spendthrifts Usually End Up Together

You’d think tightwads would marry tightwads and spendthrifts would marry spendthrifts. They don’t. Rick found that tightwads and spendthrifts are actually more likely to marry their opposites.

The reason is that neither type likes their own tendency.

Tightwads are wound tight by their inability to enjoy themselves, so when, say, a guy meets a lady who orders the appetizer and the dessert without a second thought, he finds it exciting. This gal knows how to live! The spendthrift, meanwhile, is stressed by her own spending chaos, so the tightwad’s stability is appealing. During courtship, each one is the other’s comforting counterbalance.

But then they get married, buy a house, and have to decide whether the Fast Pass at Disneyland is worth it. The traits that drew them together start to grate. His “stability” becomes controlling and joyless. Her “spontaneity” becomes reckless and irresponsible. And because every major life decision — housing, kids, retirement — runs through money, they end up having the same fight over and over.

But there is hope! Tightwads and spendthrifts can have a more harmonious marital money life if they do a few research-backed things. Here’s what Rick recommends.

Set Up “Translucent” Finances

Most financial advice for married couples recommends complete transparency. Both spouses should see exactly what the other spends. Anything less is “financial infidelity.”

Rick says that for a tightwad-spendthrift couple, this is terrible advice. The tightwad gets a line-by-line readout of every latte, every throw pillow, every scented candle his wife buys, and he’s going to have a discussion about it. She starts to feel like she’s living with an auditor. Pretty soon you’re having your fourth argument of the month over a $7 purchase, and the marriage feels less like a romance and more like the relationship you have with Bill in accounting going over your expenses.

Rick recommends something he calls, only half-jokingly, a “money-laundering device.” All income goes into a joint account. Everything that keeps the household afloat comes out of it: the mortgage, the utilities, the insurance, the kids’ braces, the food. Then every month, a fixed, equal chunk of fun money gets automatically dropped into each spouse’s own account, theirs to spend however they want. No questions asked, no receipts required. One spouse can blow their whole allowance on a new wardrobe; the other can let theirs pile up to be swum around in like Scrooge McDuck.

Rick calls this “translucency”: transparency where it matters, privacy where it doesn’t. The spendthrift gets to splurge without the fights; the tightwad has fewer accounting audits eating up their bandwidth.

What About Big Financial Decisions?

The allowance handles the day-to-day piddly stuff, but marriage still serves up big-ticket decisions you have to make together. New car or keep nursing the ’07 Honda Element along? Staycation or take the family to Yosemite?

Rick says the answer to these kinds of questions should be determined by what kind of purchase is being decided on.

With material stuff — a new car, a kitchen remodel — he recommends having the tightwad’s vote carry more weight. Happiness research shows that material upgrades don’t always deliver lasting satisfaction, thanks to a phenomenon called hedonic adaptation. The remodeled kitchen thrills you for about six months, and then the new granite countertops are just . . . the countertops. The tightwad’s reluctance, irrational as it can be, happens to point in the right direction here, so let his foot stay on the brake.

With experiences — vacations, concerts, and the like — let the spendthrift take the wheel. The joy of these doesn’t wear off the way material purchases do, because they turn into memories and stories the family draws on for decades. The spendthrift will book the trip the tightwad would’ve talked himself out of. Twenty years from now, nobody will remember what it cost. They’ll just remember the time Dad laughed like a little kid going down a snow-covered mountain on an inner tube.

If you’re the tightwad, here’s a trick for actually enjoying the trips your spouse springs for: pre-pay everything you can. Book the all-inclusive. When the whole thing is paid off in one lump sum before you leave, you take your hit once, instead of wincing through every menu and excursion price for a week.

Nudge Yourself Toward the Middle

You can also work to move toward the middle of the scale.

If you’re a spendthrift, add friction back into your spending. Rick suggests deleting your saved card info from Amazon and other retail sites. Having to get up and find the physical card every time you want to buy something can squelch the impulse-buy itch. Creating a “short budget” helps too; instead of a monthly budget, create a weekly one. Having a cap on your spending in the short term can make economic trade-offs feel more concrete.

If you’re a tightwad, take friction out. Reframing expenditures as investments seems to blunt the pain of spending. A vacation becomes an investment in your family, a good mattress an investment in your health, an upgraded wardrobe an investment in your career.

Accepting Who You Are and Working With What You’ve Got

It helps to remember that your wife isn’t splurging out of malice, and you aren’t pinching pennies out of selfishness. You’re just two people with differently wired brains bumping up against each other. Rick’s research suggests that while you can nudge yourself closer to the middle, you probably can’t turn your spouse into a different kind of spender, and you can’t fully rewire yourself either. So work with what you’ve got. Set up your accounts and your decision-making so your differences stop colliding every day.

And when her spending does drive you crazy, remember that her spontaneity, her free and easy way with money, was part of what attracted you to her in the first place; it’s just one side of the same coin of character, and the other side still delights you.

This article was originally published on The Art of Manliness.

How many streaming services are you paying for right now? If you had to write the number down from memory, could you get within five dollars of the actual monthly total? When was the last time you logged into that fitness app that’s been stealthily pulling $9.99 out of your checking account since 2022?

If you’re like most people, you probably don’t know exactly how many subscriptions you’ve got going, and when you check the numbers on them, you’re probably paying a lot more than you’d like.

I recently had David Bach on the podcast to talk about his book The Automatic Millionaire, and he made the case that finding small ways to cut your spending, and then investing that savings, will allow you to compound modest amounts of money into serious wealth.

One way to find these savings, Bach recommended, is to review your subscriptions — whether to apps or media — and cancel those you’re not using and really don’t care about.

My conversation with Bach nudged me to perform my own subscription audit; I’ll share the results of mine at the end of the article.

First, I’ll walk you through how to do an audit of your recurring subscriptions, cancel the ones you no longer need, and invest those savings to build your nest egg.

The Subscription Creep Problem

The average American household now juggles between 10 and 15 recurring charges a month. Streaming services. News subscriptions. Fitness and meditation apps. Cloud storage tiers you upgraded to when your phone filled up in 2020.

Consumer surveys suggest the average consumer loses about $204 a year to subscriptions they’ve completely forgotten about, and services that scan bank accounts for recurring charges routinely find between $180 and $400 in annual savings the first time they’re run on a new user.

Why does this happen?

Well, the subscription model is specifically designed to exploit behavioral inertia. Once you’re signed up, the friction of canceling feels greater than the $9.99 a month you’re paying, so you just keep paying. And paying. Some companies take this further with what researchers call “dark patterns.” They make it easy to sign up, but difficult to cancel. They hide the cancellation link or make it hard to see, and when you do decide to cancel, they may require you to call a retention specialist during business hours, chat with a bot, or, in the case of certain gym chains, mail a notarized letter to the home branch. It’s like the Hotel California: you can check in, but you can’t check out.

A lot of companies simply bank on you forgetting you have a subscription with them at all. Which is a safe bet: because each monthly subscription amount seems relatively small, your brain doesn’t register them as a big deal and prioritize remembering that they’re dinging your account in the background.

Yet the aggregate cost, projected over the decades you could have been investing that money instead, is not small at all. In fact, it can be yuge.

What the Compounding Math Actually Looks Like

Say you run an audit this Saturday and manage to cut $100 a month in subscriptions. $100 is a good chunk of change, but it’s not life-changing . . . in the short term.

Now take that $100 and automate a monthly transfer into a broad-market index fund — something like VTI or a standard S&P 500 ETF — averaging a historically reasonable ~7% annual return. Here’s what that turns into roughly over time:

• After 10 years of investing $100 a month: $17,309
• After 20 years of investing $100 a month: $52,096
• After 30 years investing $100 a month: $121,997

So if you’re in your 30s today and you run this audit tomorrow, over 30 years of regular saving/investing, you’re looking at six figures in retirement money that would have otherwise gone to apps and streaming services you’d practically forgotten about.

If you cut just one $9.99/month subscription, invest that $9.99/month for 40 years, and get a conceivable 10% interest rate, you’d end up with over $50,000.

Small cuts, invested consistently, turn into real money because compounding does the heavy lifting for you.

Ain’t compound interest grand?

How to Run a Subscription Audit

To run an audit of your subscriptions, you’ve got two options: app-assisted or manual.

The App Route

There are several apps on the market that will find and even cancel your recurring subscriptions for you. They make identifying and canceling your subscriptions more convenient, though the convenience will cost you.

Here’s a rundown of them:

Rocket Money. The most popular option. You link your bank and credit card accounts, and it pulls every recurring charge into one list. The free tier shows you what you’re paying for. For each charge you find, ask yourself one question: Did I use this in the last 30 days, and would I actually miss it if it disappeared tomorrow? If the answer is no, cancel it. Their premium tier, which runs $7 to $14 a month on a sliding scale, will actually call and cancel the services on your behalf, which is useful for the deliberately difficult-to-kill subscriptions.

If you don’t want to cancel a subscription outright, they’ve got a bill negotiation feature where they’ll work to reduce a bill for you, but they charge 35-60% of your first year’s savings as a success fee.

Hiatus. Like Rocket Money, Hiatus links to your accounts and scans for recurring charges, and like Rocket Money, it offers a concierge team that will cancel subscriptions and negotiate bills for you. The difference is the fee structure. Hiatus premium runs a flat $9.99 a month and doesn’t take a percentage of what they save you on negotiations — whatever they knock off your cable bill stays in your pocket.

Monarch Money. This is a cleaner, more privacy-focused alternative that picked up a lot of users after Intuit shut down Mint in 2024. It tracks your spending and groups recurring subscriptions into a single category for easy perusal. They don’t offer concierge cancellation services, but with the list of subscriptions, you can easily cancel subscriptions on your own. The privacy you get with Monarch Money will cost you $99 a year.

Copilot Money. A similar service to Monarch is Copilot. It automatically labels your expenses into certain categories so you can easily see your recurring subscriptions. It’s what I’ve been using lately. I check my subscriptions once a month and nuke any I don’t need anymore. It’s ad-free and privacy-first for $96 a year.

The Manual Route

If you don’t like the idea of signing up for another subscription in order to reduce your subscriptions, you can DIY your subscription audit:

Review bank account and credit card statements. Log into your bank and credit card accounts, download six months of transactions as CSV files, and dump them into a spreadsheet. Sort by merchant. The recurring charges cluster together. Search for terms like “subscription,” “monthly,” “Apple.com/Bill,” and “Google.”

Cancel the subscriptions you no longer want.

Review your Apple and Google Play App subscriptions. A lot of recurring subscriptions occur within apps on your phone. You can easily cancel these from your phone.

• On iPhone: Settings → your name → Subscriptions
• On Android: Play Store → profile icon → Payments & subscriptions → Subscriptions

Cancel the ones you no longer want.

Review PayPal recurring payments. There’s a good chance a lot of your recurring payments are happening via PayPal. Fortunately, they make it easy to cancel right from their platform. Log in to PayPal on desktop, click the gear icon, go to Payments, and click Manage automatic payments. You’ll see every merchant pre-approved to pull money from your account, and you can kill any of them with one click. This is often where the oldest forgotten subscriptions are hiding.

The upsides of the manual audit are that it costs nothing, doesn’t give third parties access to your data, and only takes about an hour.

