How to Build Systems to Actually Achieve Your Financial Goals

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. You ever set a financial goal that was so bold that it made your journal blush, only to realize two weeks later that you're back to binging Amazon prime and overdrafting your ambition? Yeah, me too. See, the truth is that that goals are like New Year's resolutions for your wallet. Full of hope, but allergic to the follow through. Look, I can't tell you how many times I made resolutions and let them fall off. And you actually. You know what actually gets you to financial freedom isn't Dr. Bigger. It's building systems. Simple, reliable, boring, on purpose systems. And today, I'm going to show you how to build three powerful money systems that take you from overwhelmed to in control, from paycheck dependent to peace of mind wealthy. 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, but a money machine does. And, and that freedom, it doesn't come from the next paycheck, the next raise, or the next client. It comes the moment that you start to get your money to work harder for you than you did for it. All right, think of this. A bit of financial education with a side of sarcasm and a whole lot of heart. And I'm your host, Mel Abraham. And I used to think that my corner office with a big spreadsheet was success. But after 30 years as a CPA entrepreneur and money mentor, I've learned, but the hard way, the real way, that real wealth isn't about bigger numbers. It's about bigger choices. All right, so today I'm gonna walk you through the money flow system, my investing system, and the protection and legacy system, plus one quiz that tells you exactly where to start. All right? If you're ready to build the life that is financially bulletproof and rich in meaning, let me know, Jump in, grab your coffee. Let's do this.

I want to kick things off with a story. My son Jeremy was five years old. I was a Single, full time dad raising him. And he comes home from school one day and he proudly sits back and says, daddy, Daddy, I drew a picture of you at school today. And he hands me this drawing in blue felt tip pen. And it's a stick figure of me. Wild hair, two phones, two computer screens, no smile. And then he says, look, dad, it's you. You know, I was proud and crushed at the same time. Nowhere in the picture was him. Nowhere in the picture was us having fun. Nowhere in the picture was the vision that I had for my life. And because at the hands of this five year old, six year old boy, that's when I realized I wasn't building a life. I was stuck building a job. I was on the treadmill of earnings. Okay, yeah, maybe a high income, but high stress, no freedom. And then life threw me a curveball. And that curveball was cancer. Suddenly I couldn't coach, I couldn't consult, I couldn't speak. But the beautiful thing is, because of the drawing that Jeremy made, I built systems. A money machine. The systems that kept income flowing, bills paid, lights on, even when I couldn't show up. That's what this is about. The three systems that will change your financial life. Not more hustle, but a better framework for financial peace, financial freedom, financial journey. Okay? That's what I want for you. So here's the thing. Why do systems beat goals? I love people that want to set goals, but I tell people that we shouldn't be setting goals. What I tell people is that if we're going to set a goal, then we must set a goal and pair it with a declaration. Okay? Goals are great, but they're not dependable. How many times have we set a goal to lose weight, to go work out, to get up earlier, and then three weeks after the goal set, it goes away. Why? Because goals are soft and fuzzy. Goals are easy to kind of kick down the road. I'll do it next quarter, I'll do it next year, I'll do it next month, I'll do it next week. But if we take that goal and we make a declaration to it, okay? Now all of a sudden it's a must because we say I will. So I want a goal paired with a declaration. And then here's the magic paired with a system. See, 92% of people never hit their financial goals. One, because they haven't done the declaration. But two is not because they didn't try, but because they didn't have the right systems in place to make it easier to do that. Your wealth will only grow to the level of systems that you build. And so that's the game we want to play. Now, you may look at it and go, I, I'm going to go through these systems, but I don't even know where I am in my financial journey. Well, I got you there too. So if you're not sure where to start, I want you to just simply take my financial Freedom Zone quiz, okay? It's totally free. It'll take 60, 70 seconds, 90 seconds, okay? You go to your financial freedom quiz dot com. We'll hook it up here. And, and you'll go through. It'll tell you where you are on your financial freedom journey. It'll tell you what the characteristics are, what to focus on. You'll get a report that tells you what your next steps are, and then you can look at the systems that we need to put in place. So let's just talk about the system, the three systems. System number one is what I call the money flow system. The purpose of this is this, to direct every dollar with intentions so you stop leaking freedom. Every dollar that isn't used with intention, okay, to pay a bill, to invest, to do what it's meant to do is leaking your freedom. See, in my early 30s, I was what they call income rich, cash broke, okay? One rainy afternoon, my car broke down, no big deal. Until I realized that I had spent my entire emergency fund on spontaneous spending. A vacation with room service and all that stuff. It was