How to Become a Millionaire with a Low Income

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. Is it possible to become a millionaire on a salary or as an employee? Well, in this episode, I'm going to tell you about a janitor and a gas station attendant that did just that. Break it down for you so you know exactly what to do to become a millionaire, no matter what your salary is, no matter what your income is. Let's do this. Welcome to this episode of the Affluent Entrepreneur Show. See you in the episode.

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 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 athlete entrepreneur.

Warren Buffett said you don't need to have extraordinary effort to achieve extraordinary results. You simply need to do the ordinary, everyday things consistently and exceptionally well. Well, in this episode, I wanted to. I want to break it down for you because so many people I hear say, oh, I got to make more money to become a millionaire. And the fact of the matter is, is that you might not. You might not. Now, granted, look, let's be straight. More income makes it easier, but more income doesn't mean that you'll be a millionaire. If you think that's the case, let's throw some names out there. Let's look at Nicholas Cage. Let's look at Burt Reynolds. Let's look at Willie Nelson. Let's look at Mike Tyson. Now, granted, some of them are still millionaires, but all of them made a lot of income and ended up broke. Most of them are nowhere close to where they should be had they done it right. So it isn't the income that's driving everything. It's what they do with the income that matters. And I want to introduce you to someone that he's used as an example a lot in personal finance circles. But he's a guy by the name of Ronald Reed. You might not even have heard of him because he was a guy in Vermont that happened to be a janitor and he happened to be gas station attendant. Wasn't someone that had some lofty executive job. He wasn't an entrepreneur. He wasn't someone that, that did those kinds of things. He worked his job, whether it was a gas station attendant or a janitor, he worked his job and he consistently put money away. He passed away in 2015 and now unbeknownst to his family, unbeknownst to his family, I mean they, they just figured he was just this frugal guy that, that lived his life. But when he passed away, his estate was worth $8 million. Over $8 million. So how does a janitor slash gas station attendant accumulate a net worth a wealth of $8 million? He's not getting paid lofty sums. He doesn't have an executive job. He's not getting stock options. He's not doing any of the things that you might equate to becoming a millionaire. But he was doing some things because when you look at what he's done, he lived a frugal life. He spent less than make. I mean, it's a basic thing. Look, building wealth doesn't take a lot. And I'm going to walk through some things to do and I'm going to walk through some statistics and some things. But, but it doesn't take a lot. Make money, spend less than you make, invest the rest. That's it. That's what it takes. This is what Ronald Reed did. This is what many millionaires do. There's a study of 10,000 millionaires that was done by Ramsey Solutions. 79%, almost 8 out of 10 of them. They are first generation millionaires. That means it wasn't gifted, it wasn't inherited, it wasn't, wasn't handed to them. They weren't born with a silver spoon. They weren't born on the right side of the tracks. It was none of that. They created it. Now that is really good, good odds on our side. 8 out of 10, 31% of them, 31% of them didn't make much more than $100,000 a year. So when you look at it and you start to realize 8 out of 10, 8 out of 10 were able to do it in their lifetime and one third of them did it on less than a hundred thousand or a hundred Thousand right around there. Then it makes it possible for a lot more people than we might think because too often we think that we need lots of money, make a lot of money. No, has nothing to do with it. It's about what we do with the money. So what did Ronald Reed do? Some of the things he did so he lived a frugal life. He also invested for the long term. It's, it's like he invested in things he understood. But what did he invest in? And at the time, he invested in things like Wells Fargo, he invested in Colgate. Okay. Proctor and Gamble.

He invested in JP Morgan and Chase, okay. These are big.

