7 Popular Finance Tips That Are Quietly Keeping You Broke

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. If you've ever been told to cut the lattes or pay off all your debt before investing or buy a house as soon as possible, then you're not alone, because that's literally the financial gospel that many of us grew up on. What if I told you a bunch of that smart advice is quietly keeping you broke? You know? Yeah. The reality is that some of the most respective money tips out there are actually momentum killers. They sound safe, they sound logical, they sound rational, but they're built to preserve comfort, not to create freedom. And I've been in this game for over three decades. Built businesses, coached entrepreneurs, helped families escape the income trap. And trust me, I've personally followed and untangled these myths. And today, I'm breaking down seven of the most common financial tips that sound helpful, but they stall your growth. Okay, I'll help you flip them and reframe them and help you turn the good intentions into real progress. And by the end, you. You'll walk away with new thinking, clear steps, and maybe a little righteous anger at the stuff that has been holding you back. This is building your money machine, where we help you master your money, eliminate financial stress so you can live a life of choice. Because earning more doesn't make you free. A money machine does. And that freedom, it doesn't start with the next paycheck, the next raise, or the next client. It starts the moment we get your money to work harder for you than you did for it. And I'm your host, Mel Abraham, and as a CPA entrepreneur, money mentor, and someone that has walked the financial freedom journey himself, I have come to learn really quickly that it isn't about bigger numbers. It's about bigger choices. All right? So if you're ready, let's jump in. Let's do this.

Some of the most common money advice that you've heard for years is literally keeping you stuck. It's not because it's bad advice in isolation, but it's because so many people apply it without context, without strategy, without direction. So let's unpack these and let's start with one that we hear often, and that is stop the lattes. The latte factor. And my dear, dear friend David Bach is the one that coined this term in his amazing book. Now you've heard it. Just skip the daily latte and you'll save $1,800 a year. And that's, that's kind of the gold medalist penny pinching advice. But here's the real problem, and it's not about the latte factor. And I think they misconstrued what David was, was talking about. This, if we're not careful, teaches you to think small. It creates a scarcity lens where every dollar is a threat. But I think that when we do that, we're ignoring the bigger game, like multiplying our income, creating assets, building leverage. The representation of the latte factor or skipping the coffee is a representation of the discipline and the diligence you need to make that happen. But what happens is that we start to cut out $5 lattes, but then we go and finance a car for seven years that we're buying for $100,000 that we can't afford. And more than the latte, that car is the thing that's costing us. And so one client I worked with was tracking every coffee run, every app subscription, but they hadn't raised their rates to their clients in six years. And they're buying expensive cars. So they might be saving $50 a month on their lattes, but they were losing $30,000 in unclaimed value from mispricing their services. And they were spending a bunch more on a car that was depreciating that they overpaid for and extended credit way beyond the three years, three and a half years max that we say. So instead of cutting the lattes, I think that you need to ask yourself, what am I ignoring? That are high leverage moves that if I focus on them, will be beyond the small savings. So the things like how do I get paid more, how do I create more income, a bigger shovel of income, what are the big dollars that I'm disregarding to pick up the little $5 lattes. Okay, and if you're already saying, okay, okay, where do I even begin this kind of flipping? This here's what I want you to do. I have something called the Financial Freedom Zone Quiz. It is free. It's a 72nd, 92nd, 2 minute quiz that you take, answer a handful of questions. It'll tell you where you are on Your financial freedom journey, which zone you're in, what the characteristics are, and what your next steps are. You can go to financialfreedomquiz.com to get access to it. We'll hook it up for you and allow you to jump in and allow you to figure that out. Because it's not about just the small things, it's about the big things, too. Number two, saving 10% is safe. And they tell you to save 10%, 15%, but it's too slow. I get it. Save 10% of your income is this sacred cow of personal finance. But for most people, the cow is chewing on your timeline. It's not enough. I hate to say it. We recommend 20 to 25%, which is hard for people. I get it. But think about the cost of living these days. Think about the length of life these days. Think about all of that. 10% just doesn't cut it. And so if we truly want to