Automated Future-Self Tax
Route part of every income increase into wealth before you can spend it
- Difficulty
- Easy
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 97%
Robbins recommends treating long-term investing as a tax imposed by your future self. First, establish a separate account that the business and daily spending cannot casually reclaim. Then automate a percentage of income into it, beginning below the ideal if necessary. He suggests founders aim toward 10 to 15 percent, with roughly 20 percent as an ideal, but those figures are his general suggestions rather than personalized advice. The ratchet comes from the interview's named “save more for tomorrow” strategy: commit in advance to send the first portion of every future raise into the account. This converts an intention to save later into a rule that acts automatically. The mechanism is separation plus automation plus gradual escalation, allowing compounding to continue while reducing dependence on willpower.
Origin
Extracted from The Foundr Podcast. Robbins links Ken Blanchard's advice to protect book income with the “save more for tomorrow” approach tested among workers who initially said they could not save.
Core principles
- 01A growing business will consume all available cash unless the owner draws a boundary
- 02Automated transfers are more reliable than repeated acts of willpower
- 03A small starting rate is better than waiting for an ideal rate
- 04Future raises can increase saving without cutting today's spending
How to run it
- 1
Draw the line
Choose income that will remain outside the operating business and everyday spending. Put it in a separate long-term account.
Pro tip Name the transfer as a payment to your future self.
Watch out Do not divert money already needed for taxes or essential obligations.
- 2
Pick a viable starting rate
Set a percentage you can maintain now, even if it is below your eventual target. Robbins mentions 3.5 percent as a low entry point in the cited program and 10 to 15 percent as a founder target.
Pro tip Optimize for consistency before size.
Watch out The percentages in the interview are broad suggestions, not a suitability assessment.
- 3
Automate the transfer
Route the chosen amount directly to the separate account so it is never available for an impulsive spending decision.
Pro tip Schedule the transfer to coincide with income arriving.
- 4
Pre-commit future raises
Decide now that the first portion of each future raise or income increase will go directly into the account.
Pro tip Document the percentage before the raise appears.
Watch out Do not assume future income is certain.
- 5
Ratchet toward the target
Increase the contribution rate over time while leaving the automated structure in place.
Pro tip Review the rate whenever income changes.
In the wild
Robbins recounts Ken Blanchard being advised not to put book income back into his growing company. Blanchard instead placed it in an untouched investment account, which he said reduced stress during three periods when the operating business approached bankruptcy.
→ A pool of assets existed independently of the operating company's immediate cash demands.
Robbins describes a program for blue-collar workers who had never saved. Participants started with a small percentage and promised that the first portion of any future raise would be redirected automatically. He claims their average saving rate later reached 15 percent.
→ The contribution rate rose over time without requiring participants to cut all of that amount from current spending immediately.
Common mistakes
Waiting for spare cash
Robbins argues that a growing organization will find a use for every available dollar, so an unprotected surplus may never appear.
Relying on manual transfers
Repeated manual decisions leave saving exposed to present spending priorities.
Starting at an impossible rate
An aggressive target that immediately breaks the budget is less useful than a smaller automated rate that can increase later.
Is it for you?
Best for
It is best for founders and earners who intend to build long-term assets while income grows.
Not ideal for
It is not ideal for someone who first needs to cover essentials, expensive debt, taxes, or an emergency reserve.
From the transcript
“i'm gonna put a tax on my business not the government tax my tax my future self is going to be free forever”
“the key is automating it”
“whatever the first five percent of money goes straight into this account”
From the episode
60: How to Become Financially Free with Tony Robbins
Tony Robbins