065 What You're Missing For Financial Freedom

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Most people will never find financial freedom because they're missing one key element. And listen, we've been all taught to work hard, to work long, to work for years, and the rest will work out well. If that's the case, why are so many people still struggling? Welcome to this episode of the affluent entrepreneur show. This episode, we're going to talk about that. We're going to talk about what you need to do. What's that missing element, and what you need to do instead to get you on the path to financial freedom. I'll see you in the episode.

This is the affluent entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money, and scale your life while creating a deeper impact and living with complete freedom. Because that's what it really means to be an affluent entrepreneur.

Why is it that most people will never find their path to financial freedom? I've been, like, obsessed with this question, and the fact is, I think that there's a key, key missing element that we're going to talk about in this video. Look, we came from an industrial age type of thinking. They said work hard, work for a lot of years, you know, sometimes 40, 50, 60 years, okay? And the rest will work out just magically. But here's the thing. If that truly was the case, then why are so many people still struggling? You know? And so the reality is this is that there's 18% of the people that are making $100,000 or more are still living paycheck to paycheck, 100 grand still living paycheck to paycheck. 35% of American adults, okay, 35% of American adults said they couldn't cover a surprise expense of $400 without.

Credit card or something else, but they couldn't pay for it in cash. Okay, $400 over 1/3.

And almost 1/3. 26% of non retired adults have zero retirement savings. Okay. This is a travesty. This is a challenge because. And the reason for it, I truly believe, is the lack of financial education, the lack of, of us even having conversations about it. People don't want to talk about money. We don't want to talk about what it takes. And until something smacks us in the face like a pandemic, we don't know what that, that anything's wrong. We're just following the, the worn path that everyone has told us. I got to tell you, there's a better way. I'm not saying that it's easier, but it is simpler in the long run. And you know, too often people think that money is complex or it needs to be complex. And the financial services industry would love for you to think that it's complex because then we become dependent on.

But I'm here to tell you that it's not. Building wealth is simple.

It may not be easy in some cases, depending on your situation, but it's simple. And I truly believe no matter where you are, no matter your age or stage, you still have the possibility and the probability to be able to do it if you're willing to do the things it takes to get there. A lot of people are not willing to do the things it takes. And if this is hitting you in any way or hooking you any way, you might want to examine that. My job here is to be your gentle coach or mentor, and maybe sometimes not so gentle coach or mentor. Because my desire for you more than anything is that you live to financial freedom, that you create financial freedom, that you, you dust off your dreams and that they grow. So I want to walk you through a couple of frameworks because I think that they'll start to put in perspective this missing element. The first one is this idea of what I call the. The you versus money paradigm. I'm going to jump to the iPad to do this, but the you versus money paradigm looks like this. We have this section here that we are.

We are working.

And this is, this is really you working. But here's the thing on this side of this, this graph is no or low freedom. You're tied to the job, you're tied to the business, you're tied to whatever it is you're. You're doing. You're tied to all of it. But then there's a stage that you might be Able to get to where all of a sudden it's this section here where all of a sudden it's your money working. This is the piece that most people miss. The idea of financial freedom is all about getting your money to work harder for you than you did for it. And too often we never get there. But if we, when we do, this is where you find yourself in complete freedom. Okay. All the way on that side. Now, to get there, though, understand that there's some things that you need to do. Okay. There's some things that, that need to happen. There's this. If I, if I draw a line here, there's this tipping point that, that we go through. Now, some people, like I said, never get there. They end, they stay all their days down here, which doesn't get them there because when you're down on this side of the curve, on the left side of the curve, you're totally focused on income generation. Can't tell you how many times I've talked to people. In fact, I was just having a conversation. I was driving back from Sedona and, and having a conversation with, with a good friend and a client, Mark, who at one point, when he came to me, his method of retirement, his method of financial freedom was I'm just going to work until I die.

How's that financial freedom work until we die? I don't think that we're here to do that. We do the work we love till we die, but we don't necessarily. The reason we want the wealth, the reason we want the money is to buy back our time, to get our moments back, to be able to have the choice to work. I get to work by choice.

