How To Outsmart The Game of "Money"

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. Listen, if you're tired of the conventional wisdom that never seems to boost your bank account, or you feel like maybe there's some secret wealth that no one's telling you about, this episode's gonna be a game changer because I'm gonna take you behind the curtains to kind of give you and reveal some unique and maybe some more obvious and common habits that can catapult your financial success to new heights.

So maybe you see someone that clearly has money, they are wealthy. Now, from the outside, you can't really tell because you don't know if it's all financed or anything like that. But for argument's sake, let's just assume that you see someone wealthy. Have you ever felt and wondered, what do they know? What are they doing that's different? And the thing is that wealth creation, since it is a habit and a behavior, it is what they are doing and how they are thinking about doing it that changes their result. And so if we are successful at taking on their thinking and their behaviors, the math equation of wealth should solve itself. And. And so as I go through this, I'm gonna. I'm gonna walk through some of these more common. You might see them, and some that maybe not so much. That gives you a different perspective of the habits and tactics that I have seen wealthy use over the last three decades of my working with them. I've had the blessing of working with people just starting out, building hundreds of thousands of dollars to those that are in the millions and even billions. And the thing that I have seen is there's some commonality, there is a pattern, there is a thread. And I want to give you nine of those things and some very specific, actionable steps for you to take to start to put it into your life. Because I know that when we start to do the things that move the needle, the needle gets moved, and we get a different result. All right, so let's. Let's start out with the first one, which may be. It might Surprise you. But here's what I've noticed. They see time differently and they look for ways to leverage time. Now what I mean by this is that there's another way to say it, that they look for a way to compound time. And in what I mean by this is they focus on the activities that can scale over time. In other words, where can they dedicate their time where it will grow in the future that allows them to, to get more out of what they put their time into in the future? Here's what I mean by this, and that is this. Building knowledge.

Building wisdom, getting experience.

When I get a knowledge base that I can use, my value increases, but also my ability to earn increases. And over time, there is a compound effect of that. So when we, when it comes to this idea of time compounding or leveraging time, the way to do it is to prioritize the learning. Okay, what things can you learn today that will serve you for the long term? Things like how to invest, what drives markets, a process to follow. Maybe it's in your profession. For instance, in my profession, when I started and I was doing valuations, I've got three different valuation credentials. And those credentials allowed me to charge more, bill more, do more, and, and be more distinct in the marketplace. So where can you put your time that once you put your time in, will pay dividends and pay you over and over again. And it's not just time wasted, but time invested. Okay. The second actionable step is also to look at investments when we start to invest in assets. The money machine, as I talk about in my, in my book building your money machine, that, that doesn't require your time.

To manage them on a one on one basis. In other words, once you buy the investment, you're not looking at the investment every single day, every minute of the day, watching it, watching, watching. And if you are, we're going to have a different discussion because you shouldn't be doing that. All right? So the key to this is where can I put my time, where I'm going to get more back with less effort down the road. All right? And that's, that's what I see with them. The second is automation, automating without friction. So why do we do this? We do this to eliminate the obstacles, the friction, the thought process, the emotions that come to making a decision. The less decision friction we have, the easier it is to do. Credit card companies know this. They give us a credit card not to give us credit. They give us a credit card to remove the friction from the buying Decisions that we're making. We can tap a card, we can touch our phone and buy, buy, buy, buy, buy. They know that if there's less friction, there's more purchases. Well, what happens when we take the friction out of our investing, the friction out of our wealth creation? That's what, that's what the wealthy do. I noticed over and over again. They remove themselves and the decision friction from the wealth equation. In other words, they set up automatic transfers and they set up automatic investing and they. It allows it to just happen in the background, literally. It's painless, it's invisible, and it eliminates temptation, it eliminates peer pressure. It doesn't, it doesn't get in the way. So the actionable steps for this one seem obvious, but set up automatic transfers. Call your bank, call your credit union, whoever you're banking with, and set your automatic transfers to go automatically to your high yield savings account, automatically to your tax account, automatically to your investing account, and then in the investing account, have it automatically invested into whatever portfolio allocation you have, the ETFs, the index funds to do that. Set up and enroll in automatic transfers and automated investing in your accounts take you out of the equation and take the decision friction out of the equation. That's number two, number three, and this one you've heard, okay, and that is multiple streams of income. But I'm going to, I'm going to tweak this a little bit in the sense that it's not just any income that matters here because it's the type of income we get. I talk about, in, in my book about the five incomes, and there's two levels of income that require a tremendous amount of effort from you. I call it active and business income. And the challenge is this, is that that means that you're running on the treadmill, you're on the earnings treadmill, and you are continually on the earnings treadmill. And I get it, we want to have the multiple streams of income. But at some point, if we are going to get our time back, the streams of income need to be what I call leveraged income, not passive. Because I don't believe that there's anything that's really passive. I think that we leverage our time and we are still involved in the process. It's just how much involvement we have. So now we have to look at.

