9 Financial Habits Holding You Back In Your 40s

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. Are your 40s setting you up for financial freedom? Or are they holding you back with habits that you don't even realize are working against you? Listen, for Most people, their 40s are a critical turning point in their financial journey. You're earning more, but your life, it's more expensive. You got kids, you got mortgages. You're trying to keep up. There's just so much going on, and maybe you feel like you're running harder and harder and getting nowhere. I get it. I've been there. Here's the challenge. If we don't fix these habits now, you'll wake up in your 50s or 60s wondering, why didn't I start sooner? And listen, if you're listening to this and you're not in your 40s yet, there is gold here for you, too. So stick around, because in this episode, I'll reveal the nine key financial habits that you need to adopt in your 40s to take back control of, build real wealth, and create financial freedom that you deserve. Now, they aren't quick fixes, but they are proven steps that I have used with my clients and with myself that will put you on track to live a life on your terms.

Now, your 40s can be the most pivotal decade in your financial journey, in your financial life, because the right habits now can set you up for financial freedom and a life of choice. Wrong ones, though, they can actually set you up for devastation. So the question really is, are you ready to make some changes? Because here's the thing. In your 40s, the stakes are higher. You are in a situation where you might have kids, you might have mortgages, you might have career pressures, you got college, you got all these things that you're thinking about. You might even be in a situation where you have aging parents, but with the right financial habits, this can be a decade where you build momentum towards the life that you've always wanted. This could be the decade that completely transforms things. Now, again, if you are sitting here listening to this and going, well, I'm only 25 or I'm only 30. Listen in, because these things will apply to you just the same. You just got more time to build it and get it right. All right, so let's do this. In this video, like, I'm gonna break it down. I'm gonna give you nine key financial habits that you need to have in your life. No later than in your 40s to take control, to secure your future, to build real wealth. All right, so let's talk about these nine things one @ a time, break it down for you. And I want you not only write these down, I want you to start putting them into play. I want you to put a date on the calendar and start making them part of your life. Because the sooner we do, the sooner we transform everything and the sooner you have control of your financial future. All right, so the first things first is to create a clear and intentional plan. We can call it a budget. We can call it a plan. I call it a plan, okay? It isn't. Here's the thing. When people hear the term budget, okay, now I can't budget. It's like diet, okay? I don't diet, okay?

But because they feel that it's deprivation, it is restriction, it is all of that, but it's not. The reason we use a plan is to give you permission, to give you perspective and to give you a purpose for every single dollar that comes into your life. And. And at this stage, if you have the demands on you of kids, mortgage, and things that you're trying to build, every dollar has to do the right job to get you there. And the only way that the dollar does the right job is if you plan for what the dollar's supposed to do. So we create something. I talk about it in my book, building your money machine. We talk about it, and we call it a cash resource plan. Here's what I want to do. In the cash resource plan, I'm going to understand where my money is coming from, where it's going. I'm going to define where I want it to go, because I'm going to put it in places that are going to allow me to grow my wealth and live the life that I want to live. But that also means that part of the plan is getting really clear on the priorities in your life. So paying yourself first, saving, putting money away, safety, having an emergency fund, making sure that you have liquidity to carry you if there's a problem, investing, because that's where your growth is. You cannot save your way to wealth, you have to invest your way to wealth and then spending. But what I want you to do is spend on high value spending. Okay? I didn't say high cost spending, I said high value spending. In other words, if you're spending money, I want it on the stuff that matters most to you. Every dollar should have a purpose. Whether it is funding your future or enjoying your life today. It needs to be defined and it needs to be defined in advance. And so, so here's what I would do is I would ask you for the next 30 days minimum to track all your spending, whether it's on credit card, whether it's cash, whether it's check. I don't, I don't know people use checks and cash anymore. But either way, I want you to track every dollar that goes through your, your world, what it's for, what it's used for. This isn't about beating you up. This isn't about judgment. This is about awareness. And then ask yourself, is it a want? Is it a need? Is it something I can do without? Am I getting value from it? Does it, does it move me towards what I want for my life? And based on those answers, you can then decide what you are or are not going to do.