But don’t delude yourself; if you’re not going to have the gumption to do an audit — and then follow through on the annoying work of actually canceling the unwanted subscriptions — pay for an app; it’s better to pay a little money to save a lot of money, than to save nothing and keep paying the inertia tax.

Don’t Forget to Invest It!

If you cancel $100 worth of subscriptions and then spend that same $100 at Bass Pro Shop on Saturday, you haven’t saved anything. You’ve just moved the money from one form of consumption to another.

If you want to get the most out of these savings, you gotta invest it. Bach recommends making your investing automatic, so you don’t even think about it. Set up a monthly transfer, scheduled for the day after payday, that moves whatever you’ve cut from subscriptions straight into an investment account. If you don’t have a retirement account, Vanguard, Fidelity, and Schwab will all let you open a Roth IRA online in about fifteen minutes. Need to learn more about IRAs? We’ve written about them.

If you’re already maxing your Roth, send it to a taxable brokerage account instead.

Do this consistently for years (along with regular retirement savings), and your 65-year-old self will have a nice little nest egg waiting for him.

My Subscription Audit Results

I used a combination of app-assisted and manual tactics for my subscription audit. I first looked at Copilot and filtered my transactions by “Subscriptions,” so I could see a list of all the transactions from the past year labeled as subscriptions. I found a few website/newspaper subscriptions that I barely used that were costing about $5 per subscription each month. Canceled those.

The big recurring subscription I found in Copilot was SiriusXM. It was $300 a year. Damn! Didn’t even know it was that much. It definitely wasn’t that much when I initially purchased it maybe five years ago. Guess they’ve been raising rates each year. I can’t even remember why we were once using SiriusXM enough to justify signing up once a free trial for it expired, but I do know we’ve hardly used it in the last several years, turning to our smartphones to stream music from Spotify or Pandora. Easy cancel.

The big payday for me came when I manually reviewed my Apple App subscriptions. I’d signed up for several apps’ yearly premium plans to unlock features that, at the time, I felt I needed. Each of these yearly subscription fees ranged from $50 to $100 a year. I used these apps for a few months, but then stopped. Forgot about them. If I hadn’t reviewed my Apple App subscriptions, these would have been automatically renewed for another year.

The other place where I found a lot of unused subscription fees was PayPal. When signing up for a subscription service, I’ll usually use PayPal to check out since it’s easier than pulling my credit card out of my wallet. I found several unused digital subscriptions there and canceled them right on PayPal.

When I tote up all the cancellations, I saved my family $1,323 a year, or about $110 a month. If I put that $110 into my retirement account for the next 22 years until I turn 65, and assume a 7% rate of return, it could turn into about $70K. Hot diggity! That’s a nice chunk of change.

I’m not anti-subscription altogether. I’ve actually gotten less stingy recently in ponying up for them in support of enterprises I genuinely enjoy; I don’t want the outlets I appreciate to die.

But moving forward, I’m going to be relentlessly ruthless about axing those subscriptions that don’t offer me value.

Do your own subscription audit, cut these finance vampires out of your life, and invest those savings.

Your future self will thank you!

For more simple ways to build substantial wealth, listen to our podcast with David Bach:

This article was originally published on The Art of Manliness.

Building substantial personal wealth can feel difficult and out of reach. But my guest says that even those with modest means can, with a few simple decisions and strategies, become millionaires, and even multi-millionaires.

David Bach is the author of the bestselling, newly updated personal finance classic, The Automatic Millionaire. Today on the show, we talk about the money management framework that will put you on the path to a free, secure, rich retirement. David explains his controversial “Latte Factor” principle, the astonishing power of compounding interest, how setting your finances on autopilot may be the most important financial move you can make, why he still believes in buying a home as an incomparable way to build wealth, the best way to pay down your debt, and more.

Resources Related to the Podcast

• investor.gov compound interest calculator
• AoM Article: What Every Young Man Should Know About the Power of Compound Interest
• AoM Article: Know-Nothing Investing — Index Funds For Beginners
• AoM Article: Build Your Wealth — Graduate from a Paycheck Mentality to a Net Worth Mentality
• AoM Article: A Young Man’s Guide to Understanding Retirement Accounts — IRAs

Connect With David Bach

• David’s website
• David on IG
• David on FB
• David on X
• David on YouTube
• David on LinkedIn

Listen to the Podcast! (And don’t forget to leave us a review!)

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Transcript 

Brett McKay:

Brett McKay here and welcome to another edition of the AoM podcast. Building substantial personal wealth can feel difficult and out of reach, but my guest says that even those with modest means can with a few simple decisions and strategies become millionaires and even multimillionaires. David Bach is the author of the bestselling newly updated personal finance classic, The Automatic Millionaire. In the show we talk about the money management framework that’ll put you on the path to a free, secure, rich retirement. David explains his controversial latte factor principle, the astonishing power of compounding interest, how setting your finances on autopilot may be the most important financial move you can make, why he still believes in buying a home as an incomparable way to build wealth, the best way to pay down your debt, and more. After the show is over, check out our show notes at aom.is/millionaire.

All right, David Bach, welcome to the show.

David Bach:

Thank you, Brett, it’s great to be with you. I’m really excited to do this show with you.

Brett McKay:

Well, it’s been two decades since the original release of your book, and I’m sure a lot of our listeners have read this or heard about it, The Automatic Millionaire. And in this book you lay out a personal finance philosophy that can help people save for retirement and have financial security automatically. But you adopted this or you figured this out when you were a young financial advisor and you had this experience early on in your career with a married couple that opened up your eyes to the fact that wealth isn’t about how much you earn, but how you manage what you earn. So what were these people doing differently from the other people you were advising at the time?

David Bach:

Well, so lemme tell you how I met this couple and the couple, I refer to them in the book as Jim and Sue McIntyre. I used to teach back in the day, this is like in the nineties, I taught a retirement planning course and people would come to my class. It was actually out of high school, it was adult education. And I would teach these classes at night, usually over four weeks, and we would talk about what you needed to do to prepare for retirement. And typically people who came to my class were in their late fifties. If someone was 55, it was early. So people would usually come to these classes right around when they’re getting ready to retire. And then often those people after a four week class would come into our office to have us do a financial plan for them to see if they were in good shape to retire.

And we would offer that to everybody as a complimentary thing. And that was how we got a lot of our clients. I used to work at Morgan Stanley and we would get clients from teaching a class on retirement planning and then doing these financial plans. So most people when they would actually come into my office and retire, they would be in their early sixties, somewhere between the age of 60 to 65. And that was very common. And we had people who worked at all the major companies. I lived in the Bay Area at the time and they worked at companies, everything from Safeway to Pacific Gas and Electric to Chevron and Pacific Bell. These were a lot of the major corporate companies in the Bay area of the kind of people we were working with. And they were really mid-level employees, people making between 50 to a hundred thousand dollars a year.

They worked the CEOs, they were just your average hardworking American, and they were able to come into our office and retire in their sixties. They had paid themselves first and they had bought a home and they had paid their debt down. But the McIntyres were different because the McIntyres came up to me in my class and they had told me in the class, because you get to know your students, Jim had told me he made a little over $53,000 that year. And he also asked me if he could come in my office and meet with me for a retirement planning meeting. And this was early in the week. And I said, absolutely. And he said, well, can we come in this week and meet with you? And I said, well, what’s the urgency? He is like, well, I really want to retire. You’ve got me really excited about retirement and I’d like to retire on Friday.

And his wife Sue was a beautician. She had really spiky blonde hair and she’s like, isn’t that great? He wants to retire on Friday. And I was like, how old are you guys? And they were in their early fifties. And so I said, well, sure you can come in my office, I’ll meet with you on Wednesday. And they came into my office and what I really thought was going to happen, Brett, is I thought I was going to have a really a hard meeting. I thought I would end up showing them that probably they weren’t ready to retire yet. I just assumed this. And so they showed up in my office with a Safeway bag. Actually, he didn’t work at Safeway, but he had a Safeway bag and all his statements and all of his stuff was in a bag and he basically dumped it out on the table and he said, well, I want to show you everything I’ve got.

And I had a yellow pad of paper and I started adding up what he had and I looked at his 401k plan, he had over $600,000 in it. And all of a sudden I noticed he had a home and his home was paid off and he had a rental house and the rental house was paid off and he had some money in saving accounts and investment accounts, and his wife had money put away. And as I’m totaling it all up, they had nearly $2 million and they were in their early fifties and their average income had been less than $50,000 a year over their lifetime. And it blew my mind away. And what happened, and the reason this meeting changed my life is what happened is I actually stopped the meeting and I said, I have to know how you did this.

I see a lot of people come to my office in their sixties and they can’t even afford to retire. You’re coming to my office in your early fifties with an ordinary income and you’ve got all this money sent aside. How did you do this? And they laughed and they’re like, well, David, we did a lot of what you talked about in your class. We paid ourselves first. We saved money automatically. And they basically walked me through what they did. And I ended up going back to my office super kind of in shock, almost depressed. And the reason I was depressed at the time is that I was earning twice what they were. I had now reached what I thought was a high level of success. I was a young kid making over a hundred thousand dollars a year, and I was still living paycheck to paycheck.

And that had been my experience when I came out of college. I thought if I made $50,000 a year, I would be rich. And then I spent more than $50,000. So I thought, well, it’s just not enough money. If I make $75,000, I’ll be rich. I’ll start saving money. And there wasn’t enough money and then a hundred was the same thing. And so when I met the McIntyres, they were my wake up call that it’s not what you make, it’s what you keep. And that moment, it’s not what you make. What you keep is what changed my whole life. And then I can tell you what I ended up doing. I changed everything in my life as a result of that. And then ultimately I went off and taught these lessons.

Brett McKay:

Yeah, we’re going to talk about these lessons because they’re simple stuff. It’s nothing complex. You don’t have to know anything about quantitative investing or anything like that. It’s just brass tax things. Let’s start with one of the fundamentals that you’re famous for. Something I’ve noticed in personal finance trends is there seems to be this pendulum effect. It’s interesting, a lot of people don’t know this. My very first blog that I started in 2005 was a personal finance blog. It was called the Frugal Law Student. And I remember at the time 2005, this is around when your book came out, there was a lot of emphasis on saving in small ways, looking for ways you can save money, just sort of nickel and dime it, make some small cuts so you can save more. Then it seems like recently there’s been this rise in this ethos of like, well, you don’t need to think about that nickel and dime stuff. It doesn’t matter. You need to focus on big savings. But you’re still a proponent of the idea which is encapsulated in what is perhaps your most famous. And sometimes I’ve seen people criticize this idea in the personal finance world, this idea of the latte factor. For those who aren’t familiar with it, what is it?

David Bach:

Yeah. Well, so a latte factor, again, go back to teaching my classes. I was teaching a class on how to save and invest and use your four one K plan and pay yourself first. And a young woman said in the class, this is a great idea in theory, but I can’t do it. And I said, what do you mean you can’t do it? You can’t save $5 a day, $10 a day. And she’s like, no, I can’t do it. And she was literally sitting there sipping out of a Starbucks cup of coffee, her latte. And so I stopped the class. There was a blackboard in the class, and I’m giving you the history of the latte factor. I said, what’s your name? And she’s like, my name’s Kim. I go, Kim, walk me through a typical morning. I see you’re holding a cup of coffee from Starbucks.

