11 Harsh Truths I Wish I Knew In My 30s

11 harsh money truths I wish I knew in my 30s. Here's one that'll wake you up. 46% of people who are making over 6 figures are still living paycheck to paycheck. 6 figures, and they're still stressed because you know what? Nobody ever taught us about the difference between income and wealth. And if that hits a nerve, this video is going to change the way you think about every single dollar you earn. This is Building Your Money Machine, where we help you master your money, eliminate financial stress, and live a life By choice. Because earning more doesn't make you free. A money machine does. And I'm your host, Mel Abraham. And after 30+ years as a CPA, an entrepreneur, and a money mentor, someone who's walked the financial freedom journey from nothing to something, broke it and had to rebuild it again, I realized it is much more about bigger choices than it is about bigger numbers. So if you're ready, let's do this. 11 harsh money truths that I wish I knew in my 30s. And not the Thanksgiving uncle advice that you might get about maximizing your 401(k) or cutting out lattes, but the stuff that would have changed my trajectory of my financial life quickly. Okay. And I would look— I was ambitious. I was a CPA. I was grinding. I was getting clients. I was getting the income, and I was still getting it wrong. Not because I was lazy, but because the playbook was written for a world that doesn't exist anymore. And so I'm hoping that I can save you a decade or two and a whole lot of heartache. So let's just jump in to truth number 1. Truth number 1 is that you don't have money problems. You have money symptoms. See, most people see what's left at the end of the month and they think, man, I got a money problem. I did. All right. No, you have money symptoms. See, the fever isn't the infection. The real issues are the choices, the behaviors, and the habits, and the stories that are going on in your head, or what were going on in my head. See, if your situation is a result of something external to you, then you can't control it. But when you understand that your situation is a result of choices and decisions, all we have to do is make different choices and decisions, and we realize we're not broken. Now, in my 30s, I thought I had an income problem. Okay. But it turns out I had a behavior problem that was dressed up in a really nice suit. All right. 80% of your wealth creation comes from behaviors, comes down to habits, and that's the game. So if we want to build wealth, we need to first start with examining our behaviors and our habits, which then mean that we need to examine our stories and our thinking. And once I got that flip, it completely changed the trajectory of my financial journey. That leads me to truth number 2. Budgeting, it's a trap. Listen, everyone says to budget and track every latte, every penny. And I tell people to track it for different reasons, to know where every penny goes. I'm a CPA and I love spreadsheets. I love to see the columns and rows and have it all add up. But budgeting is really managing scarcity if we're not careful. It's a plan for your limitations. And if that's what we're creating, that's not a plan. That's a prayer and a spreadsheet. Instead of obsessing over spending, how about we build a system that generates income whether you're awake or not? That's the money machine. Index funds, ETFs, dividend-paying assets, cash-flowing assets, generating cash flow to fund a life that doesn't require all your efforts. Now, most people, They make money, they spend it on lifestyle, they invest the leftovers, they create their future on the scraps. But the wealthy, they flip that. They make money, they invest first, and they spend what remains. And if they, if they don't like that, then they go back and say, how do I make more money? Instead of just cutting away and cutting away and cutting away. It's something that I call the wealth priority pathway. That one shift, that one priority shift, to make investing a priority changed everything. All right, truth number 3, okay? High income equals a shinier leash and not freedom. So you got a promotion, I got a promotion, you crack 6 figures, maybe you're at $200,000, $300,000. For some reason you're still stressed, okay? It's because earning more doesn't make you free. See, there is a difference between earning and wealth. There's a difference between income and freedom. And if it was just income that we needed to have that freedom and to have that wealth, then we could look at some of the people that make lots of money and they would be totally free. But yet many of our broke— look at some of the actors, look at Nicolas Cage and some of those folks. They made a lot of money and they went broke. Why? Because they were so hyper-focused on earnings, they never thought about building a money machine. And I've worked with, with over 100 millionaires, and some of them are the most stressed people I've ever met. And they have gigantic incomes, but high income with high expenses is just running on a hamster wheel. And if that money stops when you do, then you're not free. Your whole existence is rented. And so when you look at the data, 46% of people earning over $6 figures, over $100,000, they're still living paycheck to paycheck. That's a problem. And so, when I think about this in my own life, when I got diagnosed and I couldn't work, diagnosed with cancer, and I couldn't work the way I wanted to, I literally said to my wealth team, look, let's flip the switch. Let's turn the money machine on and allow it to spit out the cash so we can live our life. So, we weren't in a situation of, Let's cut things. Let's cut things to the bone. Let's start selling things. Let's