How the Top 1% Earners Accelerate Their Wealth (It's Not By Getting a Raise)

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. Have you ever wondered what do the top 1% do of the wealthy to accelerate their path to wealth? Well, in this episode, we're going to dig in. I'm going to give you 10 things that you need to think about to accelerate your path to wealth. Welcome to this episode of the Affluent Entrepreneur Show. Let's get going. Cheers. This is the Affluent Entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money, and scale your life while creating a deeper impact and living with complete freedom, because that's what it really means to be an affluent entrepreneur.

Welcome back to this episode of the Affluent Entrepreneur Show. This one we're going to talk about. What are the top 1% people doing to accelerate their wealth? I mean, there are things that they know. There are things that they're doing. The funny thing is that you might find they're not that complicated and they're not that sophisticated. Yeah, they can get into complex investments, but that isn't actually the way they build their wealth. All right, so let's talk about some of the key elements that drive the acceleration of wealth. All right, and the first thing to do is to say, well, what does it take to get the wealth? What does it take to build the wealth? There's four things, and I talk about this in other episodes, but it's called the four wealth drivers matrix that we have to actually master to drive wealth. If we manage these four things, we can drive our wealth. All right, and so I'm going to jump to my iPad. We're going to draw this out, and let's get going. For those of you that are listening, we'll make sure that we hook it up in the show notes. I'll make sure that you got what you need to make this happen too. But let's jump in. The first thing is this, is that we start to get in this game of wanting to build wealth. We want financial freedom. We want to be able to do the things we want to do. And I think that our wealth actually should be measured not in dollars, but in time. In other words, ask yourself, how much time of mine do I own? How much of the moments can I control? How much of that, how much do I have choice? That's the reason we want the money is so we can do things because we get to do them instead of we have to do them. You know, people ask me, mel, when are you going to retire? You don't need to do this. And I go, I'm never going to die because I'm doing what I want to do. I get to do this, I get to serve you, I get to talk to you, I get to help you. I get to see your dreams come alive. I get to see you creating legacies. I get to see you free. To me, that's my currency. And I'm like, let me add it, let me help. That's what drives me. So I don't really see me ever really retiring. I see me just continuing to do what I love to do. I want you all to have a get to life instead of a have to life. And so here's what we do is that the wealth drivers matrix, the very first thing is to understand is that our income, the amount of income we generate becomes really important. It's the catalyst of everything. But it's not just the income we generate, it's what we do with the income, how much we're spending, how much we're keeping. And the second piece is this idea of the savings rate. Okay? These two elements are probably two of the most important elements that will drive your wealth is how much of that income is being saved. Now in the wealth priority ladder, we start to talk about 20 to 30% depending on your age or stage of life. And I know that sounds like a lot, but the fact of the matter is, unless you're willing to make wealth creation and investing a priority, financial freedom isn't around the corner. We've talked about this idea of the wealth creation curve where it is a curve that's flat for a while and then it hockey sticks up and there's this flat line, this flat line that you are stuck in for a little while and it's years, it's not like days, it's not like months, it's years. And the problem is that most people don't have the patience to eat up the wealth. Flatline. I did it. I screwed up. I cashed out of the market. I cashed out my 401k because I felt it wasn't growing, I could do something else. I spent it on a trip to Japan. I mean, it cost me millions in the end when I. The couple times that I jumped out. Because one of the things that we know happens is that if we get in the market and we stay in the market, and that market can be stocks, it can be real estate, it's staying in the investing game long term. We get to a point where we have accelerated growth. The problem is that when we get in and out, in and out, start and stop, start and stop, we actually go to the beginning of the flat line again and we have to start the whole thing over. Okay, this whole thing over. We don't want to do that. Whatever our income is. Remember, wealth creation is, is about behaviors, about habits, about choice. It's about decisions. It's less about money. So the question is, do you have the behaviors, the habits, the choices, the decisions that the wealthy do? If not, let's give them to you. Let's start doing them. Just like going to a gym there, you can go to the gym and there's this dude there that is like six foot six. He's massive and he's got all the weights on it and he's, he's lifting it. Okay, he's doing great. And then there's someone that's just starting out.