totally irresponsible and it was solely a product of me operating without a system, okay? I didn't have a system that, that was taking care of my money when it came in the door. I didn't have a system that knew what was coming in the door, where I was allocating it and what it needed to do. And so listen, if you're, if your dollars, when they come in the door, do not have a job description to flow for you, they will flow away from you, okay? So here's, here's the components of a money flow system. We'll talk about the action steps here too. But the first is this is to know exactly where every single dollar that comes into your life, into your world, that goes through your hands, is meant to do before it comes there, okay? That means if you're making $1,000, how much of it is going to your living expenses? How much of it is going towards your investing, how much of it is going towards, towards your future, how much of going, going towards your savings? Now I, I tell people, if you don't have a system, then start with this. Just, it's a fundamental basic one. But 75% of, of the income that comes in should be to pay for lifestyle and, and your debt and all of that 15% should be invested. Now I want that up to 20% to 25% but at the very beginning, at the very least 75 and then 15 towards towards investing and then 10% will go towards your savings, towards your liquidity, in other words your emergency fund, your peace of mind fund. So your money flow system now comes in and you got a 75, 15, 10 allocation. You know where it's going. Now once you have your fully funded emergency fund or peace of mind fund, that 10% will be added to the 15% and there you go, you now have 20, 25% going towards investing. And so when you do this this way you know exactly what your money is meant to do when it comes in the door. And if it's not on the list, if it isn't in the, in in what we call the cash resource plan, then we don't do it. Okay, but you do it in advance of making the money. So that's the first component. The second component is when you're designing this, you're living and your lifestyle and all of that stuff, base it on what, what I call value values based budgeting, values based allocations. Often we, we start to make spending and we start to spend based on peer pressure, based on media, social media. Look y', all, I got a $900 coffee maker sitting in that kitchen because I was on Instagram one day and I go this is cool and I bought it. Now did I go, I didn't go into debt, I could afford it and this and that. But it's just a demonstration of even I'm not exempt to the emotional spontaneous type of spending. But that's when we can get ourselves in trouble and especially within the buy now, pay later types of plans and schemes that are out there. So what I want people to do is align their spending, align their income, align their investing with their values. Because then two things happen. One, your money's doing the right things for you and two, you are actualizing your own set of values through the use of your money. The third component of a money flow system is a debt pay down mini system. Now not everyone needs this, but if you're sitting on consumer debt, if you are sitting on debt, that is lifestyle debt, that means for the big screen TVs, the lavish vacations, a seven year loan on a depreciating car vehicle, the consumer lifestyle, that credit card balances that needs to be on a debt payment plan. So we have a mini system for paying down debt. It's either going to be using an avalanche pay down method or a snowball pay down method that either in the avalanche pay down method you will pay the one with the highest interest rate first. And then if you decide to use the snowball method, you will pay the lowest balance first, forgetting what the interest rate is. Okay, one is a psychological win the snowball method, which is one is a logical mathematical win the avalanche method. I don't care which one you use, I care that you have one in place. So if you're sitting on balances, credit card balances, high interest debt, destructive debt as I call it, things that are your financing lifestyle, not something that is productive that's going to increase your wealth. We need a debt payment plan in place. So now you have your, your money flow system includes the allocation and part of that 75% is going to the debt payment plan. All of this is governed by the wealth priority ladder, which is in chapter 12 of my book. Because that tells you the pecking order, the hierarchy of what to do with your money. And if you look at this and compare it to the wealth priority ladder, these are the bottom rungs of the wealth priority ladder. It's to give you an unshakable foundation from which to grow from. Now all of a sudden when your money's coming in, it knows exactly what it's going to do. But let's take it one step further. What I would do is automate this with multiple bank accounts. So, so the 75, 15, 10 and even other sinking funds and things like that, I would put them in separate bank accounts. They could possibly be in the same bank. And in some banks they'll actually have you, have you in one account, but have different buckets. So you could do it, but, but the key here is this, to have it automatically done. So you are not having to effort to do it. You're not having to pull the levers, you're not have to twist the dials. You don't have to think about it. That is happening in the bank background. Okay, so if you look at the action steps to build a money flow system, the first would be to open up the three bank accounts or the four bank accounts that you need. You know, minimum spending, Investing, savings, the 75, 15, 10.