Now the second thing here, so that, that's the first, the, the first habit, the second habit is this. Maximize your contributions, your retirement contributions. Today in, in building your money machine, I want people you'll see in the wealth priority ladder. In chapter 12, we talk about, I want 20 to 25% of your income going towards your financial future. Now it may not all be in a retirement account, it'll be in different accounts. But, but I want you to maximize your retirement contributions, especially in your 40s because you still have time on your side. But you've got to act. You're starting to run low on time, if you will. And so this is the time to make sure that you're getting access to all of the matches. If you are working for an employer that matches your 401k, that you're taking advantage of all that free money, that you're maxing out your 401k, you're maxing out your IRAs. If you can qualify for a Roth IRA based on income levels, then we do Roth IRA and everything. The aim to sit back and say, I want to max it out. Now, you might not be able to do it immediately. You might be looking at going, now I'm, I'm putting 5% in and that's all I can do. That's that's fine. See if in the next quarter you can push it by 1%. A quarter later, push it by 1%. Or maybe you get a raise and say you get a 3 or 4% raise. Let's say you get a 4% raise, take half the raise, 2% and increase your contributions. Then take the other half and live off that and take that for you. But the point being is that we need to start the journey to maximizing our retirement contributions today. So look at that because it is important for us to get in the game pretty quickly because every dollar you invest today is going to be worth far more than if you invested 10 years from now. Okay, I did, I did a, a graph once of, of someone that was investing $5,000 a year. And I had two individuals. One one that invested from age 25 to 35, so they invested $55,000 over 11 years at 8%. And then another one that invested for the same amount of time, same amount of dollars, but they started at 35 to 45. And then they let it sit. So they put $55,000 in and they let it sit until age 65. That difference, that waiting of 10 years, even though they invest the exact same amount for the exact same time. Here's what the difference was. The one that started at 25.

Ended up with almost $900,000.

The one that started at 35 was only at 400,000. A huge difference. We need to max it as soon as possible because then we get the money working for us faster. Okay? Number three, use cash, not credit. Free lifestyle expenses. And I know, I'm saying, I'm saying cash, but I'm saying as good as cash. Okay? Cash flow will create confidence. Relying on credit creates stress. If I am putting things on a credit card and I'm carrying balances, that is stressful. Debt for lifestyle expenses is a no, no in wealth building. Okay? Now I'm putting the mortgage aside and I'm putting the car aside for a moment. But if I am having to go into debt to buy a big screen TV to buy.

A.

Luxury vacation, then I can't afford it. Okay? We do not put things on credit cards to make them more affordable because all we're doing is we're borrowing from our future to live today and we have to pay it some back some way in the future and we're in a higher interest rate environment, we don't do that. So when it comes to vacations, when it comes to gadgets, when it comes to discretionary spending, I, I'm Going to tell you to allocate it as part of the plan, build the cash and, and, and buy it that way. Or you can put it on a credit card, but you have to pay the credit card off every single month. We do not carry balances now.

Mortgages and cars. We will carry a mortgage, the cars we don't go for longer than three years. This, this craziness of doing a seven year car loan. If you need a seven year car loan to afford it, then you don't afford, you can't afford the car. I hate to say it. Okay, three years, no more. Okay. And if you have debt balances, then I need you to prioritize getting it paid off. Especially here because we got to start getting out of the destructive debt. And you can use the debt snowball debt avalanche however you want to do it. I have something called the debt breakthrough calculator. Totally free, short training along with it. If you go to mel abraham.com forward/no debt, you can get access to it. Get yourself on a debt payment plan and start to look at living your life and the lifestyle through a view of cash and not credit. Because debt free living is going to give you freedom to say yes to the things that really matter. All right, leads me to number four. Number four is build what we call a fully funded peace of mind fund. Others will call it an emergency fund. Do you know that most people do not have the ability to sustain themselves without going into debt to pay for an unplanned expense of $400? It makes no sense. The problem is that starts putting you into debt, destructive debt again. So the purpose behind the emergency fund or the peace of mind fund is to give you that safety net. It protects you, it protects your wealth from having to do things in a time where you're stressed, where you don't have the wherewithal or the ability to do that. So a lot of people will say three to six months. I say nine to 18 months. And I've explained it in a couple of other episodes of why that is. Depending on your situation you might get as low as six months. But by and large it's nine to 18 months in a high yield savings account to protect you in case something happens. It could be health, it could be work, it could be relationship, it could be a repair, anything to allow you that, that you don't have to bury yourself in debt, borrow money or sell things at a bad time. If things, things go as not planned. If they unplanned things come up. So I want you to revisit this emergency fund, this peace of mind fund every single year. Because your expense structure and everything changes every year. So you'll update it, you'll adjust it and everything. It is your financial parachute. It's the thing that allows you from not having something become catastrophic if there's suddenly something that happens. Okay, leads me to number five, invest consistently. In other words, make it a habit. Make it a habit. Have a diversified portfolio. We talk about it in the book. A one fund, two fund, three fund, four fund portfolio. Nothing complicated. Y', all my portfolio is, is an eight multi eight figure portfolio. It is not complicated. It is simple, but it runs and it drives and it grows. That's what I want for you. I talk about it in the book. Okay? Investing is the only way you're going to build wealth. You cannot save your way to wealth. You've got to be investing, but you want diversification because you want to reduce the risk. Especially if you're in your 40s or in your fift, you don't have the leeway to, to deal with it. I mean, you're fine in your 40s. When you start to get in 50s and 60s, you got to be a little more specific. It's why you have a, a proper plan in place to make it happen, to do that. So this isn't about.