That's a beautiful thing. Now the thing that is missing for everyone is this, is this idea that, that over on this side of the curve there is a focus on wealth creation. But if we're totally total dialed in on income generation and we're not using the income for wealth creation.

We never get to financial freedom because the only way that we have any kind of income is to run the treadmill because the money isn't working for us. We have to cross the tipping point. Now, I'm still living in income generation, but I'm also living in wealth creation at the same time. This is the missing link that, that people have in here. I'm going to circle it here and here. They have to connect. And when we connect these two now, all of a sudden income generation is leading to wealth creation. Wealth creation is leading to your freedom. That's the key but too often, we've been trained to focus on the income. What's my salary? What's my salary? What's my salary? What's my income? What's my income? What's my income?

Even entrepreneurs, you know, they talk in terms of what their revenues are. Revenues don't matter. Revenues of vanity metrics. Revenues don't create profits. Profits are where your cash flow comes from, and cash flows where your wealth comes from. Wealth is where your freedom comes from if you follow that through. Because the fact of the matter is, is that, that I don't care if you have a billion dollars in revenues, if you have a billion one in expenses, you're still losing money.

Income generation alone isn't enough. It's what we do with the income. This is the missing link. This is the thing that most people get wrong. And I'm going to give you the things that I need you to do to get out of this rat race, the 10 things to need you to get out of this rat race, because I want you to start to transition. This wealth creation is what I call the money machine. You may have a business, you may have a job, that's your business machine, that's your income machine. But I need a money machine where the money is doing the work for me. That's the missing link no one wants to talk about.

Let's create the money machine. So if I look at this and I'm going to go to another framework so you understand what do you need to focus on? And then I'll take you through the 10 things that will make a difference. And that, and that is this the second phase of this you versus money paradigm. And if I look at this in, in a couple of different ways and I say on this side, I'm going to just look at making money, okay, at high versus low, and then down on the, on the, the bottom axes, I'm going to say my money's working.

In other words, how much is my money working for me? High versus low.

When we look at it from this perspective, what ends up happening is if I've got someone that's in a place where they are making very little income.

And they're not putting money away to create their money machine, okay? They're down in this lower left quadrant of this quadrant model, okay? And in this lower left quadrant of this quadrant model, this is where you're stuck struggling, okay? You're struggling, you're living check to check. You're probably living below, check. You're probably living on credit. It's Struggling, you're not let alone putting anything away.

Then there's those that are making a lot of money. Okay? They're, they're in the upper, upper left quadrant. They're making a lot of money, but they're spending a lot of money. They're still not putting the money away. These are people that are spending. I see a lot of this today because you got all these people that are saying, yolo, you only live once. Yes, you only live once. There's no reason, let's just live for today. And I get it. There's something there for that. As a cancer survivor, a cancer conqueror, I get it. We gotta live for today, but not forsaking tomorrow in the process. Too often what we do is we, we sacrifice what we want most for what we want now. Ask yourself, what do you want most?

And by getting what you want now, does it sacrifice what you want most? Then we shouldn't be doing it. I don't sell my future for my today.

I don't mortgage my future for my today. And the people in the spending category are doing it. You see it, athletes, actors, high income people, they think it'll never end.

And when the income ends, because they're all on the income generation side, they're not worried about wealth creation. They're not building the money machine. All right, that then leads me to this bottom right quadrant. And the bottom right quadrant.