What did that cost? And back in the day, that was like $3.50. Today, if you go to Starbucks and you get yourself a big cup of coffee, you’re going to spend in New York City up to $10. So lattes aren’t $3 anymore. They’re now 5, 6, 7, 8, 9, $10 a day. So I just walked through her morning, she goes to Starbucks, she spends $5 a day at Starbucks between a coffee and a biscotti. Then she goes and has Jamba Juice and she spends $5 a day at Jamba Juice. She hasn’t even got to lunch yet. And I took the math and I showed her, look, Kim, she worked at the Gap. I said, Kim, I know the Gap has a 401k plan. I know the gap has a matching contribution to your 401k plan if we could get you to just save $10 a day. And this woman was in her early twenties, I said, and we took that out over 40 years.

Let me show you what the compound interest could look like. And we ran the numbers for her. We showed her 8% and we showed her 10% and we showed her 11%. We showed her all the different calculations and basically showed her that if she would just start paying herself first and got the match at her company, she could be a millionaire at least. And we ran the numbers for her and it was like at the time it was like $1.8 million. And she goes, are you trying to tell me my lattes are costing me $1.8 million? And a guy sits in the front of the room, turned around and goes, yes, that’s exactly what he is trying to tell you. And what happened is I left that class and every single person was talking about the latte factor, and they were talking about what their latte factor was.

And so the latte factor has always been a metaphor, not about the coffee. It’s a metaphor for how do you spend small amounts of money unconsciously, not thinking about it and then telling yourself you can’t afford to invest because if you don’t believe you have the money to start investing, you will never start. And so I became kind of famous for teaching this philosophy of fine, we’re spending small amounts of money so that you can get started. Start with $5 a day, start with $10 a day, start with $20 a day. So the latte factor has always had pushback, but nothing I’ve done has probably changed more people’s lives than the latte factor. Because what the latte factor is, the metaphor is a wake up call. People hear it. Some people, they get it and they’re like, he’s right. I do have this thing. It might not be coffee, it might be something else.

It might be cigarettes. I’ve had people tell me that they stopped smoking because they ran their cigarette factor and they realize that they literally had spent hundreds of thousands of dollars on cigarettes over their lifetime. And had they invested that money, they would be a millionaire. And I’ve had people tell me they stopped smoking because of it. Some people have stopped drinking, some people have stopped eating out every single meal. They actually brown bag their lunch. So it’s changing your behavior consciously instead of spending money unconsciously. And it’s helped a lot of people. And then I think those who like to hate on it, a lot of people have used hating on the latte factor to build their own personal brands. There’s people who go around creating cups, say you and your latte factor basically, but whatever. You want to keep drinking your coffee, drink your coffee, you want to drink your bottle of water, drink your bottle of water.

But if you’re not saving five to $10 a day and you’re spending $10 a day going out to Starbucks and having water and coffee, I don’t know what else to tell you, it’s your life. You want to turn around and be 60 with no money and hope the government can help you. That’s your decision. But I can tell you, looking into the future, the government will not be there to help you. All the things that we have been dependent on thinking we’ll have social security, Medicaid, Medicare, ultimately all the safety nets that are in America today are going to shrink and they’re shrinking. And so you have to build your own financial security. You have to build the mote around your house. And my message has always been, you can do it. You just need to get started. And the key to getting started is to start, if you have to start small, five to $10 a day can be a great place to start and then work your way up and then make sure you’re doing it automatically. So you’re not needing to use discipline, you don’t need to think about it. It’s the money moves for you in the background while you sleep. That’s what the automatic millionaire is about. Set it and forget it. And I teach you in this book how to literally put your financial life on autopilot in less than an hour.

Brett McKay:

Yeah, we’re going to talk about how you can set it and forget it. But I think it’s interesting. In the past 20 years, there’s definitely more things out there that could be a latte factor. I mean, think about all the things that we have now that didn’t exist 20 years ago, DoorDash, Uber, in-app purchases, subscriptions, streaming services. So I’m sure everyone can find their own latte factor. They just got to look at what they’re spending and be like, okay, do I really need this thing? And if I got rid of it, how could I invest that money so it pays for my retirement in the future? So if someone who is 30 saved and invested $10 a day until they were 65 and got a 10% return when they were 65, they’d have a million dollars. So as you were saying, I mean it really adds up. And as I was reading the book, the thing that really hit home to me is that in order to really I think understand the power of the latte factor, saving just five bucks, 10 bucks a day, how it can make you lots of money in your retirement is that you have to understand the power of compounding and finances. And I think compounding is one of those things that people think they understand, but they don’t really understand just how powerful it is. So help us understand compound interest.

David Bach:

Compound interest. Einstein said this was the miracle he called the eighth wonder of the world is compound interest. Compound interest should be taught in high school. You shouldn’t get out of high school without understanding the miracle of compound interest and what that looks like and what it works. One of the things you need to understand is what’s called the rule 72, how long does it take to double your money? So first, let’s start with the rule of 72 and then we’ll kind of go into compound interest. So the rule of 72 is you take 72 and you divide that 72 by an interest rate. Let’s say it’s 10%. So basically if you take 72 and you divide it by 10%, if you’re going to earn 10% annually and you divide it by 72, you will double your money in a little over seven years. And if you’ve earned 1%, you’re going to double your money in 72 years, right?

So at first you have to understand that the rate of return has a huge amount to do with how much your money will compound. Some people don’t even understand that. They go, well, if I save $10 a day, I’m saving, what is that? That’s $3 a month, that’s $3,650 a year. That’s $36,500 over a decade. How is he getting the math? Where is he coming up with this is going to be worth millions of dollars. They’re not factoring in the interest rate. What you earn on your money and how do you earn that interest rate? Are you putting in stocks? Are you putting in bonds? Are you putting it in real estate? Are you sticking it in an index fund? Are you in the stock market? Those things determine the rate of return on your money. And so what happens is a lot of people just base, they’re fundamentally financially illiterate and they don’t understand all these basic things.

So a simple thing you can do, I’ll give you a website you can use that’s free. You can go to investor.gov. They have a very basic compound interest calculator and you can run numbers. You can go in and put down, okay, I’m going to save $300 a month. If I save $300 a month and I save it for 10 years at 10%, what could it be worth? And it will show you the calculation. Then you run in again. You go, what if I save $3 at 10% for 20 years? What could it be worth? What would it be worth in 30 years? What would it be worth in 40 years? And what you’ll see is that money grows like a snowball astronomically once it gets into the second, third, and then the fourth decade, it just starts to compound and compound and grow and grow and grow and grow. The first decade you don’t see a lot of movement, but by the fourth decade it’s just crazy. Your money’s making you money for every dollar that you spend today that you don’t invest, if you take a dollar today, no way of saying this, you take a dollar today and you invest it 40 years from now, that dollar is going to be worth $20 depending on how you invest it.

People go buy cars, they come into money and the first thing you do is buy a car. You take $50,000 and you buy a car. That car is worth, if you’re lucky, $35,000 the moment you buy it, after you drive it off the lot, it’s gone down in value. You take that same $50,000 and you invest it in a simple index fund. You use a Vanguard fund, like a Vanguard total stock market fund. The symbol is VTI 3,600 stocks in that fund. And you take that out over 30 years and you run well, what could $50,000 be worth 30 years from now, you can go to investor.gov, run the calculation, you’ll see what it’s costing you to spend the money. So we’re not raised and taught often when we’re young, how important the decisions we make around our spending is. And one thing I will tell anyone who’s listening is go open up your, most of you have Apple phones.

Go open up your iPhone, go over to the settings and then go search subscriptions and go see how many people have attached themselves already to your paycheck. You’ll be shocked. I did this on a podcast and one of the hosts, he went through it and he had 24 subscriptions I think, and he had over $500 in subscriptions. And he realized, I’m only using three of these. And that happens all the time. Now that’s maybe an extreme example, but my normal experience when I’m doing a money makeover for somebody is that the average person is spending a couple hundred dollars minimum a month on subscription services. They don’t really need, I just can’t get over it sometimes. A friend of mine was in town and I know he doesn’t have a lot of money in savings. He doesn’t have a retirement account. And he was asking me, he was telling me about a bunch of different shows, and I’m like, what do you watch that show on?

He’s like, oh, I’ll watch it on HBO. I’m like, you have an HBO subscription? He’s like, yeah. And they told about another show. We watched that on. I was like, oh, Hulu. Like, I mean the Hulu, you have a Hulu subscription. Yeah. He’s like, we have all the subscriptions. This guy’s got 10 different subscriptions for television shows and he’s not using his retirement account. So I don’t have any of those subscriptions and I have plenty of money in my retirement account, but people just don’t think, they don’t think about the fact that they’re doing all this hard work and they’re just giving their money to everybody else. And all I want to do is help people kind of free themselves financially so that they don’t give all of their money to everybody else. At least keep 10 cents out of every dollar the churn.

Brett McKay:

Yeah, so just put the example you used. So let’s say instead of paying $50,000 for a car, you take that 50,000 and invest it. So I did this on investor.gov. If you estimate a 10% return in 30 years, you’ve almost got a million dollars. And I think you can think about house costs the same way too. So if you buy a $600,000 house instead of a million dollar house and you only need to put down a hundred thousand dollars down payment instead of a $200,000 down payment and you invest that $100,000 saved in 30 years, it’s almost $2 million. And then in 35 years, I think it’s, it’s $3 million. So choosing the more affordable house, it’s like you just made yourself $3 million automatically. I mean, it’s really cool. And I think the big takeaway for me on compound interest is that it starts off a snowball.

That first decade, you’re not going to see much and you’re probably going to be thinking, why am I even doing this? But in the second and third decade, that’s really when things start picking up. And by that fourth decade you’re looking at the numbers, you’re just like, wow, this is crazy. And the book gives this great hypothetical with three different people that really brings us home. So you’ve got three different people. Person one starts investing $3,000 a year at age 15 and does it for five years and then stops. So total amount invested $15,000 by age 65. That $15,000 has grown to 1.6 million. Person two doesn’t start investing until age 19 and they invest $3,000 a year for eight years. So $24,000 total. So this is more money than person one, but at age 65, they end up with 1.5 million. So they put in more money but got out less because they were in the market for fewer years.

Then person three doesn’t start investing until age 27 and invest $3,000 every year until they retire at age 65. So that’s $117,000 total. So it’s way more than the other two, but their ending balance is 1.3 million. So it’s the lease they put in the most money over the most years and ended up with the lease. And it’s simply because the person that invested just $15,000 earlier, even though it was less money and it was earned over just five years, they gave their money more time to compound their interest was compounding on interest year after year after year.

David Bach:

That chart that you’re talking about, Brett, that’s another chart that changed my life. That chart was given to me in a training class at Morgan Stanley by an advisor who was retiring, and he said, guys, you’re all going to be hopefully successful financial advisors and you do a great job for your clients. Make sure you do a great job for yourself. And he showed us this chart and he said, I’m telling you so many financial advisors, so many people in our office who have made a lot of money who’ve done a great job for their clients have not done a great job for themselves. They haven’t paid themselves first. They haven’t used their IRA accounts. They haven’t funded their 401k plans. So at a minimum, make sure you do this. And that was one of those moments too. It’s like sometimes a chart can change your life where you look at this and you’re like, oh my God, I have to do this.

