Instantly Improve Your Finances with David Bach’s Top 13 Money Tips

Money tips are a dime a dozen, but they pack a real wallop when they come from a trusted source. Self-made millionaire David Bach has been educating people for decades.

Bach hit the millionaire milestone at the young age of 30 and has spent the last several decades passing on his wisdom. He’s known for the Finish Rich brand, under which he’s published his Finish Rich ad Automatic Millionaire Book Series, helping many to break bad money habits.

Over the years, he’s pushed out some very helpful tips, and we’ve compiled a few of them to break it down for you.

1. Buy Instead of Rent

One of the many reasons real estate is considered a vital asset is because it helps build wealth. Over time, you pay down the debt and gain equity. Once it’s paid off, you own it outright and it becomes part of your portfolio.

Renters, on the other hand, don’t have this luxury. They pay rent to their landlords, who are the real winners in this situation. When possible, it’s best to buy, not rent.

2. Invest, Don’t Borrow

If you’re only ever borrowing money, you’re on the losing side. When you take out a loan or borrow from friends and/or family, you’re constantly paying someone back.

But, when you invest, you’re consistently earning. See the difference? Borrowing is money leaving your pocket, investing is earning money you can spend at a later date. Word to the wise: leave your investments alone. Let them do their thing on the market. You’ll be glad you did because building wealth is a marathon, not a sprint.

3. But, Invest Smartly

But don’t just invest anywhere. You need to make sure you understand what you’re investing in. Bach says if the explanation requires more than one sheet of paper, it’s too complex.

Also, don’t invest on margin. That means using your securities as collateral to borrow from a broker to purchase more stock. The risk is too great.

4. Grow Your Wealth, and Keep It

Believe it or not, once you’ve reached wealthy status, it’s easy to lose it. Rather, do everything you can to hold onto your money.

Don’t spend lavishly. Don’t take risks you wouldn’t take if you were poor. Instead, make smart decisions with your money. Continue to invest and put your wealth to work for you.

5. Throw Out Budgeting

There are so many financial experts who say to budget, budget, budget. And they offer different options on how to do it. Bach says the opposite.

Budgeting is a pathway to failure, according to the guru. Instead, he says to automate your financial life. When it’s done automatically, there are no excuses and no downhills.

6. Pay Yourself First

Bach is a believer in paying yourself first, before you pay anyone else. That should come out to one hour’s worth of your income per day.

The rationale behind this thinking is that you will work quite a bit of hours in your lifetime and you deserve to personally reap the rewards of that work.

7. Don’t Spend What You Make

Also, don’t spend more. Spend less. If you spend less than you make, you will always have a surplus, which will make it easier for you to save up money for whatever purpose.

You can put the money toward your emergency fund or invest it. Just be fiscally smart and never add more to your pile than you can afford.

8. Give Back

Giving back is a big part of Bach’s mentality. He said it’s important to do this automatically, after paying yourself.

In doing so, you’re boosting your worth. Plus, giving back means you’re being selfless, and as such, making the world a better place to be overall.

9. Don’t Lend

While some wealthy people, like Kevin O’Leary, believe they can help family and friends because they have the money, Bach doesn’t believe in lending.

He says it will lead to a double loss: that of a relationship and the money you’ve chosen to lend. Remember, you’re not a bank and people shouldn’t look at you as such.

10. Take Advantage of Compound Interest

Compound interest can help build your wealth quickly. In fact, Bach gives an example of saving $10 per day at a rate of 10% interest. That money, he says, will come out to just under $2 million in 40 years.

Even if you manage to save half of that, you’ll still have a decent savings in the same timeframe: $500,000.

11. If at First, You Don’t Succeed…

Don’t give up. That’s the mantra people swear by, and Bach is one of them. Failing isn’t losing, after all. But, giving up is.

The goal is to keep dusting yourself off and trying again, but definitely don’t do it using the same methods and expecting different outcomes. That’s insanity.

12. Timing the Market Never Works

Many people believe they can time the market. In other words, make money moves depending on what they predict the market will do.

While in theory, this sounds great, in reality, it almost never works out. In fact, the majority of people who attempt to do so fail and they have worse results than if they just left their investments alone.

13. Don’t Bet the Farm

Big risks have a place. In your finances is not one of them. Don’t take exaggerated risks. In other words, don’t bet the farm.

Rather, be smart about your money moves. After all, how many times have you heard of people betting the farm and losing it? It’s a common result.