Is a little different. They're making a little bit of money. They're on the low income stream, but they're being really frugal. They're being very careful. So they're putting money away, but they're really grinding. I mean, it's a, it's a grind for them. They're putting money away. They're trying to get, get ahead. They're slowly, slowly building. They're creeping, they're. They're grinding. But then you have the upper right quadrant. You know, this is where you have the high income and you're putting a lot of money away. This is where it's freeing, okay? This is where it's freedom. This is where your freedom is, okay? And so it's about getting your income up, but also getting your money to work for you harder. So let's look at this. How do. Great, Mel, how do we move from quadrant to quadrant? All right, if we look at this, if I'm on the bottom half of this, I'm either struggling or I'm grinding, then your focus at this stage has to be on what I call income scaling. On income scaling. In other words, you're going to look at how do I get more income and how do I get more cash flow. And I can do it by cutting expenses. But you can't cut your way to wealth. You can manage that. Great. But how do we increase income? Is it a side gig? Is it a business? Is it a side hustle? Is it another job? What is it that I can do to scale my income? To do I raise my prices at the company that we talk about eight revenue scalers in the affluence blueprint and, and how to do that. So if you're on the bottom half of the, of this model, you know, either in struggling or grinding income, scaling is where you want to focus. If you're on the left side of the model trying to get to the right side of the model, then your focus is, is on portfolio building. Okay? This is about assets that pay cash flow, okay? Not. Let's, let's be clear. What an asset is in our book in the affluence world are the way we look at assets. Assets are, are things that increase your net worth and will increase your cash flow over time. That means that a car is not an asset, it's a depreciating asset. Now I get it. Today's time, it's a little different, but that's going to go away, okay? Your clothing fads, all that stuff, if it's not, if it doesn't have the capacity to generate cash flow and support your living, okay? I've talked about the stages of.

Financial freedom, the path to financial freedom. If it doesn't support you to get to financial freedom, it's not an asset, okay? So don't trick yourself into believing that you want to build a portfolio. It could be stocks, it could be ETFs, index funds, it could be real estate, it could be alternatives, it could be a combination of both. It could be business interests, all that. But there has to be a portfolio that becomes the money machine. That's the missing link. But we need to understand where we are to transition. So how, how do we get out of this rat race? Well, let me give you 10 things to do. I'm going to walk you through 10 things that'll get you out of this rat race and into a place where you can start to move yourself, where your money's working for you. So the first is this. Used to make sure that your future is a priority. Now this is huge because too often we're putting our future off. Your future's coming and it's coming for you. We need to make it a priority. What, what I notice is, is the difference. One of the differences between rich people and not so rich people. Wealthy people and, and not so wealthy people is this, is that most people, they make money, then they spend money.

And then they invest, okay? They've made spending and their lifestyle a priority. Rich people.

They make money.

They invest money. So they make investing that, and then they spend, okay? They put their future as a priority. They make investing a priority first. If investing isn't a priority right now, then your future isn't a priority. Right? You're saying that I'm going to build my future on the scraps that I have left over, and that's not a way to build a future. And I get it. Some of you might be saying, but, Mel, I'm struggling to pay bills. It's another question that we can deal with, okay? We have to start to look at your. Where your money's going. And we got to look at, remember, income scaling. We need to solve that problem so we have the room.

To put it in. But we can't make our lifestyle spending our future for our today or borrowing from the future for our today. Okay? So that's number. Number one. Number two is to get a clear vision. If you don't know where you're going, then you're just running a race that never ends. But we spend the first part of the affluence blueprint talking about the affluence vision and calculating it and defining it. Most people never define what their vision of their life is to be like. Doesn't mean that you have to know how to get there. But I got to know where I'm going before I figure out how to get there. And even if I never get fully. But I get 80% there, 85% there, 75% there, I got much closer than if I didn't know where I was going. So you need to create a clear and vivid vision of affluence. Okay? We call it an affluence vision, the affluence blueprint. Then number three, like it or not, you need to educate yourself, okay? Your money and your wealth isn't someone else's issue. Your money or your wealth isn't someone else's responsibility. It's your responsibility.

It's your responsibility. That doesn't mean you need to be some financial analyst or some. Some statistician or some mathematician. It means that you need to be involved. It means that you have to have an understanding. Because we don't invest in things that we don't understand. That's how we get burned.

We invest in things we understand. Now you may not understand it at the, at the, the most minute detail, but you understand it enough to make a decision and do it. Even if you have an advisor, you're the decision maker, not them. They're the advisor. That's why the term is advisor. They advise you, they inform you, they educate you. And so you might have to take courses, you might have to get a mentor, you might have to get a coach, you might have to read books. But once we know what the vision is, we need to educate ourselves.