And it’s interesting, the book I wrote before, well the last book I wrote before The Automatic Millionaire update was a book called The Latte Factor. And it’s the first book that my kids really read cover to cover because it’s a shorter book and it’s a parable. And my kids are like, well, dad, I want one of these IRA accounts, how do we get ’em? And I opened up a Roth IRA for my 12-year-old and he’s now 16. And so we’ve been funding his Roth, we put him on the payroll and he’s been funding his Roth IRA now fully funding it for three years, and he’s already got a $32,000 Roth IRA and he’s going to have, if we keep funding helping him, and then eventually he does it on his own, his Roth IRA could be worth over $10 million tax free money by the time he’s in his sixties, $10 million.

Brett McKay:

That’s crazy.

David Bach:

And it is crazy. And that’s why Trump just, they’re rolling out these Trump accounts to get kids started really young at birth, and that’s all about compound interest. That’s why Michael Dell came in and said, Hey, we’ll help with this because if we can get families starting off their kids at birth, it’s just a game changer. So we need to be doing more to inspire young people to save and invest.

Brett McKay:

Yeah, this chart is something you want to show to a young person, be like, look, you can be basically financially set if you start investing early. And so we’re clear on these charts and these estimates we’re assuming a 10% annual return. Of course that could change. Every year is different. There’s going to be downturns, but even if there’s a downturn, compounding is still happening. You might not get the same returns as a 10% return, but it’s better than just putting your cash in a mattress or a bank account.

David Bach:

Well, and also Brett, you know what? You said something is really important, right? Because always people that are like, yeah, but, but in 40 years, $4 million won’t be worth that much. It’s worth a whole lot more than not having $4 million.

The pushback on the automatic million people are like, well, a million dollars won’t be worth that much when I turn 60. Well, it’s worth more than zero. If you don’t get going, you won’t have anything. People go, well, I can’t earn 10%. Great. So you don’t think you can earn 10%. Put in a balance fund. Go look up the Vanguard Balance Fund. One of the most generic balance fund is 60% stock, 40% bonds. Go look at the returns of the balance fund. Look at it from inception, you’re going to find it’s like 8%. Use that number. Okay, well that’s not going to get me the same place you were talking about. Guess what? Then you need to save more. So people throw out, come up with all these excuses, it won’t be worth that much because inflation, I’m going to have to pay taxes. I can’t earn 10%.

And then you show ’em. Okay, well, so if you don’t think you can earn 10%, what do you think you can earn? I think I can only earn five. Great. Then you need to save 20% of your income. Well, I can’t save 20% of my income. The question you have to ask yourself is are you going to make excuses or are you going to take action? And as I wrap my career up here, I decided to update The Automatic Millionaire book one more time to reach the next generation. I wanted to book for my kids and my kids’ friends and all my friends’ kids and another generation. And I think the younger generation, it is probably more financially literate than my generation even was, but in some cases they’ve also been super misled. Young people have been super misled down the social media road of get rich quick. And the truth of the matter about getting rich quick is it doesn’t work. I’m 59 years old, I haven’t met too many people who’ve gotten rich quick. I’ve met a whole lot of people who spent their whole life trying to get rich quick and they’re still broke.

Brett McKay:

When I look at social media and how young people talk about personal finances, they’re definitely talking about it more than I was talking about it when I was their age. But I notice a lot of pessimism about it. And yeah, I can see where it’s coming from. Houses are more expensive. We’ll talk about that job prospect. It might seem a little, but I don’t think it’s helpful to think, well, everything’s crappy, so I’m not going to do anything.

David Bach:

I think if that’s your plan, that’s a tragic plan. And I actually think the next 10 years is going to be the greatest opportunity to build wealth in our lifetime. And I think if you miss this opportunity, I don’t know what’s coming behind it, but the next 10 years, we’ve just gone through a phenomenal 10 years, right? People said you couldn’t make 10%. When I put the book out 20 years ago, they said, you can’t make 10% annually in the stock market. Well, you’ve made much more than 10% annually the last 10 years you’ve made in many cases, 12, 13, 14, 15% annually depending on what index fund you put it in, because the market has been so strong. If you’ve been in real estate, I mean between real estate and stocks, it’s just housing prices have gone up fourfold and stock market’s gone up sixfold since the book came out 20 years ago.

And so the two primary asset classes that matter to be an investor in is real estate and the stock market. And yet young people are still looking at cryptocurrency, option trading. They’re pretty much done with NFTs. But the amount of things that people would ask me about five years, what do you think about NFTs? What do you think about this cryptocurrency? What do you think about that meme coin? What do you think about GameStop like, oh my guys, you’re just going to get wiped out financially. I can’t remember the name of the car that was the truck that was going to be the electric truck right now I’m blanking . . . I had young people coming up to me telling me they were investing in that truck company and it was going to be the future, and that whole thing was fraud and they lost everything. And so young people are told You should take risk when you’re young. And I completely disagree. I think when you’re young and you’re working really hard, take risk in your career, go for your dreams. But you don’t want to be risking your money in your twenties and your thirties because what will happen is you’ll turn around and you will have lost everything and you will believe the system is rigged against you and you will never get going. And that’s happened for a lot of people.

Brett McKay:

So yeah, the power of compounding interest, it’s time. The more time that money is in the market, the more time it has to grow. And eventually that second, third, fourth decade, it’s just going to start growing exponentially. But what if you’re a listener and in your thirties, forties, fifties and you haven’t really saved much for retirement, they might be thinking, oh geez, I’m hosed. Is their retirement hosed because they missed those early years of compounding, or are they able to still take advantage of compounding even if they got a late start?

David Bach:

It’s harder if you start late. When I sit in a room with people that are over the age of 50, I asked, how many of you wish you had started when you were younger? Almost every single hand will go up in the room. It’s a universal regret that people have. They didn’t start investing when they were younger, and when there’s young people in the room, I’m like, look at these people over the age of 50 and learn from them right now because you’re going to blink your eyes and you’re going to be 50. Now when you’re in your twenties, you see somebody who’s 50 and you think, oh my God, they’re so old, I’m never going to be there. And the next thing you know, literally snap your fingers and you’re 50 and then you’re 55 and then you’re 60. So do for your future self, you may not want to do it now, but I was doing an interview with somebody else, Chuck Jaffe, he was a very famous reporter and he said he did everything right for himself and now he’s getting to, I think he’s almost 60, and he said, when I was in my twenties, I didn’t want to show up at 60 and have my 6-year-old self say, dude, what were you thinking?

Why didn’t you save any money? I wanted my 6-year-old self to be like, dude, good job. And he’s like, and I’m there. So to somebody who’s in their fifties and they’re not there, I would say, this is your day to show up for yourself now and it’s never too late. The secret is to start, the beauty of being in your fifties is that usually the kids are out of the house and now it’s just you and maybe your significant other. You can start to buckle down and focus on really using the next 10 to 15 years to start to build wealth. And I would again, go to investor.gov, run the calculations. Well what if I save a thousand dollars a month? What would that look like in 15 years? What if I save $500 a month? What could that look like in 15 years? Run the calculations and then immediately look at what can you cut expense wise so that you can start to save more money as fast as possible on an automatic basis and that will change your life.

Brett McKay:

Yeah, and you talk about there’s some of these retirement accounts they allow for as you get closer to retirement to invest more tax free. So kind of make up for maybe lost investment opportunity that you had. So it’s never too late. It’s going to be harder, but it’s not too late. Alright, so what we’re doing, we’re looking for small ways we can save finding our latte factor, whatever that is, so we can invest in our retirement. But as the book title is, it’s The Automatic Millionaire, your approach is that the investing needs to be automatic. So you advocate that people pay themselves first each time they get a paycheck. So how much do you think people should set aside for retirement from each paycheck before you pay any other bills or even before you pay the government?

David Bach:

So the Millionaire Formula, we know exactly what the numbers look like. It’s at least you want to save one hour a day of your income. So if you work a 40 hour work week, whatever you earn an hour, the first hour a day that you go to work should go to you, you should keep it. You need the money that you make to flow directly to you first. Not pay taxes, not pay your mortgage, not pay your rent, and not pay your car payments, not go to Starbucks. It needs to go to you for the future. One hour a day of your income is 12 and a half percent of your gross income. And I say we know the formula because there are now over a million millionaires in 401k plans. Fidelity’s got probably the most of ’em. I think it’s over 650,000 millionaires now are in the Fidelity 401k plan.

And they’ve looked at the numbers and what is their savings rate. And on average, their savings rate is 14% in their 401k plan. They got there because they paid themselves first one hour day of their income and their employer had a match on top of that. And it took about, I think the number is 27 years to get to Millionaire status doing that. And their portfolios were typically 70% stock and 30% bonds. So they weren’t even a hundred percent stock. So I would tell you your goal should be to save one hour day of your income. Now, a lot of people are, average American who is saving is maybe saving three or 4%, and that is just remotely not enough money. You have to save more. One of the things that’s changed since I wrote the Automatic Millionaire is that it used to be you went to work for a company, your company gave you an enrollment package to sign up for your 401k plan.

By the way, that enrollment package, the companies that still do that, that meeting the day that you are given an enrollment package or that you’re sent an email to sign up for your 401k plan, the decision you make at that moment in time, what percentage you will put in your 401k plan will be the single most important financial decision you make in your life. It is a decision that determines if you’ll have wealth or not have wealth. And tragically, many people don’t pay attention. They talk to their person they’re sitting next to in their cubicles. They asked a friend over lunch, what do they do? They might have a stupid friend who said, oh, you don’t want to use the four one K plan. It’s a terrible way to make money. Or they might have a friend that says, oh, just do the minimum. That’s what I did.

Not putting anything more in that plan, I’m only putting in the minimum. That’s the absolute worst decision you could ever make. But the ones who go ahead and actually max out their plan, put away 10, 12, 13, 14, 15%, those people will be financially secure and ultimately financially free. Now, what’s happened with the new tax, with the new laws like Secure Act 2.0, companies are starting to automatically enroll you in 401k plans. So you get a job, they enroll you, but they enroll you at 3%. So if you don’t go into the plan now and yourself increase it, you are now at the wrong rate. So you have to be proactive. You have to go look at your plan and go, what percentage am my saving? And then I’m telling you, I’d rip off the bandaid and I would try to get to 10% minimum, ideally more than that, even 12, 13, 14, 15%.

If you don’t think you can do it, move it 1% a month until you hit those goals because you won’t notice a change of your money if it’s 1%. But here’s the thing, people change jobs a lot more now when you change your job. If you’re smart, you’re going to move this money from one 401k plan to the next 401k plan or you’re going to move it into an IRA if you move it in your next 401k plan, or you just simply go get a new 401k plan. We’ve seen people that we’re saving 10, 11 or 12% and then they go to the next employer and the next employer ops them in at 3% and they never get around to bumping it back up again. Vanguard just did a study that says that that single mistake changing jobs and having the savings rate go back down to the bottom and not increasing it again is costing retirees $300,000 in retirement money at retirement.

So when I wrote the book, there was like 7 million millionaires and there’s now 24 million millionaires in America, and most of these millionaires have become millionaires by saving money automatically. The bulk of wealth has been built in two buckets, real estate and stocks. It’s people who own homes. It is people who’ve used automatic saving investing in their retirement accounts. And so a lot of this stuff is really simple and it’s simple to listen to, but the key is to take action. It’s timeless advice that works. The tax laws have changed, the investment vehicles have changed slightly, but the advice is timeless. The McIntyre is, what did they do? They bought a home. They lived in San Leandro, California. The couple in the book, they bought a home in a blue collar neighborhood and they focused on paying the mortgage down early. And then they turned around and they rented that house and they bought another house on their street so that when they came into my office, they had two homes paid off for and clear.

