Finance Secrets Accountants Know That Most People Don't

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. Do you ever feel like maybe someone knows a secret formula or there are some things that no one's telling you about building wealth, about financial freedom, about your money journey? Well, in this episode of the Affluent Entrepreneurship, we're going to talk about the finance secrets, the money secrets that advisors and accountants know but most people don't. So welcome to this episode of the Affluent Entrepreneur show. Seeing the episode.

All right, welcome to this episode. We're going to talk about money and finance secrets that accountants and advisors know that most people don't. And this is, this is actually after decades and decades of being an advisor, helping people build their wealth, helping them build their businesses, and being that family CFO in in wealth of people's lives, I've had a chance to look at some things and realize that there's some things that people aren't being told people don't know. That I've realized from my journey to financial freedom and my client's journey, and I want to kind of open it up to you. I've got a handful that I want to walk through, seven of them exactly, that are things that maybe aren't so obvious, but we'll walk through it. So the first one is this is to understand that if we're trying to build wealth, if we're trying to take control of our financial future and everything, that this idea of a salary is not the whole story. So this goes back to this idea of, oh, making money is the key and the solution to your wealth, and making money is the way to have financial freedom. Here's the challenge with this is the making of the money is important because without it, there's no possibility to create wealth or have financial freedom. But it isn't the making of the money. That's the whole only thing. So negotiating a high salary is positive and it's impactful and it's important, but isn't the only thing, because the question is, what are you doing with the salary? 60, 60% of people are still living, check to check. That means the salary's coming in, the salary's going out, there's nothing left in between. Remember, building wealth is about behaviors. Building wealth is about discipline. Building wealth is more about what you do with the money than how much money you make. And there's a study out there, 10,000 millionaires, where they said 31% of the millionaires made their million. And they weren't, they weren't making much more than a hundred thousand dollars a year. Maybe a little bit over that. But the point being is that it didn't take them a lot of money to build the million. It took them the right behaviors, the right habits, and the right choices. And so salary isn't the whole story. The other side of this salary isn't the whole story is that what really gives you freedom is the assets you use to create cash flow. It's how you use the salary to build those assets. Here's why this is important. Because to generate a salary, typically it takes effort. Just like as I am a CPA and as I am an advisor, if I'm not on the treadmill doing projects back in the day, I wasn't making money. If I stepped off the treadmill to take a week off, I didn't bill anything. I didn't have a timesheet, I didn't bill any hours, I didn't make any money. This is the problem with earnings being tied to efforts. The purpose behind creating a money machine, the purpose behind building the wealth, is to separate the efforts from the earnings and to have the ability to generate earnings with a far less level of effort. And so salary is important. But what we need to do, that's at the bottom rung of the five incomes that I talk about in my book, building your money machine, it requires all your effort. What we want to do is use the salary to acquire things that don't require 100% of your effort. So salary isn't the whole story. We need to build assets through the salary. It's what we do with it that's going to give us, give us the ability to build wealth. Now that leads me to number two, we're going to play the long term game. I gosh, I can't tell you how many times I've had the conversations or I've seen clients come in where they got this it's too good to be true type of investment possibility. And guess what? It was, it was too good to be true. They swung for the fences, they struck out. The problem is this. If you do that early on in your career, it could absolutely destroy you. And then recovering is a problem, y', all, truth be told, full transparency. I did it. That's how I got caught in the Ponzi scheme. Swung for the fences, wiped out one third of everything I own, one third of everything. Me and two friends lost over four and a half million. Why? Because I wasn't playing the long term game. Why? Because I allowed the emotions to take hold. Why? Because I ignored my rules. Why? Because I ignored the criteria, the voice in my head. The reality is, is that wealth creation is a long term game. You're going to go through an accumulation period, a growth period, and then you're going to go through a preservation and, and, and a living period where you get a chance to now use it in the way that it was, it was meant to be. But this is a long term, it's a long term journey. It isn't, it isn't an overnight. And when we try to do things overnight, we typically get hurt. Okay, so what I want you to do is those that have had sustainable wealth, they did the things right to get wealthy, they're doing things right to stay wealthy. And they're enjoying the journey along the way. They did it systematically, building the behaviors, the habits, the decisions, following a process, following a recipe that was proven. And they did it over the long term. Here's the thing. You, you invest in, in the stock market, in an index fund or an ETF fund that is an S&P 500. On average, it's going to do 8 to 10%.

