9 Signs You're Financially Smarter Than Most People

9 signs you're financially smarter than most people. See, most financial content tells you what you're doing wrong. This one's different, because today I'm gonna show you what you're already doing right and why it matters more than you think. Because the financial baseline in this country, it's low, it's really low. And the behaviors that feel ordinary to you, they're not. They're signs. They're signs that you're financially smarter than most people. We're gonna go through them in this episode. 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 I'm your host, Mel Abraham. And after 30+ years as an entrepreneur, as a CPA, as a money mentor, and someone who's actually walked the path of financial freedom from nothing to something, then broke it and had to rebuild it again, I've seen what works. And it's not about bigger numbers, it's about bigger and better choices. So if you're ready to get it right, Let's dive in. Here's something I want you to sit with before we start. You might be smarter about money than you think you are. Not rich yet, not where you want to be yet, but smarter than most people around you and almost certainly smarter than the average American. And I'm not saying that to make you feel good. I'm saying it because the data is genuinely alarming. 77% of American workers would struggle to pay their bills if their paychecks were delayed just one week. And that's according to a recent study by payroll.org. Okay. Nearly 40% of people aren't currently contributing anything to retirement. And over a third of adults couldn't cover the cost of a $400 emergency without borrowing money, going to debt, running up credit cards. And that's the challenge. The baseline is low, lower than most people realize. And when I look at people in my community, in the ones doing the work and asking the questions and trying to build something, I see the signs all the time. They tell me, "You're already ahead. You just haven't been given permission to see it yet." Well, that's what today is. Permission and proof. We're gonna go through 9 signs that you're actually financially smarter than most people. Some of these, well, they'll be obvious. Some of them are gonna surprise you, and at least one is gonna make you go, wait, I thought that meant I was behind. So let's get into it. Sign number 1 is, do you know the difference between income and wealth? See, most people, They think these two words mean the same thing. They don't. And knowing the difference is one of the most important financial distinctions you can ever make. Income is what you earn. It's the work you do. It's the earnings machine. Wealth is what you get to work for you, and it's what you keep and grow. A doctor making $400,000 a year and spending $420,000 a year is not wealthy. A teacher making $60,000 and consistently investing 20% of it is building wealth. See, high income with no wealth, it's not success. It's just an expensive treadmill. You're running fast, you're sweating a lot, and you're going absolutely nowhere. I've watched people spend decades and decades climbing the income ladder, getting the raises, landing the promotions, arriving at 60, with nothing to show for it, but a big lifestyle, but a small bank account. So if you already understand that your paycheck is not your wealth, that wealth is what your money does when you're not working, when you're sleeping, you're ahead of most people. Most people who will never make that distinction. This is the foundation of everything. Income is just a raw material. Wealth is what you build with it. And most people never stop and ask, the second question. You're asking it and that matters. Sign number 2, you've already started investing even if it's a small amount. If you have even started with $50 going into an investment account right now, $5, $10, $20, you're doing something that roughly 40% of Americans are not doing at all. See, bankrate.com, their research says that most people are not putting money away for their future. And I want you to really let that land. Not as a self-congratulations, but as context. There is a version of a financial culture that makes you feel like you're behind if you're not maxing out your 401(k) and contributing to your Roth and buying real estate simultaneously. And if that's the bar, almost everyone is failing. See, the bar isn't a standard. That bar is a highlight reel, and it's comparing your chapter 3 to someone else's chapter 20. And that's a fast way to feel broke when you're actually building, when you're actually doing better than you think. Here's the math that actually matters. This is what we should be looking at. Someone who starts investing $200 a month at 30 and never increases that amount will end up with more than someone who starts investing $500 a month starting at 40. Not slightly more though, significantly more. The decade head start. Matters more than the dollar amount. That's why just because you're in the game makes you smarter than a lot of people. And we don't give ourselves credit for it. You don't need a lot to start. You just need to start. And if you already have started even a little bit, you're already playing a game that most people never jump into. The account exists, the habit's running, the time is doing its job. That's not small. That's the whole thing. That's the game you're playing. Sign number 3, you actually feel uncomfortable when you get a raise. Now, this one, it surprises people, but stay with me for a moment because here's, here's what I mean by this. Most people get a raise and immediately think about what they can upgrade. The new car, the