Why 50% stay broke and how one hour a day can change everything

Despite living in an era of unprecedented wealth creation, the financial reality for the average citizen remains precarious. According to David Bach, a 10-time New York Times bestselling author and financial expert, seven out of 10 people are currently living paycheck to paycheck, and half of Americans can’t access $1,000 in an emergency. In a recent appearance on The Diary Of A CEO, Bach outlined why so many people remain financially stagnant, and proposed a “one hour a day” strategy to build automatic wealth.

Bach, who spent three decades in the financial services industry, argued the primary reason people stay broke is not necessarily a lack of income, but a lack of a plan. He describes the average worker’s day as a systematic drain on resources: the hours worked from 9:00 a.m. to 12:00 p.m. pay the government in taxes, and the hours from 12:00 pm to 3:00 pm cover housing and food. Consequently, most people spend their remaining income on lifestyle costs, leaving nothing for their future.

The solution, according to Bach, lies in a concept he calls “paying yourself first.” He advises that, regardless of income level, the first hour of a worker’s daily income—roughly 12.5% of their gross pay—must be retained for their own financial future. Bach said he was basing this calculation on the latest Fidelity data on 401(k) millionaires, which showed a population of 654,000 as of January 2026; The Wall Street Journal called these “moderate millionaires,” similar to what UBS calls “everyday millionaires.”

As Bach explained it to host Steven Bartlett, “you’re the first person who gets paid” under this system, emphasizing that this money should go directly into a tax-advantaged retirement account like a 401(k).

The $27.40 solution

Bach illustrated the power of this strategy through the math of compound interest. If you invest just $27.40 a day, he said, that would amount to $10,000 per year and over $4.4 million over 40 years, assuming a 10% annual return. He acknowledged that 60% of the population may struggle to save that specific amount due to the cost-of-living crisis, but said it’s better to start small than not at all. For those with tighter margins, he suggested a 100-day challenge of saving $10 a day to build an initial safety net.

According to data from the U.S. Bureau of Labor Statistics, the median full-time worker earned roughly $1,200 a week before taxes as of 2025. After covering rent (which averages over $2,000 a month in 13 states, and far more in cities such as New York, Los Angeles, San Francisco and Miami), health care, childcare, transportation, and food, many households have little or no discretionary income left to “pay themselves first.” The surging price of groceries was a key issue in the elections of both 2024 and 2025, the latter which rode on the theme of “affordability.” As of December, three out of four Americans said groceries were so expensive they had to cut down on other spending.

A critical component of Bach’s philosophy is the rejection of budgeting and discipline, which he claims rarely work long-term. Instead, he advocated for an approach where savings are deducted from paychecks or bank accounts before the earner ever sees the money. “Unless your financial plan is automatic, it will fail,” he warned, noting that corporations already use automation to extract money from consumers through subscriptions and billing, so individuals must use the same tool to pay themselves.

The interview also touched on the contentious debate between renting and homeownership. Bach pushed back against the modern trend of financial influencers advising young people to rent and invest the difference in the stock market. He cited Federal Reserve data showing the average homeowner in America is worth 40 times more than the average renter ($400,000 versus $10,000). This figure often reflects equity tied up in property, however, not necessarily liquidity or financial flexibility.

Bach argued the theory of “renting and investing the difference” is a myth because, in the real world, renters rarely invest the surplus; they spend it. Furthermore, homeownership acts as a “forced savings” mechanism that locks in housing costs, whereas renters face perpetual increases that erode their ability to build wealth.

Bach said he views the next decade as a critical window for wealth generation, particularly with the rise of AI.

“I believe the next 10 years will be the greatest opportunity to build wealth in our lifetime,” he said, warning that those who do not automate their finances and acquire assets like stocks and real estate risk being left behind permanently.

This story was originally featured on Fortune.com