One had been paid off by the renter that they put in it, and then they owned their second home free and clear. One thing they said to me is like, we could have moved, we could have sold the house and bought a bigger home and moved out of our neighborhood. We made a decision not to do that. And again, this is over 25 years ago when they told me this story. They said, we used to have mortgage burning parties in our backyards and we made all these friends in our neighborhood and we all agreed that our goal was going to be to retire in our fifties when our kids were off in college or out of college, and we would celebrate each other, paying off their mortgages. We’d have these mortgage burning parties where you burn your final mortgage statement because you’re done. And the timeless advice of like buy a home, pay your mortgage off, be debt free, your overhead goes down.

That stuff was old school 25 years ago. It’s still old school and it still works. I’ve never seen what I’ve seen people, why would I want to pay my mortgage off? Well, because people who pay their mortgages off on average, in my experience, having done this for 33 years, people tend to retire five to 10 years earlier when they have no debt and their overheads have gone way down. They realize they don’t need as much money to retire and should you retire early if you can afford to, I mean everybody’s different. But I will tell you that most people run out of life before they run out of money. We’ve got people focusing so much on how much money they’re going to have and are they going to run out of money. And really what ends up happening often is people run out of health.

I talk about health expectancy. Health expectancy is the actual age in every country that the World Health Organization knows that the average person will get an illness that fundamentally changes their life. And in the United States, it’s age 63 and having now lived longer, I’ve seen it. Average age of widowhood is 59. I talked about that in Smart Women Finish Rich, my first book that women, you have to know what’s going on with finances because chances are it’s all going to be in your hands eventually. And if you don’t know, you don’t go, it doesn’t go well. So you have to know what’s going on with finances. But I’ve had three best friends pass away and they didn’t get to 57, they passed away in their mid fifties. So I think this game about money, money is a freedom tool. And the sooner you get serious with your finances and you automate and you do all the basics, then you can go back to all the other stuff you do in your life. The thing about the automatic millionaire approach is it doesn’t take a lot of time. Once you have an automatic investment plan, I dunno if you spend but five to 10 minutes a month just looking at it and then you’re done. You don’t need to do anything.

Brett McKay:

Yeah. Alright, so the takeaway there, make it automatic. If you have a job with a 401k, you can set up a system so that whenever you get your paycheck, it automatically invests 10% even more if you want, before you even get your paycheck. And then some of those companies, they have matching. So if you invest a certain amount, they’re going to match that up to a certain amount. And this is all tax free. It’s going into a 401k. It’s a retirement account. If you’re self-employed, you might have to set this up by yourself, but it’s easy. You can set up a system with your bank account so that every month, a certain amount of your income goes into an investment account. And then your big proponent, once you get that money into a retirement account, keep it simple, your big proponent of the target investment funds.

So these are funds designed for if you’re going to retire in 2032, well here’s what the stock and bonds makeup will be, and then it’ll shift as you get closer to retirement. Or just a simple index fund like the VTI, the matches that. So just keep it simple. It’s all about keeping it simple. You’re not wanting to check the stock market. You’re not doing option investing or any of that crazy stuff you see on Wall Street bets on Reddit. Super simple. You don’t want to even think about it. I want to talk about this home ownership thing. So you said that the biggest past to wealth are stocks and real estate and home ownership. Lately, I’ve been seeing this sentiment online that home ownership is a bad investment compared to just sticking to the S&P 500. So it’s like why would you buy a home because you would earn more in investments than you would pay in interest on your mortgage. So why are you losing out on that? But like you said, you still believe that the home is one of the ultimate investment tools for the middle class. So why is that?

David Bach:

Well, okay, so let’s just look at the facts. And interestingly enough, the facts haven’t changed that much over 20 years except that home prices have gotten even more and more and more and more expensive. So anybody who bought a home 20 years ago has done phenomenally well, right? Even the last five years, they’ve done phenomenally well. So the reason people are against home ownership right now is as extremely hard to buy a house. It’s expensive. There’s 50 markets in the United States where the average person can’t afford to buy a home and it’s cheaper for them to rent than buy. The problem is renting’s a trap. So when you rent, if you rent in your twenties and you rent in your thirties and you rent in your forties, you’re literally going to turn around your pitches in your sixties having not probably built any net worth unless you’re paying yourself first automatically.

But even if you pay yourself first automatically and you use your 401k plan, it’s like a boat with one engine or two engines, you have one engine and you’re saving 10% of your income, great, that’s phenomenal. But you didn’t buy a house, you didn’t get any of the opportunities. Of all the wealth and equity that comes from building a home, there’s like $40 trillion in America in home equity. Again, it’s the second amount of money. The most amount of money that’s in the average American’s net worth statement is in home ownership. And the thing about home ownership is that you have to live somewhere as long as you’re alive, as long as you’re alive, you got to live somewhere. You can’t live inside a mutual fund. So people go, oh, well you can just buy an s and p 500 fund. You can buy the index fund.

It’s going to close up 10% annually. First of all, it doesn’t always go up 10% annually. Second of all, you can’t live inside a mutual fund. You have to live somewhere. Well, it’s cheaper for me to rent right now than to buy a place. That might be true. But guess what? Rents are going to go up. Rents have gone up so much. I mean, in New York City right now, go look up the average cost of rent in major cities, New York, Chicago, Los Angeles, San Francisco. It’s 3, 4, 5, $6,000 a month for one bedrooms, not even two bedrooms. It’s unbelievable what rents are costing. And I promise you where those rents are going in the next 10 years is higher and in 20 years it’s higher. So the cost of renting’s always going to go up. Why is that? Because everything’s more expensive with inflation. You have taxes and you have insurance and you have maintenance.

And the people who own the home or the apartment building that you’re renting are not doing it for charity. They did it for an investment. So they pass on all of their expenses to you so they can get rich. So you just have a choice. Are you going to make your landlord rich or are you going to make yourself rich? Now, is it harder for the average person to buy a home in major cities? Absolutely. You know what? When people are doing who really want to own, they’re moving to the next 50 markets where it’s affordable. I was a co-founder. I’m technically still a co-founder of a registered investment advisor called a wealth management huge company based in Topeka, Kansas. And it’s interesting, I just heard from one of my partners, my co-founder, Cody Foster, he just sent me a message yesterday and he is like 10 years ago, we were talking about the fact that Topeka, Kansas, just giving you an example, he said 10 years ago I came out and I did an automatic millionaire talk to all of our employees.

And it was so interesting because in our office, I’d say the average age of people in our office was between 25 and 35. So millennials and I had hundreds of people in the room. I’m like, how many of you want to buy a home? All the hands went up. How many of you already own a home? And interestingly enough, here in Topeka, over half the room, average age was like 27, had already bought a home, 27 years old, they already own a home. Now why could they own a home in Topeka? Because Topeka housing prices are affordable. I don’t know what they are today, but back then the average housing price was like $65,000 for a home. So they were able to the, I said, Cody, the American Dream in Topeka, Kansas is totally available. You can go get a great job at a company like we have here and people can get married, buy a home, go to church on the weekend, take their kids to baseball.

The American dream’s still here. And the interesting thing about that is the American dream all over the Midwest and in lots of places, and the average homeowner in America is worth 43 times what an average renter’s worth. Average renter has a net worth in the United States of less than $10,000. And an average homeowner has a net worth of over $400,000. I mean the number’s and the data. And so I just think it’s tragic. It’s one thing to say, I just can’t afford to buy a house right now. I don’t have enough money for down payment. Mortgage rates are too high. That can be true. But to tell yourself it’s going to be cheaper for you to rent over the next 10, 20, 30 years than to own something and pay the debt down and be debt free one day, it’s just not true. And so I hope for a lot of young people, here’s what’s going to really happen.

There’s 125 billion in wealth transfer that’s going to take place in the next 20 years, and it’s an enormous level of wealth transfer that’s going to go from one generation to the next. And you know what? The first thing these people are going to do to haven’t bought a home when they inherit money from mom and dad or grandma and grandpa, they’re going to buy a house and the families that actually will have inheritance to pass down why they have an inheritance passed down because they bought a home. So when you look at demographics and you go, who has money in America? It’s families that own homes, because that’s the thing that determines wealth gets transferred from one generation to the next. That’s how generational wealth gets created. So I feel for a generation of young people that I think are really being, in many cases by financial influencers, really led astray,

Brett McKay:

And if you own a home, you encourage people to pay it off faster. And there’s a simple approach. It doesn’t mean you have to pay it down super fast. It’s as simple as making an extra payment or two a year. And that can really add up because saving money, that would’ve gone to interest instead.

David Bach:

Yeah, one of the simplest ways to do is biweekly mortgage. You can keep your mortgage, but you just split your mortgage payment in half and you pay half every two weeks. That trick allows you to actually make one extra payment a year and making one extra payment a year takes a 30 year mortgage and pays it down in 25 years, typically.

And that will save you for the average mortgage over a hundred thousand dollars in interest payments. Getting a 15 year mortgage is another. It’s harder. But getting a 15 year mortgage is another phenomenal way to get home paid off early. Now when rates were low, this was much easier. Today with rates being six point a half, 7% gotten much harder. But rates will come back down again and you’ll be able to refinance and hopefully get a lower rate. But even at 7% right now, rates are still on a historical basis. It’s actually, people don’t realize it, but 7% is a pretty decent rate compared to where it’s been. There’ve been years where it was over 10, 11, 12%. So only a home. It requires you to make lifestyle changes. A lot of people when they buy their first home, you can’t buy the dream home. You will probably buy something that’s not as nice as what you can rent, and you may have to move into a neighborhood that’s not where you actually want to live right now at first just to get your feet in the door of buying your first home.

Brett McKay:

Last thing I want to talk about before we end our conversation. So we’ve talked about you’re finding small ways to save. You’re going to invest that money automatically take advantage of the power of compound interest, so that can grow into wealth over time. Home ownership can be a part of that as well. But a lot of people today might have a lot of consumer debt. So it could be credit card debt, car loans, student loans. How do you balance paying that stuff off while still saving for retirement?

David Bach:

It’s a great question. So in the automatic millionaire books, there’s an entire chapter. It’s a section on how to pay your debt down. And one of the biggest myths or things that I don’t believe to be true is that is that you should pay your debt off first and then you should save and invest. And what I’ve seen is when people do that approach, they get depressed and they don’t see themselves making enough progress. And so they kind of give up. And so I teach the approach that you should put whatever you can save. Let’s say it’s a hundred dollars a month. You should put $50 towards the future investing in a retirement account and you should put $50 towards your debt to pay the debt down. So you’re doing both at the same time. And the reason that’s important is if you can see yourself starting to build a nest egg and pay your debt down a little bit each month, you’ll see yourself shrinking your debt and saving for the future.

And that combination will be a winning combination. Now there’s all kinds of strategies on how to pay your debt down and I teach you how to go and get your rates lowered on your debt because it’s not the debt that kills people, it’s the interest rate. And so you’ve got to get the interest rates refinanced. You have to get these cards down. If you’re paying 20% interest rate, it’s really hard to pay a credit card off. So you have to play the game of getting the interest rates lowered. And then I teach approach that is, I call it done on last payment, that you take your smallest debt. So let’s say you have five credit cards. You start with your smallest card, you make minimum payments on everything, and you focus on getting the smallest card paid off. You get that one paid off, then you go the second smallest card, you get that one paid off. And that process is like a snowball approach to paying down your debt. Just like the snowball approach to building wealth. Instead of snowballing to build wealth, you’re snowballing to shrink your debt.