The types of income that you're trying to create. At the beginning, you will be really focused on your active income. The, the income that you're generating from your job, your profession, your career, your knowledge, your Expertise. You're going to try and, and scale that as much as possible and build on, on that as much as possible because that's your biggest shovel of income, the biggest shovel that you have to throw against wealth, wealth creation. The challenge is that we don't want to stay there. I need to allocate a piece of it. And we're going to use the automation to do that to start building other sources of income like real estate or other assets or residual income streams such as white labeling, some of your, your knowledge, your wisdom or.

Other creative, your intellectual property. Then portfolio assets like ETFs, index funds, dividend paying ETFs, those kinds of things that create additional sources of income without requiring you to put a lot of effort in on an ongoing basis. If it's your job, you got to be there and you got to be running the treadmill and, and I don't want you running the treadmill all the time. I, I'm on the treadmill of earnings, but I'm doing it by choice. I want you to be able to do it by choice. What are your action steps here? The first is to start looking at the kinds of investing income producing assets that you like and learning about them. And then look for the opportunities to buy them properly once you understand them and are educated in the way you do it. I would tell you also to follow the wealth priority ladder in chapter 12 of my book because I give you a hierarchy of how you allocate your dollars to build an unshakable foundation below you so you can build a high growth machine above and do it that way. And so I would focus on that. You might also explore some side hustles just to get you off the ground. It's more active participation. But if you have a skill, whether it's writing or design or tutoring or anything, use that skill to create a side hustle to get additional income in so you can use that to jumpstart the investing. Okay, so that's multiple streams of income. Number four. Something that I see that, that they do all the time is they mastered the art of asking, y'. All. If you don't ask, you don't get. And the key is, is this, is that I think, I think everything's negotiable and everything's a negotiation. Now it doesn't mean, let me be really clear about what I'm saying here. I don't believe that a negotiation is a mentality of what can I get from this person? But rather it's a mentality of how do I create a win win for both of us? And when we come at it from that perspective, we get a little bit more of what we want and they get more of what they want and we walk away feeling good about that interaction. Otherwise we're, we're manipulating and trying to, to get something from someone that never feels good and it's never sustainable. So. But the, the wealthy that I work with, they've mastered the art of asking whether it's, whether it's asking for a testimonial, whether it's asking for an opportunity, whether it's asking for, for an investment, whether it's asking for the sale. They've mastered the art of asking and negotiating that communication at a level that makes it easier for them to do. So. The actionable step here is to practice negotiation. Use some role playing.

It's an uncomfortable thing for some people. Like my wife watches me negotiate. She goes, I don't know how you do that. You're calm, you're cool, you're quiet, and you have fun with it. They have fun with it and you, and, and we got a deal. I, I mean I've done everything from rental cars to parking spots. It's, it's, it's a, not a game in the sense of I don't take it seriously. I do it with a playful fun. And I think that we can do that. But it takes practicing because you have to be comfortable and you have to be able to understand the art of communication and doing that. And also remember, it's not about what you get, it's about how do you create a win win for, for both of you. All right, number five, this one's a big one. And I have talked about this. In fact, I'm doing a keynote on a bit on this coming up shortly. And that is this focus on value, not cost. So, so here's, here's the thing. This is what I, what I notice. People, they look at.