Old companies. J and J. Johnson and Johnson, CVS Health. So, so he invested in these, these big companies and just stayed invested. He did it for the long term. He stayed in for a long period of time and, and in the end they were worth $8 million to him. Now he, he became a philanthropist. He gave a lot of it away to a library and, and, and hospital. He did a lot of good in what he did. But the interesting thing is that people didn't even know he had that kind of, it's that quiet millionaire perspective. But I, I, I tell you this because I think it's important for us to, to really look at our ability to build wealth and realize that it has, it has less to do with the income we make and more to do with what we're doing with the income. There's four things that are going to drive your wealth, and it's what I call the four wealth drivers matrix. What I talk about in my upcoming book, building your money Machine. It's one of the frameworks that I break down, but I'm going to break it down for you here because I think it's important for you to understand what are the things that really happen to drive wealth. And so if I look at it this way, here's what it is. The very first thing we gotta, we gotta drive and control is our income. But the challenge is that most people will do this and they think that if I have more income, I have more wealth. No, if you have more income, you have more income. It doesn't mean that you're going to have wealth you can't have. You aren't going to have wealth just by having income. It depends on what you do with that income. And what like Ronald Reed did, he put money away. He was consistently investing in the things that matter. Now you want to make sure that you're maximizing your income as best as possible. There is Another element to it and element number two is what we call savings or investing rate. Okay. In other words, how much as a percentage of your income are you saving or investing? Because this actually is the most important element of what you do. Okay? Because remember I said the income doesn't matter, it's what we do with the income. So the higher I can push my income, yeah, that helps. But even more important is the higher I can push the savings investing rate. It matters even more. We actually, in the wealth priority ladder, want people to look at how do I get 20 to 25% of my income into investing when it comes down to it. So here's why that's important. So those are the first two elements that are the most important elements in the process. Now, there are two other ones in this wealth driver matrix. And one, we talk about this idea of returns. Returns are effectively what am I getting in the investments that I invest in? We want to have high returns, but there's an element we need to think about. You can never look at returns when, without looking at something called risk. So we can get high returns, but we might take a whole lot of risk on. We don't want to take too much risk on. This goes down to what's your risk profile? I call it a risk triad. It's the intersection of your risk tolerance, your risk capacity and your risk need. I talk about it in more detail in my book and some of my trainings and other videos. But it's important for you to maximize the returns on the investment without taking on too much risk for your situation. Okay? And then the fourth thing which we actually can't control except for one element of it, is this time is one of the most important things to consider. And what I end up with is this, this idea with people say to me, well, Mel, is now a good time to invest? And, and here's the answer. Always, always yes. If you did not start investing before, then, you need to start investing now. Now, I'm not telling you what to invest in. I'm just saying that you absolutely must consider and commit to making investing a priority. If you ever want to be a millionaire, if you ever want to be wealthy, if you ever want to have financial freedom, if you ever want to be in control of your life where you have a life of choice and a get to life instead of a life based on demands and a half to life. That's the only way to do it. But the challenge is that we're trying to time the market or we're trying to see Is it a good time? All the market's at a high or it just went down and we don't get, get in. Here's the thing. You can't win the wealth game sitting in the stands or on the sidelines. You have to get on the field. You have to get in the game. So the bottom line is that in this, in this four wealth drivers matrix, time, the answer to time is always. Whoops. Is always now. We get in the game now because if we're not in the game, there's no possibility of winning. Okay, so those are the four things that drive your wealth. And, and then you look at it and go, okay, so what does it take to be a millionaire? And you would be, you would be amazed. And we talked about time here a moment ago. And here's the thing. The more time you have, the less money you need. The less time you have, the more money you need. Let me show you what it looks like. If I look at what it takes to become a millionaire, let's just say how much do I need to put away at 25 years old to become a millionaire? So bottom line is it's about, depending on Investments, about $158 a month. $158 a month is all it takes to become a millionaire. Now here is the thing that is, is, is crazy about this. If you do this and you become a millionaire at age, at age 65, is, is how I did the, this calculation. At age 65, 92, 92.4%.

Of your million dollars. In other words, $920,000 is from investment growth. In other words, you didn't put it in. It's from investment growth. That means time did the heavy lifting. Okay, what happens if you wait, if you just wait another 10 years? Let's say we go to age 35. What does it take at age 35 instead of $158 a month? It's going to take $546 a month. I mean, it's still possible. Okay, but you're, you're now looking at 6, $7,000 a year, which is a typical IRA contribution or something like that. And now instead of 92%, 80.3% is driven by growth. So you still, you only put in 20%. But now things start to shift. Now things start to get difficult. This is why time is such an important element. As, as we, we start to look at it and now you say, well, let's say if I wait till 45, if I'm 45 years old, how much do I need to put in to be a millionaire at age 65. Well, instead of 546, it goes all the way up to $1,698. $1,698. And now all of a sudden, your. Your growth.