That's the first step. The second step is to set up automatic transfers the moment the income hits the account. So as soon as the deposit goes in, the percentages get allocated out and it's done. No fuss, no muss, it's done. Okay? The second thing that I would do along with this automatic transfer, is set as many of your bill payments on autopay. You don't have to write checks. I don't know if people write checks anymore. I still do every once in a while, but you don't have to write checks. You don't have to log in. It automatically gets paid. So I'm trying to remove as much friction from the money flow. Once you have the flow set up to your advantage as possible. Okay? And so this is the thing that we need to build up. So now here's the thing. Once you have that money flow system in place, now the money that's coming in, you know that it's doing the right job for you in the right way, in the right proportions to get you going. That then leads to the second system. And the second system is the investing system. And the investing system is where you start to build the money machine. This is where the. The income based on your work will then start to shift from that to income based on assets. See, when I was in the thick of my cancer treatment, I had zero energy, okay? There was no stages, there was no strategy calls, there was no revenue from my work. But the income kept coming in, and they kept coming in because I built an investment system, a money machine, and I had no idea the power of it. But my past self had done all the heavy lifting, the discipline, the diligence, the habits. Okay? So this is the time, and this is the second phase of the wealth priority layer where you're starting to build what I call the Freedom Fund. But now you got to look at it and say, I need to acquire. Start to use my income to acquire assets. Remember, 75, 15, 10, 15% was going to investing. That investing is acquiring assets that will grow and provide cash flow down the road. So what we want to do here is start to focus on what are we putting our money into that will allow us to generate income without our efforts to generate the income. Leveraged income, if you will. This is the whole idea of the five incomes that I talk about in my book, the five incomes. Most people will start with what I call active income. That's the bottom rung. That's one on one. That's employment, that's solopreneurship, and that we all do it. I do it every time I get on a stage. I'm paid to speak. That is active Income, I'm the only one that can do it. And if I'm not doing it, ain't nothing coming in. Okay, then we have the next level up, business income. And business income is where we start to leverage it by hiring, hiring people, hiring team, not doing all the work ourselves, but we are still instrumental in driving the income streams. Those two rungs of the five incomes are where most people generate their income, including myself. But problem happens when that's all you do. See, there's three levels above that and those three levels above that are where your freedom is. There's three levels, that's where your leverage is. And so right above that is what I call asset based income. The next step up. That's where you take your, your, your income, your cash that's coming in into the money flow system and you invest it in something that's going to generate rents or something. An asset based type of income stream, which is, you know, typically real estate, equipment, things like that, that I'll buy it and then I'll rent it. I won't have to do a lot of ongoing work to do that. Okay, then from asset based, we go to residual, residual income. This is where you create something once and you get paid repeatedly. My book, for instance, okay, Building your money machine, okay, that is something that I spent a lot of time creating. Every time it sells, I get paid. It's a residual income stream. Is there any effort to rewrite, I don't have to write it every time it's done, Licensing my intellectual property, my courses, things like that. There's a residual income stream that happens from that. And then the final rung, the fifth income level is portfolio, which is what we're really kind of talking about here. ETFs, index funds, stocks, bonds, paper assets. The typical investments you're used to. So what ends up happening here is this. You have five incomes. Active business, asset, residual and portfolio. The top three, asset residual and portfolio are where your freedom's found. That's the thing that allowed me to have the cash flow coming in, the income coming in while shutting down the other stuff during the cancer. So what your job is in this system is building a system that is acquiring a portfolio of those three types of income. Categories of asset, residual or portfolio. And when you do that, that's when you start to build in freedom. That's your money machine coming to life. Okay. Now some of it you get help with, for instance, a 401k with an employer where the employer matches, that is huge. That's free money. And what you're doing is you're putting money into a system and they're putting money into the system for you. Think about it this way. If you work for an employer that is willing to match your contributions to your 401k up to a percentage, that's like them saying to you, I'm going to put a $100 bill on the floor and if you want it, you put $100 on top of it and you'd pick up both 200. Okay, but most people don't want to do it. But I know for a fact that If I dropped $100 bills all around, y' all would pick it up. The difference here is that in order to