And he's lifting the smaller weights. They both have the same habits. They're both showing up at the gym, they're both investing in their health. They're both investing. And so my point is this, is that I don't care where you start. I don't care if you're at the gym and you're using the light chrome weights to start and get the habit, or you're been there for a while and using the big weights and you're pounding it out. The fact that I care about is that you actually are building the habit, that you're building the discipline. So whether it's $5, whether it's $10, whether it's $15, I want you to start doing that and I want you to go through this with that, with that in mind. And so when we look at this idea of the four wealth drivers, the question really is, okay, I'm going to generate income, and how much of that income is Am I going to put in to my savings and my investing and I'm going to say 20 to 30% minimum. Now you got to go through what we call the wealth priority ladder. If you've got destructive debt, if you have no liquidity, if you have no peace of mind fund, we want you to go through that. We'll hook up that episode, what to do with your cash in here so you can have a recipe to follow to make that happen. But I want you to push the savings rate as much as possible. And for now you can just put it in a high yield cash account. I can get, you can get over 4% for now, but it's just a temporary parking place. Unless it's liquid money you need until you find the right investments you want to go into. The third piece of this four wealth drivers matrix that drive your wealth is investments. What kind of assets are you going into to invest in that are going to give you returns? Returns meaning what they pay out. Now the idea is that we want higher returns, but higher returns come with a cost, come with a price. Typically higher returns come with risk. So you, you, if you want 20% returns, you're taking on a lot of risk. You could lose it all. So you understand that. And then the fourth piece of what drives your wealth is time.

This is about getting in early. Actually, it's getting in now because it's the one thing we can't control, time. I can't change what I did in the past. So I can, I can beat myself up all along saying I should have started, I should have, should have, should. That doesn't help me.

So let's forget the past, let's start now, and let's start building the habits. No reason to beat yourself up. I made bad decisions, I lost money. I wiped out one third of my net worth in a Ponzi scheme. I've done some things. I lost a little bit of money in the market last week because I've made a bad investment. It wasn't really a bad, it was a good investment, but it went against me all good. You know, it's part of the journey. But I'm not sitting there beating myself up and frozen because when I get frozen and I don't go stay in the game, I end up losing even more money. All right? So I think it's important for you to understand. And what the wealthy, the 1% understand this. They understand these four things that I need to increase my income, okay? I need to increase my savings rate and I need to increase my returns on my investments without taking on too much risk. And so there's a whole idea of risk capacity and risk tolerance. I did a whole episode on that. We can hook it up in the show notes to help you out on that, to allow you to understand that I want to push the returns up without taking on inordinate risk. I want to push my income up, my savings rate up, and time is now. And when they understand that, they go, oh, okay, now I got to get in the game. That's what they kind of the mentality, the mindset, they come at it with. And they know that it's a long term investing gain. And that over the long term.

Your velocity of growth will continue to grow. But it takes a while to get going. And once it gets going and starts to accelerate, it will continue to accelerate. This is when your dollars, your money is working harder for you than you did for it. It's when your money is making more money for you than the efforts you're putting out in the world because you did all the work. And it's now in what we call money momentum. So one of the things that they do. Let's go some specifics and I'm going to walk you through 10 things that they do that can accelerate your wealth. And I want you to use this as a checklist as you're going through it. And first, the first piece is this. They know their why. There is actually a study.