If you look at the data, the stock market goes up 8 out of 10 years. That means that, that 80% of time it's going to go up. What I need to do is stay in the game long enough to participate in that up. That's long term, long term vision. Okay, so that's number, number two, that I think that, you know, people kind of know it, but they don't do it. All right, Number three is kind of a process. You're going to use cash flow from your salary. We talked about this, okay? That cash flow is going to buy assets, okay? And then you're going to take those assets to generate more cash flow. And this is the path to financial freedom. This is the path that you want to, to work from. And in the folks that we've worked with and the folks that I have seen that have built this, understood that they're going to spend the time now, the efforts now to build the cash flow, to get the cash flow, they're going to use it to acquire assets. They're going to use those assets to, to create cash flow. It isn't helpful to you long term to just to buy a bunch of stuff. This is why I say that a car or a home isn't necessarily an asset in the construct of.

Investing and in the construct of financial freedom. I live in a beautiful home on the beach.

But there is no cash flow coming from it unless I rent it or sell it. In fact, the cash flow is going out the door instead of in the door. So to me it isn't an asset in the sense of my money machine, in the sense of creating financial freedom. Yes, it's a place to live. Yes, it's a fulfillment asset, but it isn't a cash flowing asset. And what people know, what you know, what, what advisors know and what those that have sustainable wealth know, is that ah, I gotta use the cash flow that I'm generating from my salary, from my business, from current endeavors, my efforts to acquire assets. And those assets that I acquire isn't stuff, it isn't appreciating vehicles, it isn't big screen TVs, it isn't stuff. But it is assets that actually will generate cash flow and increase net worth over the long term. That's the path to financial freedom. Okay? Now number four is value. And this is something that, that some people have a difficult time with drives the transaction. I have heard this so many times, which said, I have worked for the company for 20 years. I deserve a raise, y'. All. Hard love, tough love, however you want to look at it, you do not deserve a raise just because of your time served. Okay, that's a, that just. I'm being upfront with you. The fact of the matter is, is that people get paid for their value. Now there are some people that get overpaid, but by and large we live in a value exchange economy. If you want to get paid more as a business owner, as an entrepreneur, as an individual that's taken a salary, you got to ask yourself what is the value I provide and is there a way to create more value if I can create more value? Dependency on me, uh, the fact that I have new skills, new knowledge, new experience, new strengths, all those things increase my value in the marketplace as long as it solves problems in the marketplace. So going in and getting a certification or getting new skills that make you more effective, more efficient, smarter in business can increase your, your value which increases your ability to get paid. When you get paid more, you got a bigger shovel. The Bigger shovel will get you to financial freedom faster because you got more income going, going to it. So that that's helpful. Now, there might be other things, nothing against it, that are new skills, but they're not really solving problems, and they're not really going to further me in my career, my professional path, or what I'm trying to do. Like, I go learn needlepoint. Not going to learn needlepoint, trust me. But I go learn needle. But that's a hobby. Now, there are those people that make it a profession, but I don't. And therefore, just getting that skill isn't increasing my value from a transaction standpoint on the marketplace. But. So I want you to examine what you do for a living, what you do for business, what you do to generate cash flow, and say, what are the things that I can do to increase my value in the marketplace that I can then use it to transact at a different level? Okay, then number five, planning actually leads. It leads to a consistent discipline. And why this is important is this. Remember I said. I've said it plenty of times. Your ability to build wealth is far more driven by your habits, behaviors, and decisions than it ever is going to be driven by your money. Now, money matters, but you can have all the money in the world. If you don't have the proper behaviors, if you don't have the proper habits, if you have bad decisions, you'll end up broke. There's plenty of people that we can find that have made hundreds of millions of dollars and they got nothing to show for it. Why, here's what I think you need to plan.