Brett McKay:

Gotcha. And so you’re doing this at the same time as you’re investing. You might not be able to invest as much as you’re paying down this debt, but what’s nice about it, if you do the snowball thing, this adult thing, once you make that last payment on your consumer debt, whether it’s a car loan, credit card, student loans, all that money you were paying towards paying off your debt can now go into investments.

David Bach:

Exactly.

Brett McKay:

Well, this has been a great conversation. Where can people go to learn more about the book and your work?

David Bach:

Well, Brett, thank you. I really enjoyed our time together. They can come visit me at davidbach.com, and the book again, the new book is The Automatic Millionaire. And by the way, you go to my website, front page of the website, I have a podcast, The David Bach Show. I put the first three chapters of the book on the podcast. You can go listen to it for free and see if you enjoy it. And we’ve got a whole bunch of great resources. And we’ll have your podcast on our website later. And yeah, I’m also on social media, Instagram and Facebook and X. So come find me. And I’m constantly putting out free content. I don’t have anything to sell. So you can get my book in the library too if you can’t find it. If you don’t want to get in stores, you can go get in the library, go get on the waiting list. I know they’re backed up right now.

Brett McKay:

Fantastic. Well, David Bach, thanks time’s been a pleasure,

David Bach:

Brett, thank you. Have a great day. I appreciate you.

Brett McKay:

My guest here was David Bach. He’s the author of the book The Automatic Millionaire. It’s available on amazon.com and bookstores everywhere. You can find more information about his work at his website, davidbach.com. Also, check out our show notes at aom.is/millionaire. Until next time, this is Brett McKay reminding you to not only listen to the podcast, but to put what you’ve heard into action.

This article was originally published on The Art of Manliness.

Your wallet is an essential part of your EDC. It carries your identification and your means of payment. In the past few decades, wallet profiles have been getting thinner and thinner. Men don’t want to sit on a George-Costanza-sized lump all day. Moreover, carrying too much stuff in your wallet can be a security risk: if you lose your wallet and it contains sensitive information, you put yourself at risk for identity theft. 

So what should you put in and leave out of a wallet to ensure you have the essentials, while also keeping things streamlined and reducing your security risk?

Below we share the items you should sometimes, always, and never keep in your wallet. 

Sometimes

Some items should only be kept in your wallet on an as-needed basis. Keeping them in your wallet all the time creates a higher security risk, and they needlessly take up space.

Health insurance cards/Medicare cards. A thief can use your health insurance card or Medicare card to get procedures done in your name, potentially sticking you with the bill, messing up your health records, or even increasing the cost of your insurance. You only need to bring your health insurance card to your medical appointments. You usually don’t even need it then, as the doctor’s office keeps a copy of your card on file, but every once in awhile they update their records and want to see your card again, so it doesn’t hurt to always bring it. 

You might think that you need to always carry your health insurance cards on you in case you end up making an unexpected visit to the emergency room. Not so. A hospital will still treat you if you don’t have your insurance card. You’ll just need to get the hospital your insurance info later.

Save space in your wallet and reduce your fraud risk by carrying your health insurance cards only when needed.

Medical debit card. Your medical debit card is another sometimes item for the same reasons your health insurance card is: to avoid medical fraud and reduce your wallet profile.

Gift cards. You might keep a gift card in your wallet just in case you decide that today’s the day you’re finally going to hit The Cheesecake Factory for dinner. But, you’re probably not, so it’s just taking up needless space in your wallet. What’s more, gift cards don’t need IDs to be redeemed, so if your wallet gets stolen, a thief could use that $100 gift card from Grams to treat themselves to a cheesecake-crowned feast. Only put a gift card in your wallet when you know you’re going to use it in the immediate future.

Always

Driver’s license. Got to have this on you by law when you’re driving. Getting pulled over when you don’t have your license may just lead to a “fix-it ticket” where if you later show proof of your valid license, the citation will be dismissed. But you definitely want to skip having to show up in traffic court to get that taken care, so always keep your license with you.

Credit card. Don’t carry multiple credit cards. Just keep one in there that you use the most. Stick with a credit card accepted at most retailers, like Visa or American Express. Not only will this reduce bulk in your wallet, but if you lose your wallet, you won’t have to cancel multiple cards. 

Debit card. Debit cards are essential for making payments from your checking account and withdrawals from ATMs. Ensure you have fraud alerts and daily spending limits to reduce debit card fraud.

Cash. A man should always have some greenbacks on him. Carry $100-$300; enough to cover most cash-only transactions that may arise, but not so much that you’ll lose big if your wallet gets stolen. 

Never

Social Security card, birth certificate, passport card. No brainer. You rarely need these documents for identification purposes, and they can all be used for identity fraud. Keep them at home.

Passwords. Don’t be a dummy and store passwords for personal or work services in your wallet. You’re just asking to become a fraud victim. Protect your online privacy. 

House key. If your wallet gets stolen, the thief will now have both the key to your house and (thanks to your driver’s license) its address. Bienvenidos thief! Mi casa es tu casa!

Blank checks. If your wallet gets stolen with blank checks, you risk being a victim of check fraud. 

Receipts. Because federal law prohibits businesses from including identifying/sensitive information on receipts, it’s highly unlikely that they could be used by criminals who get ahold of your wallet. But they pointlessly take up space, so get in the habit of discarding those you’re sure you don’t need for returns or for your records, and filing away those you do. If there is any chance the receipt does contain sensitive information, shred it.

With our archives 4,000 articles deep, we’ve decided to republish a classic piece each Sunday to help our newer readers discover some of the best, evergreen gems from the past. This article was originally published in March 2023.

This article was originally published on The Art of Manliness.

People have long been fascinated by their fellow humans’ daily routines — particularly the routines of the famous and successful.

We feel there are likely habits common to high-achievers, which, if duplicated, would help us all elevate our own work. This is especially true of the choice of when to wake up each day. There seems to be special weight placed on this decision, a feeling perhaps born of the idea that how you start something determines how the rest of it will go. The time you get up each day seems to be a potentially impactful pivot point from which the quantity and quality of one’s ensuing work and decision-making will flow.

It’s popularly thought that the best time to wake up is early in the morning. “The early bird gets the worm”; “Early to bed, and early to rise, makes a man healthy, wealthy, and wise.” Beyond even the idea that rising early has a practical benefit in aiding productivity, there’s a moral connotation to this habit as well; early risers are perceived as having more discipline, while their late-rising peers are often perceived as lazy.

Is there truly a correlation between waking up early and success?

The Morning Person as Success Story: Considering the Evidence

I decided to find out by re-reading Mason Currey’s Daily Rituals: How Great Minds Make Time, Find Inspiration, and Get to Work. The book is a collection of short descriptions of the daily routines of 161 eminent authors, mathematicians, architects, and artists — folks who did creative work and were able to set their own schedules. As I read each entry, I kept a tally of when each individual woke up. I only marked down those for whom a specific time was given, skipping entries where the time was kept more vague (e.g., “early morning” or “early afternoon”). In the few cases where a person woke up not at a straight o’clock (i.e., _:00) and instead arose at _:30, or were said to arise sometime between __ and __, I “rounded” to the earlier hour in half the cases, and to the later hour in the other half. My aim was just to get a feel for the general range of times that these folks got up each day.

This gave me the wake-up times for a sample set of 68 individuals, and these have been graphed below:

It’s worth noting that almost all those who woke up at 4 am took a long nap either several hours after rising or in the afternoon.

As you can see, there were indeed many early risers among this high-performing group, with the most common wake-up time being 6 a.m. Yet it is just as significant to observe that there were as many folks who woke up at 8 a.m. as 5 a.m., and almost as many who woke up from 7 a.m. on, as at 6 o’clock or earlier. And those in the former category were no less creative/productive/successful than the latter. Having a good morning to set the tone of your day, it seems, can happen at almost any time.

The real takeaway, then, is that there isn’t in fact one “right” time to wake up if you want to be creative and successful. The answer to the question of “What time should you wake up to do your best work?” is: “Whatever time works best for you.”

The novelist Bernard Malamud came to this same conclusion:

There’s no one way—there’s too much drivel about this subject [of copying other people’s routines]. You’re who you are, not Fitzgerald or Thomas Wolfe. You write by sitting down and writing. There’s no particular time or place—you suit yourself, your nature. How one works, assuming he’s disciplined, doesn’t matter. If he or she is not disciplined, no sympathetic magic trick will help. . . . Eventually everyone learns his or her own best way. The real mystery to crack is you.

Experiment. Be self-reliant. Find your own optimal routine. It’s worth noting that not everyone Mason profiled began working right after waking up; they might arise in the morning but first attend to other important tasks and activities before beginning work in the afternoon or evening. They might get in a morning workout or spend the first few hours of the day with loved ones. There are multiple components in one’s schedule to play with.

Now, all this being said, there was one commonality between all the profiles that was so nearly universal that it should be given real credence: despite the many varied ways in which each individual arranged their daily routine, almost all of them had a routine, and stuck to it religiously.

The Importance of a Regular, Consistent Daily Routine

“My experience has been that most really serious creative people I know have very, very routine and not particularly glamorous work habits,” explained the modern composer John Adams.

“Routine is a condition of survival,” asserted the writer Flannery O’Connor.

The novelist John Updike felt that having a daily routine was so important because it “saves you from giving up.”

These sentiments were shared even among those whose overall personalities and lifestyles were fairly hedonistic; for example, though the modern artist Francis Bacon and the writer Ernest Hemingway could be called night owls and sometimes stayed up late partying (the former drank six bottles of wine a day), they would nonetheless still wake up early and get to work, hangovers and getting enough hours of sleep be damned. A productive morning and day were always on the docket. As Papa put it, “You have to work every day. No matter what has happened the day or night before, get up and bite the nail.”

Further, among the individuals Currey profiled, such revelry was far more the exception than the rule. Despite the reputation of creative types as living freewheeling, iconoclastic lives, the vast majority kept to routines — both within and outside their work schedules — that were surprisingly quiet, prosaic, and closed-in. “I love the cell,” Voltaire exclaimed, and so did many of his productive peers throughout time.

The morning habits and daily rituals of famous authors and artists typically look something like this: wake up, drink a glass of water, eat breakfast, do a few hours of work, eat lunch, do a few more hours of work, eat dinner with spouse, take a walk (if one stand-out commonality did emerge from surveying all these routines, it’s taking a daily walk, or two; almost a third of the individuals profiled kept this habit), watch television or read a book, go to bed. Entire days would pass like this. They went out surprisingly seldom, and this was not an incidental choice but an intentional one; limiting distractions expanded their creativity.

Or as Gustave Flaubert put it, “Be regular and orderly in your life like a bourgeois so that you may be violent and original in your work.”

With our archives 4,000 articles deep, we’ve decided to republish a classic piece each Sunday to help our newer readers discover some of the best, evergreen gems from the past. This article was originally published in March 2021.

This article was originally published on The Art of Manliness.