That was done on 4,000 millionaires. Harvard did a study, 4,000 millionaires. And it was, it was a study on happiness and money. And it was really a study more about happiness, what made them happy. And one of the key elements there, it wasn't that they made the money, but it was one of the top impactors on their happiness was how they made the money, the purpose of the mission and everything behind it. The why. Too often we will come at it and say, I want a million dollars, I want 2 million, I want 10 million, I want 100 million. Whatever the number is, it's just a number. It's arbitrary. Why are we even asking for it? The question is why? Because we want a big bank account. That's not a strong enough why. Because trust me, you're going to get hit with challenges, you're going to get hit with setbacks, you're going to get hit with obstacles. I know this is the motivational part of the, the presentation, but you're going to get hit with it. That's just what life does. And if your why isn't strong enough you won't make the choices that you need to make to continue going. Okay, some of you may have heard me talk about this too often. We want too much, and we will too little.

And you're saying what? I think that when we say, I want this, it is a weak, fuzzy goal, because it's easy to say I want. And when you don't get it, you say, well, I want it. We'll kick it down the road. Maybe I'll get it later.

But when you will something, when you turn around and you say, I will do this. I will lose weight. I will get healthy. I will conquer this. I will learn this. That's a declaration. A declaration is a commitment. And when you make that kind of declaration and that kind of commitment, your body and everything starts to get congruent with that pathway to make that happen. I think we need more wills in our life and less wants. And when we do that, we start to see that path to start to grow. And that comes from the why.

And so the first thing is that they truly understand their why. The second is that they track their numbers. I was talking to one of my. One of my master's clients, and recently, and she said, you know, until you had me start tracking the numbers, I had no idea. And to the point where she thought they were really far off from their ultimate goal, their ultimate freedom number. And I started to do math for them. I said, let me. Let's just do some Ralph. What I call cowboy math, okay?

And I. So I started doing math and I said, you're literally based on your numbers and the timeline to get there, you're literally only a couple hundred thousand dollars away. And, my gosh, you could just see the stress and attention. Tracking your numbers does a couple things. One, it lets you know where you are. Now, sometimes that can be ugly, but we're better off knowing how ugly it is so we can fix it. Two, it lets you know if you're on track. And three, it lets you know if you've hit your target.

And from that, we can make adjustments and we can make decisions and we can make changes. But if we're not tracking our numbers, if we don't know what's coming in, what's going out, where it's coming in, from, where it's going out to, how much is growing, what kind of. If we're not tracking the numbers.

We are a ship without a rudder, and we are prey to whatever winds take us, whatever current takes us. And we could find ourselves in the rapids, we could find ourselves on the rocks. Okay, so we got to track the numbers. The top 1% track their numbers. They look at them. Now we have scorecards and we have.

You know, cheat sheets that we work with our clients that allow them to track their numbers on a regular basis, every month, every quarter. So they know the metrics, they know the things that are going on. The third is that the top 1% work from a cash resource plan. They're very deliberate.

With what they do. And when I say cash resource plan, some people might think it's a budget. No, it's a job description. For every dollar that comes in, I want every dollar to be assigned a job. I want every dollar to know, this one's for the mortgage, this one's for our clothes, this one's for utilities. I want every dollar to have a job. Because unless we give it a job, it doesn't know what to do. It's like bringing a bunch of employees in and say, I got no job description. I'm not going to give you any to do's, I'm not going to give you any goals. I'm going to let you do your thing. Here's what we want to do. We want to grow, grow 20%. You think it's going to happen? Hell no. And if it does, it's coincidental and it's not something that can be replicated. So we need to be very deliberate. The top 1% are very deliberate. They have a plan and they know specifically what they're doing with that plan. And they, they work the plan. Okay, Number four, they front load their investing. They understand the impact of compounding the impact of time. Okay, that they can front load the investments and let the time go. So they're going to invest as much as they can up front to allow time to take on because we got to eat up the flat line.

Until we get to an acceleration. See, your wealth compounding will start to accelerate at an exponential rate. But you got to be in the game for a while to do that. So the sooner we get in and the more we can put in at the beginning, the easier it is down the road.