Is 59.3%. In other words, of your million dollars, 593,000 was done by time, by. By growth, by the investment growing. Instead of, if we started early, 924,000. Okay, now. Still good. Still good. But it's going to require you to put away $20,000 or so a year. Seventeen hundred dollars. Okay, well, what happens if I. If I go to 55 at 55 years old? Now we're starting to crank this thing up again. We don't have a lot of room because 55 to 65 is 10 years. It doesn't give us a lot of space. It doesn't give us a lot of room. Remember, more time, less money. Less time, more money. Now all of a sudden, we got to put away $5,778. $5,778. And that means that we're putting away 70% of this. Effectively, 30.7% is from growth. Still got to get in the game. What else are you going to do now? What happens if we wait? Let's say that we wait till 60 years old. We go, oh, my gosh, retirement's around the corner. I got to do something. Well, now you're pushing a big boulder up a steep hill. We actually need $14,333. $14,333 to be a millionaire. If we started at 60, that's a month. A month. Okay. Basically, you're putting most of it away because only 14% is coming from growth. Because you didn't have time. You had five years between 65 and 60. But I tell you that to get you to understand the importance of getting in the game. Now, you can't take time back. So wherever you are, we got to get in the game and properly make it a priority to make it happen. So here are the traits that I think that. That you need to have to become a millionaire. And it doesn't matter the salary. It matters that you get in the game. It matters what you're doing with it. It matters that you have the right behaviors. It matters that you have the right attitude. It matters that you have the right discipline. It matters that you're making the right choices and that you need a recipe, a prescription, and a process to make it happen. If you don't have one. Get my book. Building your money machine. Because that is what I'm giving you in there. I'm breaking it down for you. But let's just talk about five traits that most millionaires have. And I think that you'll start to look at it and ask yourself, do I have these traits? And trait number one is personal responsibility. In other words, they've taken agency, they believe that they have the responsibility and that they have the ability to affect it. Now, it doesn't mean that it's easy, but it's simple. But here's the thing. Just because it's difficult doesn't make it impossible. We still have to get in the game. Personal responsibility that you take it and you say, I'm not depending on someone else, I'm not depending on government, I'm not depending on inheritance. I'm not depending on anyone. I'm gonna take care of it, I'm gonna do it myself. I'm gonna make it I happen. We're going to take on personal responsibility. Intentional. Here's the thing. I usually. Very rarely do I ever tell someone not to spend money. Very rarely does that ever happen because I just. It's not my place. If you want to spend the money, if you want to buy something, go for it. Here's all I want someone to do. I want you to understand and do everything you do with your money intentionally. I want you to be aware and conscious and intentional with it all. Like if, you know, I have a. There was a kid that cuts my hair, is 23 years old. I go in there, I have a conversation with him and he knows what I do. So we're all always talking about money and what's going on. He tells me about a friend of his. He says he bought a five thousand dollar watch. And I go, really? Does he make a lot of money? He says, no, he's like me, he's 20 years old. I said, oh my God. Okay, 20 years old and he bought a $5,000 watch. Can I ask you why he did it? He says, yeah, his friends thought it was cool. Okay, let me do some math. So he goes at 20 years old to buy a $5,000 watch to impress a couple of dudes that probably won't be in his life in a handful of years. Now.