When you have a high-responsibility job, your work hours can readily bleed beyond the 9-to-5. You’ve got a lot of tasks that seem urgent and important and an endless number of people who need responding to. This is of course especially true in the age of smartphones and digital communication, when bosses and colleagues feel free to message you at any time — even when you’re nominally “off the clock.”

The problem of ever-expanding work hours may be more prevalent these days, but it’s not new.

General George Marshall faced the issue almost a century ago. And found a way to overcome it.

As Chief of Staff of the United States Army during World War II, Marshall oversaw the expansion of a military ranked seventeenth in the world into the most powerful fighting force in human history. He managed nine theaters of war, helped oversee the Manhattan Project, and directed millions of personnel across the globe. His job was arguably the most complex administrative role of the twentieth century.

Day and night, there was always some issue, in some branch, in some part of the world that Marshall could be tending to, and that he could have convinced himself was urgent — the fate of democracy hung in the balance, after all!

But Marshall walked out of the War Department at 5:00 PM almost every single day and didn’t think about work until he showed up to the office the next morning.

How did a guy who oversaw the largest, most complex military campaign in human history do that?

The Marshall Plan — For Taming His Work Schedule

Here’s how General George Marshall kept the tentacles of his work responsibilities from expanding into an all-encompassing chokehold:

Marshall Gutted the Bureaucracy

When Marshall took over as Chief of Staff in 1939, the War Department was a mess. Over sixty different bureaus and agencies had direct access to his office, which meant he spent most of his time refereeing petty jurisdictional squabbles instead of planning a war. Marshall described himself as being “worked to tatters on minor details.”

So in early 1942, he blew the whole thing up. He directed Brigadier General Joseph McNarney to streamline the organization. The results were dramatic. The number of people with direct access to Marshall dropped from over sixty to roughly six. He created semi-autonomous commands — Army Ground Forces, Army Air Forces, Services of Supply — that handled their own training and supplies procurement.

And he established the Operations Division (OPD), which functioned as a single command post that filtered the entire war’s worth of data into a manageable stream of intelligence and proposed actions.

The OPD was the key to the whole thing. Theater commanders had to send copies of all combat-related messages to the OPD, and the OPD’s job was to synthesize that information and only bring the “broad phases of plans or changes” to Marshall. When Marshall sat down at his desk each morning, the information had already been distilled by competent people. His only job was to exercise judgment.

Marshall Demanded the One-Page Memo

Marshall had a rule: if you couldn’t explain your problem and propose a solution on a single page, you didn’t understand the problem yet. The one-page memo requirement forced his staff to do the hard thinking before they walked into his office, which meant Marshall could review dozens of critical strategic questions in the time it took other commanders to get through a single briefing.

Marshall Maintained Strict Boundaries

Marshall’s daily routine was boringly rigid, which is what made it effective.

He woke up at 6:30 AM and was at the War Department by 7:30. He’d get a global briefing at 8:00, and then he’d dive straight into strategic work through the morning.

He ate lunch and followed that up with a power nap. Marshall was a big advocate of the midday nap and pushed Eisenhower and MacArthur to adopt the habit.

After his nap, he worked through the afternoon until 5:00 PM.

At 5 PM on the dot, he’d leave the office for the day.

What did he do in his personal time?

Horseback riding. It was a non-negotiable part of his day. Marshall rode with his stepdaughter, Molly, or alone with his dog, Fleet. He specifically refused to ride with colleagues because he didn’t want “office talk” creeping into his recovery time.

After riding, he had dinner with his wife, Katherine, and was in bed by 9:00 PM.

Marshall understood that if you work yourself to exhaustion, you won’t have the mental clarity and energy to actually do the work you’re supposed to do. He was able to get more done during the time he did work because he was well-rested (thanks to the power nap and strict sleeping schedule) and refreshed (thanks to horseback riding and strict leave-the-work-at-work policy). And by standardizing his schedule, he eliminated that low-grade decision fatigue that makes you stare at your inbox for 10 minutes without actually writing any emails or causes you to snap at your kid for asking a simple question.

Even on the morning of December 7, 1941, Marshall was out on his horse, Prepare, at Fort Myer. Some people at the time criticized the optics. Why wasn’t the Army Chief of Staff at the office as soon as that Day of Infamy occurred? But Marshall understood there was nothing he could do immediately, so he took the time to get his mind right before he had to get down to business. His ability to remain “especially cheerful and optimistic” in the hours and days after Pearl Harbor was a direct product of those physical and emotional reserves he built up through deliberate rest and relaxation.

So, What Can We Steal From Marshall?

While we may not have to manage nine theaters of war, nor have Marshall’s latitude in restructuring administrative operations, I think we can use some of Marshall’s principles to tame our own workload into a more humane schedule. It’s all about working effectively when you’re “on the clock,” and actually checking out when you’re off it.

Cut the number of communications you have coming in. How many people have direct access to your time and attention? How many pings and dings do you receive?

Marshall cut his direct reports from sixty to six. You may not be able to be that aggressive, but you can identify the nonsense that eats your day without producing anything useful. Aggressively reduce the number of apps you have to check for communication. Use filters in your email so that only the important stuff shows up there. Turn off notifications from web services that you use. Use your phone’s Do Not Disturb feature and only allow VIPs to call or text you. Don’t attend meetings where you’re not needed. Get rid of the deadwood.

Organize your communications and answer them in blocks. You don’t have an OPD to synthesize your info and give you a one-page memo about it. But you can turn the intelligence you receive into a manageable stream and claw back a lot of time and bandwidth by keeping information and conversations organized into set channels.

In my conversation with business efficiency expert Nick Sonnenberg, he said that 20% of an employee’s time can be spent just looking for where information about a certain topic/project ended up. To shrink these “scavenger hunts,” he recommends designating certain channels for certain communications: text for personal matters, email for external communications with clients, vendors, and partners, and apps like Slack for internal team messages. By eliminating the search for where particular information resides, Nick’s found that workers gain back hours of time.

I also recommend establishing a “correspondence hour” — set blocks of time when you answer messages. In the morning, I glance through my emails, texts, and messaging apps and take action on anything that needs action. At night, I do the same thing. Doing this in set, consolidated blocks saves time over constantly ping-ponging back and forth through apps throughout the day.

Pick your 5:00 PM. You don’t need to literally knock off every day at 5:00 PM like Marshall did, but you need to establish a hard boundary where you take off your general’s cap and put on your personal one.

Marshall rode every evening because, without those hours on the horse, he knew he’d eventually start making bad calls with millions of lives on the line. Find your horseback riding. It could be working out, building model trains, or reading a book. Whatever. Pick something that has nothing to do with your job and do it as a way to transition from work mode to private mode.

If you’re an employee rather than a boss, it may be harder to say no to responding to messages when you should be off the clock. But try to have that boundary-setting conversation with your supervisor. And set expectations with your own behavior. If you always respond to messages in the evening and on the weekend, people will take that as the norm; if you don’t, then they won’t expect you to.

Nick also recommended keeping in mind that the more emails you send out, the more you’ll get back. So avoid the temptation to send “just one” response on a Saturday, lest you find yourself caught up in a back-and-forth that runs all weekend long. If you need to get a response off your mind, write it up, and then schedule it to be sent first thing Monday morning.

General George Marshall went on to create the Marshall Plan, rebuild Europe, and win the Nobel Peace Prize. He did all of it on eight-hour days with absolute focus, discipline, and a genuine understanding of human limits. He understood that a man’s effectiveness has a lot more to do with the quality of the work he does at his desk than with how many hours he sits there.

This article was originally published on The Art of Manliness.

I’m in my late thirties and have been laid off twice in my working years. This is not an unusual experience, especially in the post-COVID era, which some have termed a time of “forever layoffs.” Nearly half of all working adults have been laid off at some point in their career and most working employees are worried about layoffs on a regular basis.

The first time it happened to me was in 2012 when the small marketing agency that I’d been with for only a year went belly up. I was young, didn’t have many responsibilities in life just yet, and the job hunt went quite well; I secured a new gig within a handful of weeks. The second time I was laid off was in 2024, as part of a larger set of cuts at a billion-dollar tech company I had been with for about three years. Twelve years after my first layoff, not only was the economy wildly different, but I had a family, three young kids, and a mortgage to worry about. It took almost a year of ups, downs, and freelance projects to get back into comfortable employment. Those two instances ended up being pretty different experiences, and yet a similar set of tactics helped me get through both times.  

There will inevitably be a flood of anxiety after you’ve been laid off. But once your heart rate has calmed down and you’re able to move beyond panic mode, do these five things to get yourself in a good position to survive and move forward.  

Nail Down Your Financial and Insurance Logistics  

As hard as it can be in those first days after being let go, you need to start thinking right away about your finances and health insurance. It can be hard to do so without catastrophizing, but it’s important to think clearly and strategically about how you and your family will weather the financial unpredictability of the coming weeks and months.

Insurance

First, consider your insurance situation. Be sure that you have information from HR about when your benefits lapse — it can be immediate, but sometimes it’s a few weeks or even months down the road.

If you’re carrying the household’s insurance and have the option to move to a spouse’s insurance plan, definitely go that route, even if it’s not for the long-term. Having coverage is better than not having coverage.

If that’s not an option, COBRA is a federal government program that allows you to receive the same exact insurance you had with your former employer, for a period of 18-36 months after being let go. The major difference is that you’ll have to pay the entire cost of the premiums. If you’re in a field with good benefits, it may be exorbitantly expensive to pay out of pocket. In that case, your state’s insurance marketplace is where to look next. It can be confusing if you’ve never dealt with it before; your former employer’s HR department may be able to help you find a broker to help with that process. Don’t hesitate to ask them these types of questions.  

Finances

You also have to think realistically about your budget. How much do you have in your bank account? How much severance are you receiving, if any? How much do you have in emergency savings or other accessible accounts (that is, stocks or other investments that don’t have withdrawal penalties, rather than retirement accounts)? Make sure you know exactly how long you can make it without your income.

Next, apply for government unemployment benefits. Each state has their own online portal (and set of rules). You’ll be entitled to a percentage of your previous wages (typically 50%) for an entire year. It’s a hassle, and there are a lot of forms, including weekly online check-ins about your job search, but there’s no reason to not take advantage of unemployment checks. After all, your taxes have been paying into that fund for as long as you’ve been working!

Reach Out and Start Networking

Time to share some harsh truth: In today’s job market, it’s nearly impossible to just apply for a job that you found online and get invited to a screening interview, let alone make it all the way through the lengthy multi-interview + work test process that pervades modern job hunting. In the vast majority of cases, networking will get you farther than scrolling job listings online. It bears repeating: while networking does not necessarily have the same immediate ROI as applying for random jobs, it will net you greater returns in the long run.

In particular, it’s worth reaching out to your weak ties — those loose connections you made in college or through work or church. You aren’t quite friends with these folks, but know them well enough that reaching out in this scenario isn’t weird. Go creeping on LinkedIn to see where folks work; if a company seems interesting, there’s no harm in sending a message like:

“Hi there! I know it’s been a while since we’ve talked. I hope you’re doing well — I loved seeing that family picture on Facebook. I wanted to reach out and say hello because I was recently let go from my job of five years. I’m trying to get a feel for what the market is like and what’s out there and would really appreciate a 30-minute chat if you’re willing. If the timing isn’t right, no worries, but it’d be great to catch up a bit.”