So we start early, we stay in, we stay often, we increase as much as we can. That's what they do. They front load their investing as much as possible. Okay. And then along with that, number five is they keep their fees down. Now I want you to hear something really clear. They're not paying fees that don't give them value. What I am not saying is that you don't not to get an Advisor. Don't pay an advisor. Because I have a whole team. I pay him a regular fee. Yes. Could I do it on my own? Absolutely. I could do it on my own. Okay. But having the sanity check of a team, having them do some other work for me to do stress testing of my portfolio and the plan and do all that is valuable to me. I have advisors that I'm able to go to. Yeah, it costs. I don't see those fees as unimportant. I see them as important. Plus, it's a place for, God forbid something happens to me that my wife can go to. Okay. So the idea is to keep fees down, but to not try to eliminate all fees if you're getting value from those fees. Okay. When I talk about fees, you know, if I'm looking at a mutual fund with a company that has a fee structure or an expense structure of, you know, one and a half percentage points or even two percentage points, and I could get the same kind of investment for 0.2%, we get rid of it. We get the same kind of investment as an ETF or an index fund at 0.2%. We get the same, same benefits, but we have now have lower fees, which means that more is going to me. But what I'm not saying is that, that you have no advisors and you have no team. I have attorneys. I have a wealth team, and I pay them happily to be by my side. Okay. Number six. Number six. Huge. They automate their investing. They get in the game and they say, look.

I need to remove as much friction from the investing process as possible. And so they automate it. If I know that I'm investing 1,000 bucks a month, thousand bucks a month, without question, automatically gets moved over to that account and gets invested.

By automating, you remove friction from the investing decision. If you don't think it works, why do you think they gave you credit cards? Why do you think you can take your phone and just tap and buy? Is because the marketers understand that the more, the less that they can get friction out of the buying decision, the more you're going to buy. Think about it. Have you ever bought anything on Instagram? Swipe up, buy. I did. That's how I ended up with a $900 coffee maker that has an app and go, this is cool. $300 in shirts. What the heck? Because the friction wasn't there. But for some reason, there's a whole lot of friction in investing. If we got rid of the friction investing by automating it, you would see that you would invest more, you would invest more consistently, invest more often, and your wealth would grow faster. It's what the 1% do. They create it on an automated plan, okay?

Number seven, they know that they're going to get their money working harder for them than they did for you, okay? So what that means is this, is that they're going to keep their money at work. They're not going to park it in a 0.2% savings account. Now, let's be clear. If it's for your liquidity, in other words, it's your peace of mind fund, as we call it, our emergency fund, that has to stay liquid. Its job, its job is to give you peace of mind and to preserve your liquidity. Its job isn't to make you wealthy. Its job is to keep you from going broke. Okay, different jobs. So the other dollars are there to make you wealthy. This one is to keep you from going broke. That we don't put in the market, that we typically put in a high yield cash account. You can get over 4% in a cash account right now, okay? So I want every dollar working for me, but I want it to do the job that it's meant to do. If it's meant to give me liquidity, I'm going to put it in a high yield cash account. If it's meant to build wealth, I'm going to put it in the investments based upon a cash resource plan and, and an investment plan, okay? That's how we do it. We get our dollars working. They're just not sitting somewhere in a mattress or in a savings account not doing anything for us. Our dollars must work harder for us than we did for them. Okay? Number eight.