nicer apartment, the more dinners out. Within a few months, that raise is gone. It's absorbed into that higher baseline of spending and now it feels normal to you and everything has been up-leveled. And if you've ever gotten a raise and thought, "Okay, but how much of this should I actually put into investing?" That discomfort you felt, that moment, that resistance to automatically upgrade lifestyle, that, that's financial intelligence. And it's rare in today's world 'cause today's world of comparison, of living for today and instant gratification, That's where most people are living. See, most people treat a raise like a permission slip to spend more. If you're treating it like a question to answer, one of those people will end up with wealth, the other will end up with a nicer car, the same bank account, and probably a whole lot of debt. Now, I know people who have literally doubled their income over a decade and almost nothing to show for it in their net worth, in their investable assets, because every raise got spent, every bonus got literally consumed, and their income may have grown, but their wealth didn't. So lifestyle inflation is this silent, relentless kind of attack on your wealth. And the fact that you notice it, the fact that you feel the pull and you question it, puts you in a very small category of who— people who are actually thinking about where their money's going. You don't have to live like a monk though. Pause, pause the thing and start to ask yourself, should I direct some of this towards investing? Should I direct some of this towards my joy points in my life? That's the game I want you to play. I want you to be deliberate. I want you to be intentional. The mistake that most of us make is we are so bombarded with marketing messages on, on social media, on media and comparison, our neighbors and everything that we start to upgrade things based on temptation and not some strategic financial plan. If you have a vision towards the future and you know where you're going and you're making deliberate, intentional, conscious decisions about how to deploy your money, and some of it's for lifestyle and the other is for your future, you're ahead of the game. Sign number 4, you actually have a number, not a vague idea. Now, this was something that I got wrong early on. I had a vague idea. I didn't know what my enough number was. Not that I was gonna stop and I didn't stop, but to understand what was it gonna take to have the life that I wanted, not the bank account that I thought I needed. See, some version of that number is important. You need to understand what that freedom number is. This is the thing that gives it to you because otherwise you're entirely dependent on the paycheck and increasing that check over and over again because you don't know what the finish line looks like. You don't know what your life looks like and what it's going to take to fund it. And it doesn't have to be exact. It just needs to be a ballpark to start. And you'll get it more precise as you get closer and closer to that day, the day of retirement or transitioning to, to a work-optional type of lifestyle. But if you, if you have not figured it out and you're just flippantly going after more income, more income, more income, and you don't know what that number is, That's like trying to plan a road trip and not knowing the destination. You need to calculate it and understand what that is. What's your investment income? What does it need to be to cover? What are the expenses? What's the vast majority of expenses you need? And the majority of people never do that. They never take the time. And I've worked with some incredibly successful, high-earning people who have never, not once, done the math. They're saving, they're investing, they're working hard, they're maxing out the 401(k), but they have no target. They don't know the destination. They're just moving. And they say, if I'm in motion, I'm doing what? Doing good. That's great because you're going in the right general direction. But then the rest of it is you're just hoping that it'll work out. That's not a plan. That's hope. With a paycheck. Here's why having a number matters. You can't build towards a target you can't see. You can't build the life you want without understanding what the life is that you want. The number makes the abstract come concrete. It turns someday into a specific milestone you can actually measure. You can look at the progress that you're getting towards it. Even if it's a rough number to start, it gives your direct— your decisions direction. It allows you to make decisions with purpose and a purpose that they didn't have before. And I know I get some people don't understand, well, I don't even know how to, how to calculate the numbers. So before we go on, I'm going to give you a tool. It's called the Freedom Number Calculator. It's totally free. You, you go to melabraham.com/number. You'll drop some information in about what that lifestyle cost is. It will tell you what your general freedom number is. And now you have a target, something you can go towards. It's free. It's simple. It gives you the target that maybe you just don't have right now. All right. Sign number 5, you don't panic when the market goes down or when we see the volatility. Or maybe you do panic a little, but you don't act on it. And that's the distinction that most people don't get. See, behavioral finance research is pretty clear on this. One of the most costly things an investor can do is sell during downturn. When you go over the falls and you're in the rapids, that's not the time to get out of the boat, you know. You don't