Sure, it might have been cool, but here's what I know. Every dollar I put away at 20 years old will turn into $88 by the time I'm retirement age. So in his eyes, he spent $5,000 on a watch to impress a couple of dudes. In my eyes, he squandered a $400,000 nest egg for when he retires. 5,000 times 80 is 400,000. Now again, I'm okay if he does it, as long as he understands all the costs associated with it. And if he's, if he knows it, he goes, I'm good with it. I'll make it up. I'm good. So the key is to do everything intentional. And millionaires, what they do is they're, they're very intentional with their money. What do they do with it? What are they instructing to do? How are they, how are they making it? So that leads me to number three, their goal focused. So they actually have a target and they're moving towards a target, and they have milestones and gateways to go through. We, we break it down for you so you start to understand where are you going? Are you on track? Are you in a, in a place where you're moving towards where you want to go? We break it down in 10 years, years, one year, 90 day increments, and then action steps. The thing is that when you do that now all of a sudden you have a direction. You also have metrics to measure and say, am I going in the right direction in the right way and getting closer and closer to the goal. Truth be told, goals will change, trajectories will change, targets will change, life will change. But at least it helps you become intentional. Which then leads to number four. Number four is that they have a really good work ethic. Now, I'm not talking about labor work, although it's part of it, but a work ethic. They dedicate themselves to not the issue of becoming a millionaire, but they dedicate themselves to being a good steward of their finances, a good steward of their life, a good steward of doing that. And what does that entail? That entails. Studying, that entails, reading. That entails learning. That entails you saying to yourself, I am not going to just relinquish or outsource my financial future to someone else, advisors or otherwise. But I am going to take control of it, be part of the journey and work with people to help me, help me understand so I can make informed decisions. Their work ethic is big. They get in the game, they stay in the game, they're very disciplined, and they stay, stay with it. Which leads to the, the final piece of this is consistency. What was the big thing that Ronald Reed had? Consistency. He was making money as a gas station attendant or janitor in, in Vermont. But he was consistent in putting money away, investing in things like Wells Fargo, Colgate, Procter and Gamble, JP Morgan Chase. All those things.

Turned into $8 million. These are the traits that millionaires have. These are the traits that are common. And you can look at it and say, do I have those traits? At what level do I have those traits? Do I need to develop those traits? Now let's. Let me just call out some things that I think are really important to understand. Ronald Reed started doing this a long, long time ago. And so he was picking and choosing stocks. He was picking things like in different industries, Wells Fargo, Colgate, JP Morgan, you know, Johnson and Johnson, CVS Health. So he was picking individual stocks because back in his time, that was the only way to invest. Today, to do what Ronald Reed did is far easier because we have, and it's far less risk because we have access to ETF and index index fund investing. So instead of picking a single stock and hoping it goes to the moon, you actually are going to pick a basket of stocks and be able to work through it and have a diversified portfolio that may have 500 to 3,000 stocks in it and allow it to grow. The S P 500, 500 biggest companies over the long term is averaged between 8 and 10%. And if you do that over the long term, you too can end up with a Ronald Reed portfolio. But you have to understand the magic million. You know, when are you starting? How much are you putting away each month and how much are you putting to work for you? The whole key is this. Every dollar that comes into your life must have a job description. And it must, it must be deployed to do that. It must be used to do that. Is it to pay the mortgage? Is it to pay the rent? Is it to put clothes on your back? Is it supposed to put food in your gut? Is it to invest? And making investing a priority on a, on an ongoing basis is the thing that's going to get you there. Instead of focusing on today's lifestyle only and forsaking the future, we actually take care of the future and we look at how do we build a life today in a better way. That's what millionaires do. And it doesn't matter whether you're making a janitor salary, a gas, gas station attendance salary, or that you are a doctor, because trust me, I have seen people with huge incomes and zero wealth and I've seen people with little incomes and a whole lot of wealth. And so it is important to understand that what's driving your income and what's driving your wealth are your consistency, your behaviors, your choices and your decisions. Here's what I'm going to tell you. Do get in the game. Stay in the game. Get in the game and start investing in ETFs and index funds. When you're ready, I want you to follow the wealth priority ladder that I teach in my book because it tells you specifically what to do with each dollar and what to do in, in what order. It is the prescription, it is the recipe to help you out. Okay, but get in the game and stay in the game. Long term, is the market going to go up and down? It certainly is. But you're not in it for the short term. You're in it for a decade or more, and that's what Ronald Reid did, and that's why he ended up with $8 million. I want you to find your path to your own millions, your own way. But it takes discipline, consistency, and getting in the game. I hope that this helps. I hope that this gives you something and that you're going to go ahead and sit back and say, all right, I'm going to, I'm going to do this. I'm going to get in the game. And I have plenty of more trainings about ETFs and index funds, how to do it, what to do. I've got my book that will help you the whole process and build it out for you. But the bottom line is sitting on the sidelines or sitting on the stands won't get you there. Let's get in the game. And I'm here to help. Okay. I hope that you found this of value. I hope that this helps you on your journey to financial freedom. As you know, I'm on a crusade to light the path to financial freedom for a million families, and I want one of them to be you. And until I get a chance to see you in another episode or on my road as I'm speaking, always, always strive live a life that outlives you. Cheers.

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.

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