Just like they understand the power of compounding, the top 1% understand the detriment of destructive debt and they avoid destructive debt. They do not finance consumables. They're not that. If, if they're going to take on debt, they use it for productive reasons. In other words, I'm going to take on debt that is going to increase my net worth or it's going to increase my cash flows and wealth, okay? Meaning that I might take on debt to finance a piece of real estate or an equipment that's going to increase my profitability or my, my capacity, but I'm not going to do it to finance luxuries. If I can't afford to pay cash for the luxuries, I'm not going to do it. That's what the 1% do. They start to understand destructive debt could be if we get into that game where we're financing a lifestyle that we can't afford to pay for today. Okay, that then leads me to number nine, top 1%. Realize that multiple income streams are important. Multiple income streams are no longer a luxury, they're a requirement for you. Pandemic proved that out. Even if you're a job, in a job with a salary, having additional income streams gives you more security. Having additional income streams gives you more peace. Having additional income streams accelerates your ability to build the money machine to give you the financial freedom. So your job is a get to job and not a have to job. That's the thing that I think we need to do is we got to start thinking about how can I create additional income streams. Now, mind you, the wealthy understand that some of these income streams will take their effort, but the majority of the additional income streams, they want to be leveraged. Now, some people will call it passive. I don't call it passive. None of your income and none of your wealth is passive because it is a relationship. And when we take a passive perspective to a relationship, the relationship withers and dies. So I say it's leveraged. In other words, how much time are you spending with it?

My one on one work, my consulting, my mentoring, that is not leveraged. That's me. My investments, my real estate and all that stuff, that's leveraged. I put effort in once or twice or a little bit, but I get multiples of value back. So my dollars in those are working far greater for me than I did for it. That's the beauty of multiple streams of income. Plus it gives you the peace of mind that if one stream of income goes away, your lifestyle still is intact. That's the thing that we need that for. It's the thing that will give you the more security than anything else, is that you have multiple streams of income and you can live your life on just one or two streams of those income. That takes a while to build it. I totally get it.

But once we have it built, that's the beauty. That's what allowed me to financially not struggle during, during my cancer. I could shut my businesses down, but because we had all these other streams of income that were not tied to my effort, we were fine. We didn't drain savings, we didn't sell assets, we didn't, we didn't do any of that. We were fine. We had a machine. I want the same for you. And you can have the same. It may take some time, but you can have the same. We just got to get you in the game with the right strategy, the right tactics, the right tools to make it happen. And the last thing they understand, oh, they understand that they got a partner in life, and that partner is the tax man or woman, however you want to look at it. And so they spend a lot of time understanding what does it take to minimize taxes. Now, let me be really clear. I am a cpa, so I am not telling you to avoid taxes. Tax avoidance is illegal.

Tax minimization is legal. So they understand the tax code, or they have advisors that understand the tax code. And they say, look, if every dollar of income potentially is going to get hit by a 20%, 30%, 40%, sometimes 50%, if you're in California tax, then it makes sense to try and figure out the methods to legally reduce your taxes. So you can keep that 50 cents in your pocket. Yeah. That accelerates your wealth because you got more money working for you. But rather than sitting back and saying, hey, oh, well, taxes are taxes. No, use them to your benefit.

Understand it. So the top, the top 1% understand things. They know their why. They track their numbers. They have a resource plan or a plan for every dollar that they're using. They front load their investments. They keep their fees down. They automate their investing. They get their money to continually work for them and work harder for them than they did for it. They avoid destructive debt. They build multiple strings of income, and. And they use the tax code to their advantage to minimize taxes. That's what they do, and that's what you can do. All right? I hope that this helps you. I hope that you found this of value. Go through it as a checklist, start putting things into play. If there's things that I can do to help you, support you on this journey, do me a favor, reach out to me. I have a hotline where you can go to askmelnow.com you can submit your questions. We can get them on the show, we can get them answered. I. I might even bring you on the show, all right? And get them answered. You're not alone in this financial journey. You're not alone. We've got a community for you, and I've got you. All right? Let's make it happen. Let's work together. I got no investments to sell you, no insurance to sell you. I just want to sell you on the fact that your dreams are within reach. So until we get a chance to see each other on another episode of the Affluent Entrepreneur show, as I always say, always, always strive to live a life that outlives you. Cheers. See you soon. Thank you for listening to the Affluent Entrepreneur show with me, your host, Mel Abrahamic. 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 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 your birthright and I want to help each and every one of you claim it. Thanks so much.