pick it up, you got to put another hundred on it to pick it up. And now you keep yours and theirs. That's part of the system. That's part of the investing. That's part of it. Okay. Then again, in this situation, it's about automating it. So let's just talk about what this looks like. The money comes in through the money flow system and you take that portion and a portion of may go into a 401k, it may go into a brokerage account. It's going to go into some sort of investment account. In that investment account, you're going to invest in. What we tell people at the very beginning is broad based, low cost ETFs or index funds. Okay? So you have diversification, you have liquidity, and you have the access to it at the beginning stages. What we want to do is put that on autopilot just like we did with the money flow system. So when money comes in the door for me, a percentage goes directly to Fidelity, if you will, because that's where we keep our portfolio. So percentage goes to Fidelity, and it automatically is invested every single week, every single month. We are on a dollar cost averaging process, so it's automatically doing the investing for us. I don't have to sit back and go, oh, I got 10,000 bucks in there, what do I do with it? No, it's done already. You have the plan in place. So here's the thing. What are your action steps here? Okay. Decide that you know which one of the five incomes you want to work with. And the easiest one to get involved with will actually be the top one portfolio. Because it's liquid, you can get into it in small increments and you have a lot of access to it. Okay? And so that's where I tell people to start. You can go to residual and asset based as you will. But I think the easiest thing to do is to open a brokerage account, have that 15% moving into the brokerage account, and have an investment plan in place that is automatically putting it into 1, 2, 3, maybe 4 different ETFs are index funds, and it's doing it automatically. That's it. It doesn't get any more complicated than that. So you open up an investment account, you set a recurring contribution, the 15% that's coming in, and you automate it, and you set up a recurring investment plan. That's it, you're done. It will build in the background. It will build in the background, okay? This isn't about day trading. This is about long term investing. Day trading for a retirement is like trying to tightrope across the Grand Canyon on dental floss. It's not going to work, okay? Auto invest instead. Way less stress, way less effort, way less everything. Okay? That's the game that leads me to system number three. System number three is the protection legacy system. You're building it now, you're generating income, you're doing the right things, but now you have to keep what you built and you got to make sure it lives beyond you. See, after getting the cancer diagnosis, I wasn't worried about the money, the lawsuits and the chaos. Not because I was fearless, but because the documents, the insurance, the plans were already in place. I had it structured right. But what I wanted to do, literally two hours after the diagnosis, I was in my attorney's office sitting down with him, saying, hey, let's review our trust. Let's make sure it's right, let's make sure it's dialed in. Not because I was planning for the end of life, and I guess it could be argued that I was, but because I was planning for the peace of mind. Once I knew that the people I love, my wife, my son, my grandkids, my brother, were all taken care of. Once I knew that if, God forbid, the worst happened with Stephanie, all she had to do is make two phone calls and she knew the phone calls and she knew where everything was. I could clear my mind, space my heart, space my spirit, space my energy to fight the demon. So when it comes to protection and legacy, there's a couple things here, a couple mini systems you have to have in place. And the first is an insurance review system. You want to make sure that you have the proper insurances in place. Now, I am not one that loves insurance, but I love insurance when it's the right insurance for the right reasons. If you have Someone dependent on your income and you're the sole income earner, then you probably need life insurance in place. Now, I only want you to get term life insurance. There's other esoteric insurance products, but they're not, they're for very few situations. So I don't want you getting caught in that. High commissions, high fees, high expenses, and they try to parade it as an investment. It is an insurance product where they get rich and you get your money all tied up. Okay? I don't care what they say. So, so that's life insurance. You might need disability insurance, long term care insurance. Make sure you have the right property insurance, the right, you know, or umbrella insurance. There's a lot of different insurances that you might need in place depending on your facts and circumstances. But what they're meant to do is to rid your, your, your systems, your exposure to, to any risks, and cover the risks that you haven't been able to mitigate or eliminate. The other system here is this. You want to make sure that you have your estate stuff in place. That means your will, your trust, your power of attorney, your directives. What are your wishes? Here's the deal. A lot of people say this and, well, you know, I don't know, I'll deal with it later. You all, every single person has a trust in place already. There is an estate plan in place. The question is, was the estate plan drafted by you or the state? See, if you die.

