We recently spoke about the predecessor to AI – automation, and why it is one of the most critical components to leverage while working to build and maintain our assets.
When you shrink the time between income and investing, we can either – retire sooner or have more money when we do.
It’s an easy win.
Let’s get into it.
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Most things in life have a margin.
You may think about printing margins in Word, how far to drive behind someone, how much you won by at your city league basketball game, or the limits your eight-year-old has before he gets in trouble.
The more we go down this rabbit hole, the more things we can find with margin.
Furthermore, we’ll find that most things are already accounted for, leaving relatively little time/money to build.
1/3 of our lives are spent sleeping, 1/3 of our money is spent on taxes, another 1/3 is spent on housing, and 1/3 is spent working.
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When you shrink the time between income and investing, we can either – retire sooner or have more money when we do.
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The average American spends 40 minutes a day commuting and 8/9 hours working.
You can see where I am going with this; we don’t have that much time or money outside the routine.
And if you are like me, you want to ensure it all counts
I’d rather play with my kids and pursue my wife, be active, and travel versus spending hours pouring over spending mistakes, bad habits to fix, or portfolio allocations.
Automation ensures we don’t lose where it counts the most, at the margin.
We need to win at the margins, knowing most of our money is pre-spent on fixed costs and our time on sleep, work, and family time.
It’s crucial to get this right.
Examples of Winning the Margin Game
Here’s a simple example of why this: doing the small things well matters.
Susan and Sarah are both 35 and earn $150,000 a year. They are exactly the same, except Susan saves 7% of her income while Sarah saves 5%. Given a long-term average return of 7%, 20 years, and a $50,000 starting point, Susan ends with $637,578, while Sarah ends with $510,694. Susan saved just $250 more per month and ended up with over $150,000 more.
That, my friends, is why the margin matters.
Life is not a math equation, but our money is.
Tired and Rich is choosing our tired and winning the margins with our money.
This is similar to how Susan saved a bit more over time and ended up with significantly more money heading into the final ten years of her career.
Winning these small battles leads to winning the war.
This isn’t about having money for money’s sake, but rather, it’s about freedom.
Strategies for Winning at the Margin with Automation
So, in light of what we are talking about, here are some ways to win at the margin using automation
- Increase or start an automatic draw into your brokerage account.
- Start a college fund with a monthly purchase for all your kids
- Up your 401k contribution by 5%
- Max out your HSA next year
- Pay off your car and put that cash flow into your brokerage account.
- Make an extra mortgage payment once a year.
Pick one of these, set it up, and don’t stop.
The margins of life are slim, but in them is life itself.
We win the margin game over time when we focus on automating our financial lives. When we win there, we win our freedom.