sell. Listen, when Nordstrom's having a sale. All I know is people are running into the store, not running out of the store. This is where you buy back into the recovery. Every major market drop in history has been followed by a recovery. Every single one. The market's never gone to zero. And as long as you invest properly in the way we recommend with ETFs and index funds in a diversified portfolio, it's not going to zero. If it goes to zero, we've got other problems. And that's the thing that we need to think about. Every drop should trigger a wave of people who are starting to buy. But what happens is that it triggers a wave of people to sell because they're emotional and they sell at the bottom and they lock in the permanent losses. It's what happened during the pandemic. Panic selling during a market drop is the financial equivalent of selling your house because it rained last Tuesday. The house didn't get worse. It just got scared. It got wet. And I'll be honest with you, when I watch the market drop, I feel something. That's human. When I see it, I've got the charts up. The amygdala doesn't care that you have long-term investments and long-term strategy. It just knows that something that you— that looked like a number went down and it wants to do something about it. It wants to solve it. And the question isn't whether you feel it. The question is whether you Act on it. So if you've sat through a market correction and kept your hands off your account, even when it hurt, even when the news was loud, even when the noise was there, you demonstrated more financial discipline than the majority of retail investors out there. Staying invested during volatility, it's not passive. It's one of the most active, intelligent decisions you can make because what you're really doing is trusting the math. Over the emotion. Because when your emotions go up, your financial intellect goes down. The fact that you've held the line, that's a sign you're smarter than most people. All right, then sign number 6, you've made a financially courageous decision. This one covers two things that look different on the surface, but really come from the same place. And that's financial honesty. Maybe it was an uncomfortable conversation you finally had with a partner, with a parent, with yourself at 11:00 PM. Maybe it was looking at something you could technically afford and saying, but this is really the best use of my money right now. Is it? Or asking yourself that and holding yourself back. Both the conversation and the decision to not invest, even if you could afford to spend the money, Take courage. And most people never do either one. See, in the research, when I see it, has consistently shown that financial disagreement is one of the top predictors of relationship stress. The couples who struggle the most aren't always the ones fighting about money. They're often the ones who never talk about it at all. Avoiding the money conversation is like ignoring the check engine light. The car doesn't fix itself all of a sudden. It just breaks down somewhere more inconvenient. And the "I can afford it" is one of the most financially dangerous sentences in the English language because it shifts the question from "should I" to "can I." And those are very different questions. Just because you can reach the cookie jar doesn't mean you should empty the cookie jar. And that's true at age 7, and it's still true at 47. And so I look at it and say, I know that people technically are affording a lifestyle that is slowly eating their financial future. And they have the nice car and they can afford the payment on the car, the vacations that they can put on a card and put all over Instagram, the dinners out they can cover. Each one is affordable in isolation, but in combination it's devastating because nothing is going into investing or your financial future. It's going into the current life. The moment You've either had the hard money conversation or looked at something you could afford and asked, but should I? You've crossed a line that most people never cross. And that's not restriction. That's financial courage. And it's rarer than you think. Now, sign number 7, you understand that your house is not your wealth building strategy. This one's gonna ruffle some feathers, and I'm fine with that because for decades, homeownership has been held up as the ultimate ultimate financial achievement, the cornerstone of the American dream. And I'm not here to say not to buy a home, but I am here to get you to start thinking about what homeownership is. Homeownership can be a great thing, but your house is not a money machine. And treating, treating it like it is one is one of the most common wealth-building mistakes I see. See, I look at a money machine as investments that have the ability to support your lifestyle. Now I get it, you need a place to live. So you're either going to be renting a place or owning a place and you need a place to live, but it doesn't pay— put the food on the table, doesn't pay the other bills. You need cash flow to do that. The home doesn't generate income while you sleep. You can't use it to cover the monthly expenses unless you're selling it or renting it. Its appreciation, even if it goes up, doesn't put food on the table. You can't eat the equity. Home equity is the world's most popular invisible account. People feel rich because the Z-Estimate on Zillow went up, but meanwhile, their actual cash flow hasn't changed by a dime, by a dollar. And if you understand that your, your primary residence is where you live and not how you build wealth, that real wealth building happens through investing and generating