build freedom, then we need to push that. We need to at least double that savings rate. Investing rate, if you will. At 10%, you're not building freedom, you're buying eventual permission to stop working, maybe in 40 years. But. But the fact of the matter is, is that we need something more to truly find ourselves in that freedom. Point. Okay? This is like trying to fill a pool with a spoon while it's evaporating. That doesn't work. The game isn't just about savings. It's separation. You want to separate the income, the earnings, from the efforts to earn it. Because when you have the ability to generate the income without the efforts to earn it, that is when you have a life of choice. So start with 10%. Sure, that's great. But then create a plan to escalate it, whether it's 10%. And then we're going to push 1% more then 1% more in another three months, and now 1% more in the next 90 days. Or start with something to start investing aggressively and start to build that. Because when we do that, things will shift. Maybe you're in a job and you're going to say, I can't do that. Well, okay, next time you get a raise, take half the raise, do the 5050 rule, half the raise, and put it towards your future, put it towards investing, and the other half, you can use it for lifestyle adjustment. Okay, that leads me to number three, work more, hustle harder. That's the trap of trading time for money. It's probably the worst business model out there, but we all do it, whether we're an employee or a Solopreneur. That's what we've gotten indoctrinated.

To in the sense of, well, if I want more money, then I just need more hours. No. Okay. The challenge is if you want more money, we need to create more value. Time is a trap. Time is capped. Okay? Your energy is capped. There's only so much you can give. There's only so much you can do. This model has a ceiling to it. And so I look at it for me, my story. You know, I had a client that I coached that was earning multiple six figures, but everything was tied to her showing up. She couldn't stop working. She couldn't take a vacation. She couldn't say no to more clients. Because if she wanted to increase her income, get a bigger shovel, accelerate her path to wealth, she was doing it by being on the treadmill, you know, 10 hours a day. That's not sustainable, and it's certainly not quality of life. Yeah, she had a high income, but what it came with was a shinier leash. That's no fun. What we need to focus in on versus this hustle culture is to look at and say, let me be smart, let me be strategic. What are the values and the value of the thing that I bring to the marketplace? How can I get paid more for it? How can I position myself for it? How can I set myself up for it? There are things that you do that you might be able to get additional income from by just changing and shifting one degree. See, when I was building my practice, I was out there trying to get my. My projects from attorneys, accountants, financial advisors, all that because I was valuing businesses. And in order to do that, I was speaking in order to do that, I was writing in order to do that, I was workshopping. In order to do that, I was facilitating. But I was doing all those things for free to get the project. Now, mind you, the project was lucrative. But then it dawned on me. Well, if I'm going to do those things anyways, is it possible for me to get paid when I go to speak? Is it possible for me to get paid for what I write? Is it possible for me to get paid when I workshop? Is it possible for me to get paid when I facilitate? And the answer was yes. So imagine now that I'm trying to land the big project for $20,000, but on the road to the big project, I'm getting paid 2,000, 5,000, 1,000. And so by the time I get the project, I've already been paid the same amount as the project in some Cases. So what I want you to do is to be strategic and innovative with what you're doing, to look at how you're using your time. Because if we're still doing a math equation of hours for dollars sessions for for dollars, that's limited. So audit your action step here is to audit your time. Ask yourself, what if I use two hours this week that not to earn more now, but to build something that will pay me more later? That is a money machine mindset number four, Buying a home equals wealth. Okay, let's be clear. And I did a whole episode on this. A home is a lifestyle asset and it's a liability. It is not an investment. They say that your home is your best investment. No, it's a forced savings for sure. As long as it holds its value and you're paying down the loan. You've got this store of value in real estate, which is wonderful, but it's not going to be the money machine because you can't live off it. You can't eat it unless you sell it or rent it. But then you need a place to stay. So I don't have a problem with buying home. I'm not saying not to buy the home. I'm saying to understand what you're buying. You're not buying an investment. You are buying a lifestyle asset that you're living in. Okay? At least the way we look at it. See, if it doesn't cash flow and you can't access the equity in it without a second mortgage, that's not really