It is you've got to not fear the uncertainty of investing because here's what's happening. Is there risk investing? Absolutely there's risk investing. There always is. But when you look at it on the long term, when you look at the statistics, long term, the stock market goes up 8 out of 10 years. 8 out of 10 years. When you invest in one year increments versus 10 year increments, the probability of success increases to almost 94%.

So when we look at things in a diversified portfolio, properly structured over the long term, the probability of success is really good. If we're looking at it in a myopic short term, heck, we had the market drop 1100 points just a few weeks ago.

If that's what I'm looking at, I'm going to freak out and I'm not going to put money in. But you know what? Two days later it went up 5, 600 points and it's on. And then it recovered. So when we understand that and we are consistently investing over time and in a diversified portfolio, we're, we will build that wealth along, along the way. So we invest regularly in diversified assets, stocks, index funds, ETFs, low cost bonds, real estate. That Kind of thing. You automate it. You take the friction out of it so it is automatically invested without. Without effort on your part. And then you just review it and adjust it at least annually. Okay, I look at mine, obviously, a lot. A lot more. But realize this. What you're doing here is building your wealth, your money machine. It is a tool, and if we do it right and we put it to work so you don't have to work. The subtitle of the book is how to get your money to work harder for you than you did for it. We want to build it in a way that it takes care of you. And now we've separated your ability to earn from the efforts to earn it. That's true freedom. That's true freedom. All right, number six. The sixth habit is this. To spend on the things that align with your values. Your spending should reflect your priorities, your dreams and your values, not someone else's expectations. Not what you see on social media, not what your parents say, what your siblings say, not what your degree says, but what your values are. Because then you're living in alignment.

And congruent with what you were put here to do. Figure out, spend the time to look at it and say, what are my core values? In family, in freedom, in adventure? Is it security? Is it health? You know, what is it? And make sure that what you're spending on, what you're investing in supports that. And make sure that you're in alignment with that so there's no friction. Invest in experiences and relationships because the material things will dissipate. They'll go out of style, they'll be updated. But experiences, memories and personal relationships, personal growth, it's with you forever. Think about looking back at 50 or 60 and knowing that every dollar you spent made your life richer and not your closet fuller. I think it's a different way to look. Right. Leads me to number seven. Oh. Invest in your financial education. Financial literacy is not optional. It is the foundation of building wealth. Read. Make a commitment to read one book a quarter on personal finance, on investing. Not to make you some guru, but to put you in command, to put you as the captain of your financial ship. Okay. Take online courses, attend workshops. Take some of my courses. If coaching or mentoring, I do that with some. Some folks, it's like, make sure that you're in the game to upskill your level of finances. This idea of, well, I'm not good with math, I'm not good with numbers. I'm not good with money. Listen, at one point, we all couldn't tie our shoes. We did all right. Finances, money, wealth creation is a learnable skill. Let's learn it. You don't have to do it alone. I'm here with you. That's what I'm. That's what my show is about. That's what my book is about. That's what my speaking is about. It's what I do. I want to educate you, I want to empower you. I want to equip you to be the master of your financial destiny. Okay? Because the more you learn, the more you're going to earn, the more you'll be in control. All right, number eight, plan for rising health expenses, y'. All, I just went through a time, you know, unfortunately, we lost my mom in, in, in September. And, you know, she was, it was a long illness. She had six years on dialysis and, and everything. She was up in age. She was 90. I mean, she had a good life. 91 years old. But her last year was tough. Her last year, the quality of life was, was rough. But her health care we had as the best health care that we could get for her. In her, in her situation. She was in assisted living. Do you know that when I look back on it, that six years cost over $850,000? If you're not planning for that, in fact, Fidelity estimates that a couple in retirement should anticipate about a 300,000, $315,000 cost for health care. Well, that's a lot of money. We need to plan for those rising health expenses. Investing in your own health protects your finances later. So one is sitting back and saying, if you're in your 40s, in your 20s, 30s, 40s, 50s, to sit back and say, how do I take care of myself so I can at least stall out the rising health expenses or eliminate them. And then look at some of the other possibilities in, in investing, you know, whether it's a health savings account that gives you tax advantage, ways to do that, and we can talk about that. Making sure you have the right insurances in place, whether it's health insurance, disability insurance, long term care insurance, doing the preventative stuff to keep your health. Because the other side of that is when you decide you want to slow down and you want to do the things you want to do and enjoy it. I want you to be able to enjoy it. You may. It doesn't do you any good to build all this wealth and then you don't have the health to, to go enjoy it. Listen, I got diagnosed with cancer in 2019. They found what was a 7 1/2 centimeter tumor. Okay? I had not seen a doctor in seven years.