start downsizing. It allowed us to live because there was a machine in the background that got built. Now, I'm not saying it's easy, but I am saying it's simple. With the discipline, the behaviors that I already talked about, the habits and the thinking, we can make it happen. The money machine literally covered our whole lifestyle without us having to downsize things. And that's the— that's where I want you to go in starting to build this up. Because in my world, we didn't have to sell anything. We didn't drain the savings. The machine just worked. That's the difference between income and wealth. Truth number 4, your 401(k), it won't save you. Okay? We used to have pensions in our world. And when we talk about a pension, I mean a lifetime of income for loyalty after you retire. Where companies said, you gave us the best years of your life, we're gonna take care of you the rest of the time. But it got too expensive. They couldn't carry that anymore and we were living longer. So what did they do? They did away with it and they introduced us to 401(k)s and IRAs and SEPs and those kinds of things. And they said, "Good luck, it's your problem now." So what ends up happening is that now we have been saddled with the requirement, if you will, the responsibility to create our own lifetime of income. Again, the argument for building your own money machine. And so, Their version of retirement, given this new kind of era that we're in, is to save for 40 years, drop your lifestyle by 30%, so you're living on 70% of what you made, and spend it down and pray that you don't die before the money runs out. That's not a retirement plan. That is literally a ticking time bomb of anxiety. Okay? So yes, use your 401(k), especially if there's a match, and follow the wealth priority ladder as I talk about it, because you want You want to take the free money, take it. All right. But don't mistake that vehicle for the journey. Retirement isn't a number. It's a choice. And it's a choice that you get to make. And we need to understand what that choice is, what that life is, what that vision for your life is, and create something that supports that vision, not some arbitrary number that they say is 70% of what you made. Okay. Truth number 5, beating the market is pure arrogance. Okay. In my thirties, I thought I was smart enough to pick stocks and time trades. I was doing day trading. I was doing all kinds of things and I did really good until I didn't. And I found out, yeah, that's a lie. Okay. It's, it is not possible. Even the best hedge fund managers with an army of analysts, billions of dollars, the best computers, the smartest people can't beat the the S&P 500 long-term. They just can't. And data has shown it. And so why are we sitting here on our phones going, hey, between meetings, thinking that we're going to do better than them when they do it full-time? See, I realized quickly that that's not investing. That's literally gambling with a Wi-Fi connection. That's the problem is that you don't need to beat the market. Again, if you have the vision for your life and you know where you're going, it's not about beating the market. It's about putting a strategic plan in place that works to get you to the life that you want. You need to become the market. And the way you do that is you invest properly in low-cost index funds, low-cost ETFs. You end up in a situation where you have a diversified portfolio, a big candy bag, if you will, of stocks that gets you the whole bag. And you get 8 to 11% historically low-cost, diversified, lower risk, liquid, and we stop trying to be clever. We take the stress off of ourselves. We take the anxiety off ourselves. We just, instead of being clever, we're consistent because clever loses sooner or later. Consistent wins all the time. All right. Truth number 6: Time in the market wins, not timing the market. And this is related to truth number 5. People ask me all the time, Is now a good time to invest? When should I invest? Well, the reality is you should have invested yesterday or a month ago or a year ago or 10 years ago, but we can't go back. So the second best time is now, today, because when we look at the market long term, it always goes up. Now it goes up 8 out of 10 years. So there are going to be down years, there's going to be corrections, there's going to be drops. That's the way the market goes. But that's why you structure your portfolio and your liquidity in a way that when the market drops, you don't get hurt. You don't get hurt badly, and you can sustain yourself until it picks back up again. The S&P 500 over any 20-year period has always been positive 90% of the time, over 8% returns. Okay, you miss the 10 best days in 20 years. If you literally miss the 10 best days because you're trying to get in and out, in and out, in and out, and you happen to to miss the 10 best days, your portfolio returns get cut in half. Okay. This isn't a game of us trying to jump in and jump out and think that we can predict it. We don't have a crystal ball. And you know, those 10 best days over a 20-year period, 7 of them happened to be in down markets, in bear markets. The people who sold out because they were fearful, they missed the bounce, or the people who sold out because they thought they knew better. They missed the bounce and they paid for it by losing 50%. See, when our emotions go up, our financial intellect goes down every time. It's how I got caught in the Ponzi scheme. Here's why I think it's important. You just have to follow a process, follow a system, build a machine, automate it, let the time do the heavy lifting, and then let the system do what it's supposed to do. Okay. You don't need to be smart about this. You just need to be patient. All