helping you build wealth, okay? It's consuming wealth because you got all the maintenance costs and you got all the fees and everything around it. I once had a client that, that was sitting on $500,000 in home equity. He was so cash strapped in every other area that the wealth was locked inside the walls of that house and not working for him. And so you got to look at this. The idea here is from an action step standpoint is just to run the numbers. I'm not saying to buy, not buy a house. We bought a house. But do I look at it as an asset? Yeah, it's an asset on my net worth statement. But is it an investment? Not from the perspective of providing me the cash flow to pay my bills. It's actually costing me, but there's value in it and I could take the value out. I don't want to do it in debt by selling it or renting it. And if I do that now, I've converted a lifestyle asset to an investment. The key Here though, run the numbers. Ask what is my equity doing for me? And if the answer is nothing, then you got to look at and say as long as I make a conscious, aware choice that the equity is doing nothing other than a place to live, then go for it intentionally. But it's not part of your money machine that's going to generate cash flow to pay for your lifestyle. All right, number five, kill all debt first. And I don't think that's always the correct move. See, this one feels noble. Don't invest until all your debt is gone. But if your debt is at a low interest rate and your investments can earn more, then you're giving up years of compounding for a false sense of control. Now there's also another aspect that I kind of look at is mathematically getting out of destructive debt is really important. Destructive debt to me is consumables. It is lifestyle debt. It is, it is not constructive, that it's not productive debt. Productive debt is strategic debt that's going to generate additional cash flow or wealth or returns in the future. That means it's a mortgage on a rental property, it's a loan on a piece of equipment, but it isn't your big screen tv. It isn't financing a car for seven years because you can't afford to buy it. Okay, Those things are consumables that's to be avoided at all costs. That's the kind of debt that we need to get out of. If you're in that kind of debt, then we need to get you out of that debt. Okay, you need to be on a debt payment plan to do that. But does that mean that you can't invest? I don't like that advice. And the reason I don't like that advice is I believe that the mindset and the muscles that inhabit you create with death management are very different than the mindset and the muscles you create with wealth creation. And I want you to do both. Now that doesn't mean I, I want you to do them equally. If I have $1000 to put towards my, my debt and my investing, I might, if I have a lot of destructive debt, say I'm going to put $900 towards my debt and $100 towards investing. Now is that going to make it longer for you to get out of debt? Yes, mathematically it will. But it's also going to start exercising the knowledge, the financial literacy and the decisions you make on the wealth building side, even if it's a small increment. So when you are out of debt. Now all of a sudden you can go great guns. So I don't believe that in all cases you should be completely out of debt before investing. I think we lose some things when we do that. I think that you should be doing that in some shape or form together. And I talk about it in my book, in chapter 12 of the book to make that happen. All right, that leads me to number six, play it safe, stay small, okay? What most people hear is don't risk anything. And what they end up living if they do that is they just don't grow. Okay? Security isn't the same as freedom. It's not. And most safe advice creates a slow decline into dependency. Hear that again. Because you end up in this slow decline into dependency. When we do that, you cannot play it safe and invest at the same time. The only way to win the wealth game is to be on the field, playing the game. And if anyone tells you that investments have no risk or their investment has no risk, run, because when you decide to play the game, there is always going to be a risk of loss, a risk of decline. The question is, how big of a risk? And that's why we have principles and we have investing rules that we teach in the things that we do to make sure that we reduce the risk as much as possible and increase the probability of success as much as possible. It's why low cost, low fee index funds and ETFs are one of the best ways, easiest ways to get on the in the wealth gain. Because if you look at the historical patterns, when we do them long term, you can have probability of success in the 90%. And so rather than sitting back and saying, I'm going to be timid, I'm going to be scared, I'm going to be scared of my own shadow and I don't want any risk really. Because if you go with no risk and stick it under the mattress, you're eroding the purchasing power. It's actually a most definite way that you will lose wealth and purchasing power by doing that. We have to get in the game, but we just have to do it smart. Okay? So.