Because I didn't feel bad. I felt good, I felt fine. But that rocked my world. Had I seen a doctor, would it have stopped the cancer? No, I don't think so. Would it have made it so we would have caught it before it got to seven and a half centimeters? Because at the time, at seven and a half centimeters, they told me I might lose the prostate, I might have to deal with the kidney, and I might lose my bladder and I might lose my life. It got bad, it got scary.

And I was only in my 50s when it happened. And so.

It rocked my world to a point where I am hyper proactive on my health now. I always worked out, I always took care of myself. But checkups, blood work, all that stuff, do the preventative stuff to make sure that you're here to live fully, fully expressed, okay? Because wealth means nothing if you don't have your health. Take care of both, okay? And then the last one is this. Align your financial plan with your bigger goals. Every financial plan we do, and I, I do these money machine master plans for people where we build out their plans, okay? But we all need a plan. But that plan is informed by the vision. It all starts with the vision. Your financial choices should be helping you live the life that you want, the life that you envision, not just get by. And so what I want you to do in this is to take the time to sit back and say, what is the vision for my life? Not how you're going to get there. I don't care about the how yet. Because the how becomes a filter to stop you if you're not careful. Create the vision first. Get clear on it with the values and what you want. And then sit back and say, what is the plan to get you there? And it could be on a spreadsheet, it can be in a program, it can be in a portal like we do. It can be with someone. Help you. If you need help doing it, let people know, let us know. See if we can help you. But the point is that you need to have a plan. So when you make choices, you make choices based on a plan. And they're not arbitrary, based on a whim, based on emotion, based on something else. And the habits are driven by the plan. So create the plan that supports your goals, supports your definition of freedom, supports whether you want to travel, your family time, whether you want to start a business, whatever the dreams are that you make it. You make it very Specific, very detailed that you stress tested. So if the market goes up, what happens? If the market goes down, what happens if there's, you know, you decide to stop working earlier, what happens? You test it, test it, test it and revisit regularly. Okay? Because that's the game that we need to play. And in your 40s and even before that, if you have these nine financial habits in place, it will, it will change dramatically your financial trajectory. Now, none of these, most, all of them, are not quick fixes, and I get it, but they are about creating a life of freedom, security, and choice. It's about creating a journey that's meaningful to you. It's about doing the things that will create something. And if you have children and you have people around you, those habits become contagious. And so now you are giving them the gift of the proper financial habits. Start small, but stay consistent. Stay in the game. Keep your focus on the big picture. Your 40s are a pivotal time. It is the important decade to make sure that you shift the things that you need to shift, that you can change the things that you need to change. They can put you on the path to the life that you deserve. So here's my question for you. I'd love to hear from you. Which habit are you going to adopt first? Which one are you going to start with? Drop it in the comments. Let's get a conversation going. Let's see what you need. Where do you need help? Because here's the thing. If you're ready to take charge of your financial life, and I think you all should be, then stay with me on this journey. Start building these habits. I will keep putting the content out. I will be keep. I will stay in this journey with you to guide you, to help you, to answer your questions. You don't have to do this in isolation. You do not have to do this alone. That's why I have the show. That's why I did the book. That's why I go out and speak. I have the programs. Okay, let's do this together. I think that financial freedom is your birthright. I want to light the path so you know how to claim it. All right? All right. I hope you found this of value. I hope that you'll take these habits, put them in your life. No matter the age, stage, or circumstance of your life, get them rolling. Because your future self and your legacy will thank you. All right. Till I get a chance to see you on your road to financial freedom. As I always say, always, always strive to live a life you'll see. 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 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 is your birthright and I want to help each and every one of you claim it. Thanks so much.