They look at, at everything through the eyes of what is the value I get. They realize that, yeah, I gotta pay for something. That's not what, what is the issue? I have no problem with paying for anything and, and most wealthy don't. The question is what am I paying for? What's coming back to me? What's the value? And this is a two edged sword or two sided coin I think is a better way to put it. Because if you come from your perspective and say, what value do I bring to the table? And you own your value, you get paid more. Okay. And when you get paid more, you have a bigger shovel. That's one side of it is, are you owning your value? Okay. The second side of it is to be really clear on the value you are receiving when you are making an investment or a payment to anyone. I see this a lot, and I've hired a couple of new contractors. And some contractors that I did not hire will come to me and say, here's the recipe. Here's what we do. Here's, here's this one, this one, this one. This is what you're going to get. And there's tick boxes. It's like a to do list. I'm not paying for them to do a to do list. I'm paying for the results. If the to do list gets the results, great. But if the to do list doesn't get the results, then it's not worthwhile. So I don't care of the process. I care that they get the results. That's the value people pay for a solution to a problem. And so it's important for us to look through those eyes. So your action steps for this one is to sit back first and really delineate journal. Ask yourself, what is the value I bring to the table? What's the value of the solutions I have? What are the things that I can do for people to solve problems? And what's the pro. What's the value of having that problem solved? Okay. The second is anytime you're in an interaction or a transaction to ask yourself, what's the value exchange that is happening? And does that make sense? Am I willing to put out the thousand dollars, the 5,000, the 10,000, and am I getting more than that back in value at the end? And if not, you either adjust the transaction or, or you move on. Okay, so that's number five. Number six, this is regular money audit. Okay, this sounds like really boring.

Stuff. Probably shouldn't have used the word audits, but hey, it works. And what I mean by this is that you're checking the pulse on the patient. The wealthy know where they are, they know where they're going, and they know where they are in the process. Okay? And so, so the way they do that is that they periodically review their financials, their ins, their outs of, of cash flow, their assets, their liabilities, their plans, and where they are on that journey. And without it, you don't know whether you're getting close to the destination or not. It's like, it's like setting on a trip, a road trip, and you have a map and you start driving and you never look at the map again.

You won't get to the destination. If you do, it's coincidental. And that's not the way we build wealth. We build wealth intentionally following a process, following a recipe, following a plan. So in order to do this, there's two things I want you to do here.

And from an action step is one, I, I want you to schedule regular money reviews. This could be monthly. I do it typically monthly. It could be quarterly. I would not do anything less frequent than quarterly. But at the beginning, I would do it monthly. The more you're checking it, the better off you are. This is for you to just see where you're at, see if you're on track and see if you need to make some adjustments. At the same time, I want you to create.

A spreadsheet or a schedule of your net worth. Start tracking your net worth. There's two net worths I talk about, and I talk about it in the book that I want you to track your total net worth, which will include everything you know. It's your assets, less the stuff you owe, the liabilities, which could be your, your home, your cars, your clothing, all that stuff. And clothing really isn't an asset. But you can look at it and say, this is everything that's in my existence. Okay, and then what do you owe? And what's left over is your net worth. The more important number, though, is what I call investable net worth. That's the stuff that's going to allow you to build wealth and have a life of choice. That is your money machine. That means that your clothes, your shoes, your, your cars, even your residence does not count. It is only the assets that actually can generate cash flow and support the lifestyle that you want down the road. Okay, I get it. The residence is a place to live, but it isn't generating cash flow. It's costing you to live there. And you need a place to live. So I'm not taking that out of the equation. I'm simply saying I'm setting it aside. And because I want to focus on a specific type of asset that's going to allow me to live and pay for the home that I'm living in. All right, so those are the action steps that I would do in step six. All right, Number seven is I would embrace frugality. So talking with some of, some of the millionaires and watching my clients, they embraced frugality, but what they didn't do is they didn't go to market. Miserly. So frugal and miser two different things. And where they were focused on is being frugal in the high impact areas, the big financial decisions that you're making. Yeah, you hear it.

Stop, take, just stop getting your lattes, don't get the avocado toast. All this. And you know, in principle it makes sense. That's not the stuff that's destroying people's wealth. What's destroying people's wealth is over buying cars, over buying houses, over buying expensive stuff. So embrace the frugality in your living, in your buying decisions and do it from that perspective. Now, the action steps here, one of the action steps is when you build your plan. Because what I don't want you doing, because there are people that say, hey, go live, live on, on beans and rice. Okay? Dave Ramsey says that all the time. And I understand where he's coming from and he's trying to help you dig out of a hole. I want you to build a mountain.