right. Now, one of the things that I think happens is that we lose patience because we aren't really clear on what our position is in our journey. Okay. Where are we in this financial freedom journey? And that's one of the reasons that I created something called the Financial Freedom Zone Quiz. It's free. You go in, you, you answer a handful of questions, you'll get a report of where you are, what to focus on, what your next steps are. And I'm gonna send you a couple of little trainings to move you along the path based on where you're at. So we're gonna hook that all up here for you so you can grab the quiz and get dialed in, know exactly what to do next. All right, now truth number 7, your money stories control your money. See, we all have money stories. Running, they're running in the background. I always said that our money lessons are caught, not taught. We don't get taught. Only about 14 states require high schoolers to do any kind of money class in their education. Unfortunately, it should be all of them. But we're not taught about money and we don't talk about money at home. Most of us grew up in homes where, oh, talking about money is impolite. And so, we never had these conversations. So where do we learn it? We learn it through observation. We watch our parents struggle with money or argue about money or say things like money doesn't grow on trees, which I heard a lot, or we can't afford that. Or you watch something in the media or social media, or you see the demonization of wealth and all of that stuff. And what happens is we take that in without the proper context and we interpret it. We give it a meaning. We create a story in our head. It's what I call the money story dynamic. We observe something, we give it meaning, and ultimately it becomes our identity. And that identity, it drives our behaviors. And we've already talked about the fact that 80% of your wealth creation is behavior-based. And if we have stories that are driving our behaviors, that behavior may not be optimal for wealth creation, and it creates what I call a money set. Ceiling, if you will, that you can never get above until you solve those stories. I think about me at 5 years old. I was standing in the kitchen and mom and dad were having a, let's say, heated discussion about money. I didn't know what the topic was. I just knew it had to do with money because I remember dad saying, we can't afford to do that. And mom not happy about it. And dad I see the tears come down in his eyes. Now, Dad was a tower of power to me as a 5-year-old. And here's the first time I saw my dad cry, saying, "God, I am trying so hard and I'm disappointing the people I love." And I gave that meaning of, well, if you don't make a lot of money, you're going to disappoint the people I love. And I carried that with me for decades. And so, when you start to understand that we might be driven by stories in our head, our actions, our decisions, our way of looking at money, and it creates a set point. Now all of a sudden we need to realize how do we separate them. And one of the things to do, and I talk about this in the Money Story Dynamic, is to go back to those stories and watch them through a lens without sound, as if you're looking through a camera lens. And what the lens sees is with the facts of what actually happened. Everything else is your interpretation, the meaning you give See, I gave that meaning and it carried with me to a point where I was obsessed with make more money, make more money, make more money until my son drew a picture of me. And it was a picture of me in front of two computer screens and the phones in both ears. And Jeremy wasn't even in the picture. He wasn't even part of the family. It was a stab in my heart. And that's when I realized, wait a second, I'm making good money. I'm still disappointing the people I love. I don't want that for you. And so we need to deal with those kinds of things so we can deal with the stories first, which will build our behaviors, which will build our wealth. Truth number 8, saving won't make you wealthy. Saving is a defensive maneuver. Investing is an offense kind of maneuver. Okay? You need both. Now, we do save. We put a peace of mind fund away. We put it in a high yield savings account. We have sinking funds for certain things. So, those are there not to build wealth, but to protect wealth. And we can't save our way to freedom. The fact of the matter is, is that if I turn around and I'm putting $5,000 away over 40 years and I invest it, okay, at 8%, that's $200,000. That $5,000 by age 65, after 40 years of doing it will turn into $1.5 million at an 8% average rate of return. Okay? But if I put it away in a savings account and I get 2%, that same $200,000 over 40 years, that $5,000 a year is only gonna amount to about 3, a little over $300,000. By investing it, you're gonna make 5 times that. The fact of the matter is, is that wealth creation is not a spectator sport. You can't do it from the stands. You can't do it from the sidelines. You have to be on the field playing the game. Okay? And the way you do that is you follow a system, you follow a process, and you get in the game and you stay in the game consistently. S&P 500 held 10 years or more has a positive return 94% of the time. And we get you on that wealth creation curve. We get you past the flat line and you start to see the acceleration. It's when your money starts working harder for you than you did for it. And that's the game that we need to play. All right, truth number 9. Oh man, this one's a good one because emotions are your worst financial advisor. The most dangerous sentence in finance is, I just feel like— and complete the sentence. Because when your emotions go up, your