Once we educate ourselves. Now I need you to create a solid strategic financial plan. A plan that moves you towards the vision. A plan that, that is something that you can execute on a regular basis. You can measure to know that you're on track. You can adjust if you're not on track.

And you can adjust as life happens. A solid strategic financial plan. And number five is all about then following our, what we call the wealth priority ladder. The wealth priority ladder is how you allocate your cash. In fact, I have a video on this. I'm going to hook it up at the end of this called what to do with your cash. It'll give you a breakdown of how to do this. So every dollar that comes in, where does it go and what does it do? Okay, then number six. Number six is, is all about.

Having the right metrics and scorecards to track your progress.

A pilot doesn't get in a plane and start flying and never look at the instruments, never look at the horizon and never look at where they're at. It's the same thing with your wealth. It's same thing with your money. It's the same thing with your income and your expenses. Know your metrics. We have specific scorecards and metrics that we have our members follow on a monthly basis to make sure that they're on track, to be able to tweak, to be able to adjust. What are the metrics? Define the metrics that are gonna, that are gonna make sure that you're moving towards your, your money milestones down, down the road. Number seven, this is, this is big. Get the right mentors and advisors. Surround yourself with the people that can help you make that vision a reality and not just a vision and a dream. Okay, you might need mentors, coaches, advisors.

Number eight, know that you're in it for the long game. Wealth creation is a long term pursuit. It's a life time pursuit. And when you start to understand the dynamics of compounding the dynamics of investment growth and exponential growth. You'll realize that it starts off flat and then it arcs in a hockey stick. But we have to get through that flat curve. And the only thing gets it through that flat curve is the flat part of the curve is time. We got to get in the game, we got to play the game for a while. Play the game, live the game on a long term basis. Number nine is live your life. What I mean by this, I mean when you define your vision.

In, you are really clear what that vision is. You live to that vision. I don't care what the people on the right and left are doing. I don't care what people are doing in social media. I don't care what your parents say. I don't care what the media says. I care that you did life on your terms. I care that you did finances on your terms. I care that you built the life that you wanted to build. The worst thing that could happen is that you live the 70, 80, 90, 100 years of your life and you get to those last years and go, wait, that wasn't mine.

Live your life, that's someone else's. I hope this is resonating with you. And then number 10.

Be generous.

Be generous. When we're generous, this is when all of a sudden the world is generous back. Those that have built wealth will give back. Be generous with your time. If you don't have wealth first, be generous with your time. Be generous with your caring, be, be generous with your empathy. Then be generous with your money. When you're generous to the universe, it will be generous back.

It may take some time, it won't. It may not be a transaction that happens instantly, but I truly believe, and I have seen it lived out in my life, the more generous I am, the more generous the universe is. All right, Those are the 10 things that I think you need to do to get out of the rat race to start to shift from, from you working for money and money working for you to get you from the struggling point to the freeing point in the framework to move you to complete freedom. So I hope this helps and gets you to start to understand the mentality and the, and the mindset that you need to have moving through this that it's not just income generation, it is wealth creation done at the same time. It's about building a money machine to make that happen. So like I said, I'm going to hook you up with what to do with your cash, which will help you out. I'm going to hook you up with another video over here called the framework for financial independence to walk you through what I think it takes to help you make that a reality. All right? But above all, get involved. Above all, if you have questions or things that come in, send them to me. Reach out to me. Let's bring them on the show. Let's bring them on an episode. Let me be partly one of those mentors for you, one of those coaches for you to keep you moving on the path to financial freedom. Financial freedom, it's a birthright. We just have never been taught how to claim it. Well, that's why this show is here and that's why I'm doing the show. So let's make sure that happens. And I look forward to seeing you in another episode, another show, or on the road. And until we get a chance to see each other again, always, always strive to live a life that outlives you. Cheers.

Thank you for listening to the affluent entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com.

And I'll see you there.

And that's it for this episode of building your money machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple podcast, or wherever you're listening to this this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people, because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.