If they agree to chat, don’t make it just about finding a job at their company; it really should be a broader focus on if they know of anyone or anything helpful. If you talk and something seems like a good fit, they’ll let you know. (After you talk, make sure to send a thank you note or message!)

Beyond those weak ties, also do some fresh networking both online and in your community. With a quick internet search, you’ll be able to find digital and IRL networks of folks in your industry. Again, the ROI is not always apparent, but genuine networking — with the goal of just getting to know people and getting your name and face out there — always has a way of paying off in the long run.  

P.S. This is a great reason to never burn bridges on your way out of any job.

Set Some “Working” Hours

In my observations, it seems that there are two types of responses to being out of work: either you can’t seem to get off the couch to do anything or you turn that anxiety into a kind of hyperactivity, spending every waking moment on the phone or computer. Both of those approaches have problems that can be remedied by doing your best to set daily “working” hours.

Don’t try to replicate a full work week; set aside 3-4 hours per day for networking, job hunting, building up your skills, and the like. The work of finding work is mentally taxing (and, let’s be honest, often defeating) in a way that a “real” job is not. There’s no psychological security at all; in fact, you’re mostly dealing with feelings of existential dread the whole time. As such, your willpower gets depleted rather quickly. After half a day or so, you’ll experience diminishing returns and it won’t be worth the additional mental energy to keep going. You can only scroll through so many job listings and write so many cover letters in a day before you start to feel your soul escaping your body.

Conduct Career Experiments

My initial response to being let go was, naturally enough, to apply for positions similar to what I just held. That makes total sense and should absolutely be your first plan of attack. Unless you have a sizeable financial cushion, it’s not a bad idea to do this even if you plan on changing careers — it may make for a nice fallback should that other route not work out as quickly as you hoped.

Within a few weeks, though, it was easy to blast through applying for the roles that most matched my resume. After that, I took the liberty of getting a little more creative and looking for roles that I wasn’t perfectly qualified for but suited my interests a bit more. Even though my career has been in online media and marketing, when I was laid off in 2024 I branched out and had a couple interviews outside my comfort zone, including with a small coffee roaster and a large airplane manufacturer. I even considered going back to school. I didn’t end up doing any of those things, but I thought long and hard about them and did learn a lot about what it would be like to jump industries, to start at the bottom of a workplace food chain, and the practicalities of starting fresh.

If you’ve ever thought of doing something different with your career, perhaps being let go is the spark you need to jumpstart that process. Don’t be afraid to look outside of what you know, especially if it’s an industry that’s been hit hard with layoffs (perhaps making it all that much harder to get a new job in that field).  

Do Your Best to Relax

One of the things that bothered me most — and which happened both of the times I was laid off — was hearing from folks about how I now had some time to sleep in, relax a bit, and enjoy “funemployment.” As if! There was no way I could sleep in or really even remotely enjoy myself while in the midst of desperately trying to find a way to replace that income as soon as possible. It’s very hard to relax when you’ve been laid off versus when you’ve left a job on your own terms, even if you’ve been lucky enough to receive severance pay.

That said, each time it’s happened to me, I forced myself to at least do some activities that would normally bring me joy — even if they didn’t immediately do so in the moment. For me, it was hiking/walking every day, reading, and doing some extra cooking/baking. While there’s a time and place for some true vegging out with Netflix, it’s best to shoot for a more active type of relaxation that comes from using your body and brain in a way that you get deeper fulfillment from. Regular exercise should especially be part of that routine. If you just lounge around on the couch all day, you can quickly fall into a pattern that’s hard to get out of.

It’s likely going to be hard to truly relax and let yourself recharge, but at least go through the motions. Some of it will stick and you’ll at least build up a good routine of caring for your mind and body while without work.

The job market and the process of finding work after a layoff is unpredictable. I simply cannot say that it will all work out in a timely manner. But if you follow these steps, you’ll at least have a better setup for success than you would have otherwise. Best of luck out there!

This article was originally published on The Art of Manliness.

We usually think of money as something very practical, concrete, and secular; we earn it, save it, spend it, and crunch the numbers behind it. But money is never just about money: it reflects our values, our priorities — and even our spiritual life.

My guest today, Tom Levinson, knows this well. He’s a financial advisor who studied religion at Harvard Divinity School and thought about becoming a rabbi. Now, he helps people navigate not just their portfolios, but the deeper questions that come with them.

In today’s conversation, Tom shares the greater meaning around money, what the Jewish, Christian, and Islamic religions say about it, and how financial practices like budgeting can be spiritual disciplines.

Resources Related to the Podcast

• All That’s Holy: A Young Guy, an Old Car, and the Search for God in America by Tom Levinson
• AoM Article: The Spiritual Disciplines — Simplicity
• AoM Podcast #363: Budgeting Doesn’t Have to Suck

Connect With Tom Levinson

This article was originally published on The Art of Manliness.

In the years after World War I, longtime Army colleagues and friends George S. Patton and Dwight D. Eisenhower contemplated what would happen if another global conflict broke out. As Patton envisioned it: “In the next war, I’ll be the Stonewall Jackson, and you can be the Robert E. Lee. Ike, you do the big planning, and you let me go in and shoot up the enemy.”

And that’s pretty much how things worked out in World War II.

Eisenhower led from Allied headquarters as Europe’s Supreme Commander, while Patton served on the ground as commander of the Third and Seventh armies. 

Ike, who lacked battlefield experience, was nonetheless brilliant as a theater commander. Having spent his career as a highly effective staff officer, he had a genius for planning, marshaling material, organizing logistics, and practicing diplomacy. Charming, modest, flexible, and steady, he excelled at getting the disparate and sometimes rivalrous Allied leaders to work together, interfacing with politicians and the press, and keeping all the pieces of a monumental war effort sorted and spinning.

Patton, on the other hand, had little patience for politicking and wasn’t lauded for his ability to formulate high-level plans. But, he possessed all the traits necessary for superior battlefield command. Bold and aggressive, he executed missions with mastery and confidence and advanced with relentless drive.

While each man’s position and responsibilities were different, each excelled in his particular role.

Ike was the consummate strategist. 

Patton was born to be an operator.

Strategists Versus Operators

Andrew Wilson, a professor at the Naval War College, describes the difference between Eisenhower and Patton as the difference between having a bent toward strategy versus having a bent toward operations. 

Wilson defines strategy as “the means by which you translate political purpose” — what the political leadership hopes to achieve with a war — “into military action, and how it is that you anticipate military action to deliver your political purpose. . . . So strategy is the bridge between policy and military actions.”

Operations, he says, are those military actions — “essentially the big muscle movements, the battles.”

Those who excel in that second kind of work — operators — do best on the ground and in the field. They excel at, and derive satisfaction from, practicing and carrying out a certain skill, craft, or art.

Those who excel at the first kind of work — strategists — do best in high-level positions. They excel at, and derive satisfaction from, overseeing, organizing, and supervising those who practice and carry out skills, crafts, and arts.

Another way to describe the strategists versus operators dichotomy is as managers versus tacticians.

It’s a distinction in men’s proclivities that extends beyond the military context, and it’s crucial to know which category you fall into. 

Are You a Strategist or an Operator?

While there are a few men who are adept at both strategy and operations, most primarily lean toward one over the other.

Problems arise when men don’t have the self-awareness and foresight to understand their personal strengths and propensities, and end up in a role for which they are ill-suited.

Strategists Becoming Operators 

Sometimes a man is doing well as a manager type, but may desire a job in the field, perhaps because such work seems “sexier.” For example, he may have done well for years as a supervisor within a company, but thinks about striking out on his own and becoming an entrepreneur, even though the skill set necessary for success in the former pursuit isn’t likely to translate to success in the latter.

Eisenhower thought about making this kind of shift.

In the lead-up to WWII, Ike thought he’d like to work alongside Patton and become the commander of an armored regiment. He had never seen combat; because he was so good at training others, he had been kept stateside during WWI and tasked with preparing troops to deploy. Having missed out on the consummate experience of a military career during the First World War, he was determined to get into the field during the Second.

So when in 1941, a general in the War Plans Division asked Eisenhower to consider joining its staff in Washington, Ike demurred. He really liked the prospect of that position, and knew he’d do well there, but felt that a field command was something he was supposed to prefer. He felt conflicted, and worried he’d “pass[ed] up something I wanted to do, in favor of something I thought I ought to do.” 

Eisenhower needn’t have worried. While he continued to position himself for field command, his administrative abilities were too valuable to be dispensed with, and he was eventually appointed chief of staff to the commander of the Third Army, then Chief of the War Plans Division, and eventually Supreme Allied Commander. Ike’s sense of personal satisfaction, and the fate of world history, benefitted from his sticking to these strategic positions.

Operators Becoming Strategists

What happens more often than managerial men trying to shift into tactical roles is tacticians being promoted into administrative positions. Those who excel in operational roles are frequently moved up the ranks. The problem is, the skills required to succeed as tactical operators don’t typically translate into success as strategic supervisors. This is the essence of the “Peter principle.” And not only may a tactician placed in a managerial or executive job struggle to be competent in that position, he is also unlikely to enjoy it. 

Entrepreneurs who successfully launch start-ups often don’t transition well to becoming the CEOs who run them. Fitness coaches who excel at training clients frequently flounder at owning their own gyms. Pastors who have the skill set to plant churches don’t always have the skill set to oversee the large, established congregations they grow into. Doctors who like practicing hands-on medicine won’t be satisfied spending their days supervising teams of nurses. Academics who enjoy teaching end up less happy as deans than they were as professors. 

Writers and artists, who initially function as fully autonomous operators, sometimes try hiring assistants and social media gurus to expand the empire around their “brand,” but find they’d rather keep their “business” smaller than to give over any of the time they could be creating to managing other people. 

Sometimes an operator has to transition to being a strategist because the fieldwork they do is physical in nature and takes a toll on the body. As a man who works in the trades gets older, for example, he may find it desirable and/or necessary to move from working on projects himself to supervising the work of others. 

But oftentimes, an operator ends up in a managerial position because he feels he’s supposed to take it and defaults to following the standard professional trajectory. The next rung up the ladder may take someone out of the field, but the position comes with more money, power, and/or status. A man thinks he ought to keep moving up in the world, even if that “advancement” puts him into a position he’s less suited for and finds less fulfilling.

Do You Want to Be in the War Room or in the Trenches?

It’s important to know who you are: a strategist or an operator.

If you’re a manager type, lean into that, even if that job may not seem as sexy as others. Administrators are absolutely crucial in keeping the world spinning round, and even help win world wars. 

If you’re the tactician type, do some real reflection before you accept that “promotion.” Is the benefit in money and status worth the tradeoff in fulfillment that comes from doing a job you’re brilliant at and love? It’s okay to recognize that you like carrying out orders more than formulating them. And it’s okay to value the chance to practice the things you’re really skilled at more than a bigger office. 

When Eisenhower was serving as Allied Supreme Commander in North Africa during WWII, his forces experienced some initial setbacks on the battlefield, and the Army’s Chief of Staff, George Marshall, suggested that Ike bring Patton in to serve as his deputy and oversee the fighting. But Patton balked at the idea of taking a more administrative job. He understood that he could do more good on the ground than at HQ, and that an operator belongs in the field — not behind a desk.

With our archives 4,000 articles deep, we’ve decided to republish a classic piece each Sunday to help our newer readers discover some of the best, evergreen gems from the past. This article was originally published in January 2023.

This article was originally published on The Art of Manliness.