If you're going to do this and you want to invest and you want to build wealth, you're going to take some risk on doesn't mean you have to take inordinate risk. And if you try to avoid risk and just put the money away, that's like staying in a sinking boat. Just because the cushions are soft, it's not the way to play it. All right? So your Action step here. Stretch yourself one small growth, move a quarter. Freedom doesn't live in your comfort zone. It lives in ownership. Ownership of who you are, ownership of what you want. Ownership in equities or assets that produce income, but done with rules, criteria, systems, and processes that allow you to raise the probability of success while reducing the risk of loss. All right, and then this leads me to number seven. Number seven is money can't buy happiness. It eats the punchline. The reality is, you look at it, people say this like it's deep wisdom, but let's be honest, poverty doesn't buy happiness either. And as hard as it is, money can't buy happiness. But it can buy options. It can buy time. Why do we want the money? Why did I want to build wealth? Because I wanted agency over my time. I wanted to get my time back. When my son, when Jeremy drew that picture of me, of me standing in front of two computer screens, and that's how he saw me at 6 years old, that was a cry from him to say, I need you, dad. It wasn't about cash. It wasn't about my son needed me, and I needed the capacity to be there for him. And that had nothing to do with money directly. It had nothing to do with earning directly. What it had to do is my ability to buy my time back, to have choice in my life. The money is the thing that allowed me to sit back. The money machine has allowed me to separate my earnings from the efforts to earn it so I could be present for him. And so when we say it doesn't buy happiness, it does buy the options, the time. It buys access. It buys peace. It buys impact. We can get behind most movements and missions and things like that. It can create our ability to put things behind, meaning, purpose at greater levels than if we didn't have it. Money isn't everything. It's simply the paintbrush.

That paintbrush should be aligned with your values, the things that matter, and building it from there. Because the happiness isn't from the money. The happiness is truly from the journey. And it's how the money allows you to define, refine, and live your journey on your terms, by your design, in your way. That's the key. So your action step here is this. Write down three things. Three things that more money would actually let you do that would fuel your joy. That's the money's mission. And when we do that and we start to use the money towards that one, it fuels for more. Okay, all right. So here's the deal. These were seven financial Tips that aren't bad, they're just. I just think they're incomplete. And if we follow them blindly, then people are going to be on a grind. But what I want you to do is flip them like we talked about, because then you're going to turn them into money machine moves. They're going to unlock your clarity, they're going to give you control, they're going to give you cash flow. That doesn't depend on your daily hustle. It's going to. It's going to depend on the design you have for your life, the discipline you have in your life, the habits you create, and the choices you make on your path to the finance, to financial freedom. And if you don't know where you are in your journey to financial freedom, remember to go take the financial freedom Zone quiz. It's totally free. You can go to yourfinancialfreedomquiz.com to get access to it. Break it down, see where you're at, see what the characteristics are, see what your next steps are. Because in the end, what we're really trying to do is to create a life of freedom, a life of choice, a life by your own design. And earning more doesn't make you free. The money machine does. Let's build yours. All right, I hope you found this valuable. I hope that this helps you on your journey. And I hope you look at these seven kinds of financial tips because you're going to hear them all the time with a new perspective, a new set of eyes to look at it differently. All right, love to hear from you. I'd love to hear what your thoughts are. And do me a favor, leave me a comment, give me a thumbs up and subscribe, all right, Until I get a chance to see you in the next one and on your path to financial liberation. Thank you for listening to the affluent entrepreneurship 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 and 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 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 can your birthright. And I want to help each and every one of you claim it. Thanks so much.