With no estate plan in place, no will, no trust, no poa, no directives, then you are at the mercy of whatever the state laws are. And I don't know about you, I don't trust the state to do the right thing for my beneficiaries, my heirs and my family and my loved ones. So I'm going to draft a will and a trust and the proper powers of attorney and directives. So my wishes are carried out. If I, God forbid, I'm not able to carry them out for myself. Okay, so you want to make sure that you have that in place. As your wealth grows, you'll want to make sure that you have some sort of tax strategy in place. If tax rates are at 30 to 50%, it makes sense for us to, to be smart about taxes, to use it to our advantage so we can minimize them as much as possible. Then the last piece of this component here is this. I want you to put a legacy planning piece in place. You're building something. It's a money machine. Call it what you want. Okay? And I am a proponent. I am Not a proponent of just. Just because you have a child that they're entitled to the wealth that you created. Jeremy is my son, but he's not entitled to a dime of wealth just because he's my son unless he proves that he has the skill sets to steward the assets. There's a chapter in my book that says skill sets before assets. So what this means is that the legacy piece of this is how do you transfer the knowledge, the wisdom, the skills to the next generation of. Of stewards to take care of what you built? Because if Jeremy. Jeremy didn't prove he could do it, he wouldn't get a dime. It would go to a good cause, it would go to charity. Okay, so there is a piece that needs to be put in place here, and that is to turn around and say, before I think about transferring the assets to my heirs, let's look at how do I transfer the systems and the skills to them so I know that everything stays intact. Okay, so what are your action steps with this one? I think the first thing is to schedule a wealth health day where you sit back and start to look at all these things, the insurance, the estate, the taxes, the legacy, all that stuff, and start asking yourself what's missing, what's not missing. Use this episode, if you will, as a checklist. The second thing is to review your documents. If you have documents in place, meet with your advisors. Do that once a year to say, do I have an update to a trust? Do I need to update the will? Do I need to change my. My insurances? Do I need to add some things in here? And if your advisors don't want to meet with you regularly, get new advisors, okay? That's their job. That's their job. The third step here is this. Check your beneficiaries, y'. All, okay? We set things up early on as we start, and we never look at them. And sometimes I've seen situations where, where you've got multiple marriages and, and some of the beneficiaries on the assets are from the very first marriage, and they're three marriages in. That's going to create a whole lot of friction down the road. So you want to make sure that when you do the reviewing of your docs, that you're checking all the beneficiaries on all the accounts and how it's all set up so it's properly done. And then the last piece of this is to update everything based on your current wishes and make sure that the people that need to know, the trustees, your significant other, that they're aware of all of it, where it's at. Okay? Don't let your financial legacy be a mystery novel to the families you know and your loved ones that they're stuck reading, that they're trying to figure out. And it becomes this puzzle. Okay, so let's zoom out. There are three systems you, you need to actually hit your financial goals. A money flow system, that's the system that controls and automates the cash that comes into your life to do the right things, to take care of giving you a life today that you want to live, but to take care of your future and the freedom that you deserve to live in the future. The second system is the investing system. That's to take the money from the money flow system and grow the wealth beyond your work, beyond your efforts. This is where you're going to find your freedom. This is your money machine that you're building a portfolio of assets that will cash flow and pay for the life that you dream of. And the third system is the protection Legacy system is to secure and sustain it all for the long term, not only for you, but beyond you. Each one is made up of smaller little bite sized systems. It's about progress, not perfection. Listen, if you're sitting here wondering, well, where do I even begin? The first place is to understand where you are on the financial freedom journey. That's why I created the Financial Freedom Zone quiz. You can go to your financial freedomquiz.com it'll tell you exactly where you are. It'll tell you what's the next steps for you, what to focus in on. It'll allow you to then look at the systems that are associated with that. No shame, just clarity. Momentum, freedom drives through that. Because the truth is this, you don't rise to the level of your goals. You rise to the level of the declarations and the systems attached to them. And when your systems are strong, you can stop chasing money and you can start building a life by choice that's driven by a money machine. Let's build your money machine. Let's get you free. Okay, that's the game I'm going to play. I hope that you found this valuable and I hope that you'll. You start to build, build the systems. Do me a favor. You know, once you go through this, let me know which system you're going to focus on first. Drop it in the comments, send me a dm. I love to hear from you. Let me know if you have questions on this. We can do deeper dive videos on some of these at the same time. Now, at the same time, I'm sure you know someone else that needs to have these systems in their life, too. So do me a favor, subscribe and share this out. Let other people know. Get them on the journey to their path to financial freedom. I believe that financial freedom is a birthright. We just got to go claim it. And I'm on a crusade to light the path for a million families, and I want one of them to be you. All right? I hope that this was valuable and I can't wait to see you on the road and the path to your financial freedom or out there as I'm speaking. Make sure you reach out. Make sure you touch base with me. I'd love to hear from you. Until I do, always, always strive to live a life that outlives you. See you in the next one. 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.

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 Podcast, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people, because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.