The challenge is this, is that inevitably what we have historically done is we make money, we spend money, we invest what's left. That's what most people do. And the way we spend money isn't deliberate, it isn't intentional, it isn't planned out in advance. What it is, is built, is driven by temptation and demands. Okay. Oh, we see a marketing thing. Oh, you know, oh, that looks cool. I'm going to buy it without thinking, can I afford it? Does it make sense? Does it move me closer to the vision I have for my life? It's just a momentary pleasure that you decide to buy. It's a reason I got a $900 coffee maker in there because I was on Instagram going, oh, this is good. Here's what planning does. Some people will call it budgeting. I call it planning. It is giving a job to every dollar that comes into your life before you ever earn it. There's something in the book in my book called the Wealth Priority Ladder, it is the recipe. It is the hierarchy for every single dollar that comes in your life. Where do you put it first? It's the way to minimize your risk and maximize your returns, to accelerate yourself to financial freedom without taking undue risk. And what it requires you to do is for you to look forward and say, when this money comes in in the future, here's how it's going to go. In other words, you're planning for it in advance. You're giving it a job description in advance. When you do that, you remove temptation, you remove the marketing, the, the influence that you get from marketing. You have a plan in place and you start to focus on the plan. It builds discipline. That doesn't mean you don't have enjoyment because you build, you build joy points into the plan and you give yourself some, some room. As long as you're making the right enough income to make it work, you give yourself some room for those momentary pleasures that you might go get, like a coffee maker, you know. But the fact of the matter is, is that, that what you're trying to do is take as much emotional decisions out of the money as possible and make sure that your logical decisions and your plan is moving you forward to the vision you have for your life based upon where you're trying to go. Now, number six, the math always works out. Here's the deal. The math always works out. Here's what I mean by this. If you do the right things, if you follow the right recipe, if you follow the processes in my book, or for that matter, you can follow other processes too. But the fact of the matter is, if you're following a process, the math will always work. Your wealth is a math equation. I put money away regularly. I invest it regularly. Market goes up and down, it goes up 8 out of 10 years. Okay, if I'm getting an average rate of return of 8 or 10%, it's a math equation. It's a math equation. If I put Money Away At 18 years old, it's going to go up 107 times. At 20 years old, it's going to Go up 88 times. At 25 years old, it's going to GO up 44 times. At 30 years old, it's going to GOOp 23 times. Sense in, in that environment, that's just the math behind it. We just got to put the behaviors behind the math. Now here's the other side of the math. If we disrespect the math, the math will work out okay. If we spend beyond our means and we go into debt, and now we have interest that we pay on credit cards, and we do that every month, we are digging a hole. That math is going to work out, and we're going to end this big chasm of a hole of debt that is burying us that we can't get out of because the interest costs are going to be too high. The math always works. And so what we need to do is work the math and work it backwards. You set the vision, you determine the plan, you set the strategy, you build the tactics to make the math work out and achieve the vision. That doesn't mean that it's easy, but it is simple. Just because it's difficult doesn't make it impossible. You might have a steep hill because you're in debt, you might have student loan debt, credit card debt, but doesn't mean we can't get you out of the hole. And so we got to get you on the field, doing the right things in the right math equation so it works out properly. All right, last one, last one. And this one, I think, is actually one is the most important, the first investment that you're ever going to make. And the most important investment that you're ever going to make is in yourself. Whether it is skills for a profession, whether it's financial literacy, the amount of effort, time, and an investment you put in yourself will always pay off if you put it to use. Okay, keywords, if you put it to use. If you're going to create an education, if you're going to go get an education, you got an education, that's great. There's no value in the education unless you put it to use. So. So your first investment is an investment of time in skill development, knowledge acquisition, mentorship, and people to allow you to grow. Your second investment will be. Will be the money necessary to do those things because some of them will be free, some of them won't. But if you're spending the time reading books, going through, through podcasts, or watching shows to learn from the right people that understand how to do this and have done it for decades, that actually have credential doing it, you know, then you will learn, you will grow. But you cannot expect that you will hit a windfall or build wealth that's sustainable if you're not willing to invest in yourself first. So the very first investment you're always going to make is going to be in yourself. It may be financial investment in yourself by taking courses and stuff, or it may simply be effort skilling all that stuff. So that's, these are what I think are the top secrets that advisors accountants know that most people don't or they, they have an idea but they're not consciously working them. So remember, salary isn't the whole story. We need to build assets. Two, we're going to walk through the long term game to play versus short term and trying to hit it out of the park. Three, the formula is cash flow buys assets. Assets will create more cash flow. That's the path to freedom. Four, value is what drives the transaction. I'm going to increase my value and I'm going to get paid my value of the solutions that I provide. And five, planning leads to consistent, consistent discipline. And it is those behaviors and that consistent discipline that will get you there. And, and six, math is always going to work out. It's a math equation. It has to work out in the end. All right? And the last one. Seven, your first investment and your best investment is always in yourself. All right? I hope that you found this of value. I hope that this opened your mind to some things you ought to be considering as you move forward on your path to financial freedom. All right, if you've got questions or anything that comes up, do me a favor, let me know, Reach out to me, leave a comment. Let's, let's walk this path together. You don't have to do it alone. For all I believe that financial freedom is your birthright. Let's go out and claim it. All right? Until I get a chance to see you on the road on another episode, maybe out there while I'm speaking, always I'll strive live a life that outlives you. Thank you for listening to the affluent entrepreneur show with me, your host, Mel Abraham. If you want to achieve, 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 do me a favor, go to Apple, 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.