cash flow from assets. Then you're thinking in a way that a lot of homeowners never do. Your home is part of your life. I get it. It's part of your lifestyle, but it's a lifestyle asset. It's a use asset. It's not a retirement plan. And the people who confuse the two often arrive at 65 with a paid-off house and not enough income to enjoy it. Wealthy is not house rich and cash poor. Wealthy is free. Sign number 8. Sign number 8 is you've already thought about income beyond your paycheck. Even, even if it's a fleeting thought, this is important because if you've asked yourself, I wonder if I could make it without my paycheck, how that, that, that works, then it counts. That's the game I want you to play because most people's entire financial life runs on a single paycheck. Source, their salary, their job, their income, one stream of income, one employer, one paycheck. And when that paycheck stops— retirement, layoff, illness, restructuring— the whole system collapses. This is your earnings machine, and about— this is the earnings machine trap. You're on a treadmill and it only runs when you do. And the moment you can't run anymore, it stops. Well, that's not a life of freedom. That's a life that's rented. And we need to figure that out. The second you've, you've thought about what else could my money do, or what if I had something generating income that didn't require all of my time, you started thinking like someone who builds a money machine instead of just running one. And that's a game changer. You don't have to have passive income yet. The thought is the beginning, the place where you start to really dial it in. I'm not saying to quit your job tomorrow. I'm just saying that the thought is putting you in the right perspective to start thinking about how do I get other streams of income? So I have the option and now I work because I choose to, not because I have to. Earned income, dividend income, interest income, rental income, profit income, portfolio income. These are all different tracks and financially, the financially smart person starts asking which tracks they're on and which ones they could add easily. See, the paycheck, that's just a starting point. It was never meant to be the whole strategy. So let's get it dialed in. And that leads me to the final one. Sign number 9, you don't feel financially behind. You feel financially in motion. And this last one, it might be the most important because there is a version of financial anxiety that comes from comparing where you are to where you think you should be. And that anxiety, it's useful for a moment. It can wake you up. But if it just makes you feel stuck, if it just makes you feel bad, then it's working against you. The shift from I'm behind to I'm in motion is not denial. It's literally a strategy. I went through cancer twice, and I'll tell you something about those moments. What I took stock of wasn't how far I still had to go. It was how far I had come. It was whether I was moving. It was whether the machine was running. Progress doesn't always look like a big number. Sometimes it just looks like the account is existing. The habit is running. The conversation is happening. The number has been defined. If you're watching this, if you're here taking this in, doing the work, you're not behind. You're in motion. And in motion beats a perfect plan sitting still every single time. See, the people who build real wealth, they aren't always the ones that started with the most. I started with nothing. They're the ones who started and just kept going, even in the downturns. See, financially smart isn't a destination, it's a direction. And you're pointed the right way. So here's what I want to leave you with. Money is not a goal. It never was. You know that. But sometimes when we're in the middle of building, it's easy to lose the thread, to focus so hard on the numbers that we forget what the numbers are for. They're for a time. They're for choice. They're for being present with the people who matter, for waking up and living the day you designed and not the day your income demands. If your money stops when you you stop running, you're not free. You're rented. These 9 signs aren't a finish line. They're just proof that you're on the road, the right road. Traveling consistently leads to the right destination. Keep going, keep building, because you're earning more doesn't make you free. The money machine does, and you're on the right path and you're already building yours. That's the game I want you to play. So do me a favor. Let me know which one of these signs hit you? Which one of those surprised you? Send me a DM, send me a comment. I love having the conversations with all of you. So let me know which one it is, if there was one that surprised you. And at the same time, while you're there, if you haven't done so, hit the subscribe button and give me a thumbs up. It makes YouTube and the algorithms happy, but it also warms my heart. And if someone in your life needs to hear this, then share it with them. Because the goal isn't just to build your machine, it's to live the life the machine makes possible. And I can't wait to see you in that life. And like I say, always, always strive to live a life that outlives you. I can't wait to see you on your path to financial freedom. Until the next one, cheers. And that's it for this episode of Building Your Money Machine, where we help you learn how to master your money, eliminate financial 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 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 is your birthright, and I want to help each and every one of you claim it. Thanks so much.