financial intellect goes down every single time, no exceptions. Okay, I literally lost one-third of everything I own in a bad investment that turned out to be a Ponzi scheme. Between me and two friends, we lost nearly $5 million, and the story sounded good. The emotions ran high. The con man knew exactly how to stroke the emotions, and I just didn't do the math. I didn't follow the rules that I have. I didn't follow my due diligence. Okay, and now all of a sudden I lost one-third of everything I own. Okay, it, it's like when you're sitting there and people say, why wouldn't you try it? Think about this, think about what it'll do for you. Because here's the deal: when you have a system and you have a portfolio that's working for you, and you're following a system and it's working, the answer to the question when someone says, well, why don't you try it, when someone is trying to push you into a speculative investment, the answer is because I don't need to. And that's the game that I think we need to play is that we're not trying to hit a home run, grand slam every single time. I'm simply trying to hit singles, doubles, and triples on a regular basis. I'm building a machine that's going to pay me every single month and that does that for the rest of my life. And then I pass the machine to my wife and she passes it on to my kids and the grandkids. I do it with boring, beautiful index funds and ETFs. That's it. It doesn't— if it's giving you an adrenaline rush, it's the wrong plan. All right? We got to do it differently. Truth number 10, health is the only wealth that matters. Listen, I'm a 2-time cancer survivor. And the day they told me that I had cancer, everything else became irrelevant. The whole idea of what's your priorities, There's only one priority. It was living. It was life. See, people grind themselves building wealth. They spend buying back, trying to buy things, but then they lose their health. They lose their relationships. It's a horrible trade. See, our energy, our health is the number one asset, not the portfolio. Our body, our mind, And so when you start to understand that, because it doesn't matter how much you have in the bank. Look at Steve Jobs. He was one of the wealthiest people around and it still didn't help when his health took a turn. I work out 5, 6 days a week, not to look good on Instagram. I'm a CPA, not a model. All right? But I do it because my body runs everything else. My clarity, my creativity, my patience, my energy, my vibrancy to serve, to get out there and speak, to travel the world. And do the things that I want to do. So build your money machine, but not at the sacrifice of, of caring for your body and your mind. Okay? Because make sure that you're taking care of it so you get to enjoy what the machine produces. And then the final truth, and this one's a big one. It's not about the money. It's about the life. This one I would tell my 30-year-old self louder than anything else. I would put it on repeat. I would would keep it going and going and going. I spent years chasing the number. And when I hit it, I didn't really feel much because the number was never the point. The point was the life on the other side. Being present at Jeremy's games, taking Stephanie to lunch on a Tuesday, looking at cancer and saying, we're going to be fine. Financial freedom isn't a dream. It's a system. And that system is called a money machine. So you look at it and say, what would your life look like if money wasn't keeping you up at night? What would you say yes to? Who would you become? What would you say no to? Not in just a nice thought, but truly create a blueprint for a life that matters. A life of choice, a life not by chance, a life that outlives you. That's The goal, not money. Money's just the vehicle to get you there. Okay? And so here's the game that I want you to play is I want you to start to really understand a couple things. You have no money problems. You have money symptoms. You don't want, you don't want to focus on budgets. You want to focus on a plan that works. Higher income doesn't solve things unless it is being used to build the machine. Because if your money stops when you do, you're not free. Your life's rented. And so when you start to look at this, design the life you want, get out of the stories in your head, build the behaviors that make a difference. And if you don't know what those behaviors are, get my book, follow me here, and let's keep on this journey. Because these 11 things, had I known them the way I know them today in my 30s would have completely transformed my financial journey. And I know that it can for you. Now, whether you're 30, 40, 50, I don't care where you are, age stage or, or stage of where you are in your journey, these 11 harsh truths will serve you from wherever you are. Do me a favor. I'd love to hear which ones hit home for you, which ones you're going to make sure that that you take care of, leave me a DM, send me a comment. I'd love to hear from you. I'd love to have the conversation with you, and I'd love to support you on your journey to the gift of being financially free, because I believe that's your birthright. All right, until I get a chance to see you on the road or in the next one, or when I'm out there speaking, as you are soaring on your path to financial freedom, always, always strive to live a life that outlives you. See you in the next one. 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/group, 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'd do me a favor, go to Apple Podcasts or wherever you're listening to 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 Freedom's your birthright, and I want to help each and every one of you claim it. Thanks so much.