Now if we're going to do that, that means at the same time, I want you to enjoy the trip up the mountain. If you don't enjoy the journey to financial freedom, you will not relish and enjoy the destination of financial freedom. And the way we enjoy the journey to it is in the plan you create. I want you to have two to four joy points. The things that give you sustainable joy, the things that actually excite you from the inside out that you love to do, and make sure you put it into the plan and try to make sure that you have that along the way so you, so there's some enjoyment of along the way. If it is drudgery and miserable the whole way, then the quality of life, the richness of life is gone. Now you might have to work harder, you might have to get a second, you know, a side gig to support some of those things, but that's fine because it's something, it's joyful for you. The second piece of that is by doing that, you focus on the joy points and not momentary pleasures and temptation. So when it comes to embracing frugality, what I want you to do from an action step standpoint is one, be very clear. And if you're in a intimate relationship, marriage or anything like that, you do this as a couple. Be very clear on the joy points that are important to you that you want to make sure are part of your life plan for them. Define them, make them vivid. Okay? That's, that's number one. Number two is to build the plan around those and to eliminate as much as possible peer pressure, temptation and and buying that are emotional, momentary pleasure purchases. That's, that's how I would embrace frugality.

Number eight tactic that they, that I see them use is that, and I've kind of hinted on this anyways, is that they invest in assets, not liabilities. So they invest in things that will grow in time and give me cash flow so they, so I can live without my time and effort. Here's the thing. When I was building my business, I was a cpa. I was.

I was trading hours for dollars. I was on the treadmill of earnings. And I knew because of. So Jeremy came in running from, from school. He says, I drew a picture of you school today dad. And he was 6 years old. And I look at this picture and here I am standing in front of two computer screens with a phone in each ear and one on the desk screen. In a moment a six year old boy put a mirror into my soul and basically said.

You'Re screwing this up, Dan.

What came from that is this idea and this element of looking at this and say, oh, I need to find a way to separate my earnings from the efforts to earn it. Otherwise I will be imprisoned by the treadmill of earnings the rest of my life. And that's what was the thing that gave birth to the concept of the money machine that, that we talk about. And so in this, in this element, this is where a lot of wealthy realize that hey, I have to separate my earnings, my ability to earn from the efforts to earn it. Otherwise I'm imprisoned to it. And the way to do that is you invest in assets that create income without my efforts or with less effort. And I don't buy liabilities. Liabilities are, are buying things that depreciate or buying things that have ongoing costs. Okay, so your action steps for this one is to identify, make a list of the assets that you have in your life. You went through the net worth statement. Now I want you to make sure that you make a list to say which one of these are real assets that produce cash flow that I can work from down the road. And then also look at the things that are liabilities that are costing you. And look at how do I expand the assets and start shrinking the liabilities. All right, and that leads me to the last one and that is this. Most of the folks that I have seen over the decades, they embrace contrarian investing or thinking, listen, Warren Buffett said it the best be fearful when others are greedy and greedy when others are fearful. He says we start to move in towards, towards the devastation to Pick things up and not run away from it. And so when we look at it from that perspective, it's really starting to look at how do I go? Contrary to what normal people might consider, when the market is going down, what's happening is a lot of people are getting out. In fact, what causes the stock market to go down, what causes the stock market to go down is people selling. That means people are running for the hills, people are leaving, okay? So the stock price drops, it drops, it drops, it drops. And so most people sit on the sidelines and they wait till it gets all the way back up and they get in too late. Contrarian thinking. Contrarian investing will do something that's contrary to what your natural tendency will, will, will feel like doing. And that is when things go on sale. In other words, there's a drop, I'm going to buy. When there's an increase, I might sell depending on what I'm doing. But if it's a long term investment, I'm probably just going to let it run. Okay? And so it's important for you to look at it and say what's going on? This takes a little bit of time to develop because it's against the natural tendency to, of, of your upbringing and just the human spirit, if you will. So the way to do this and the action steps here is to spend some time watching and understanding the basic rhythms of the market and watch what happenings happening. Recognize when the market is going down and what's happening in specific sectors. Whether it's the consumer discretionary sector or utilities or real estate sector. There's ways to do that. Watch what's happening where you start to see where things seem overly depressed and maybe there's a buying opportunity or when things to be, need to be, seem to be excessively hyped. And there might be a time to say maybe this is too, too rich and it's something I need to stay away from and, and, and, or get out of. Now the second piece of the actionable step is you have to practice patience. When you go against a cycle or you go contrarian, sometimes it takes a little bit more time for it to develop and to take hold. So if you're investing in an undervalued stock based on your analysis or based on what you're, you're going through, it doesn't turn around in an instant. It doesn't just turn around and shoot up. It could take a little time. So you're going to have to have a sound theory. You're going to have to have sound system and process, you're going to have to have some patience to make that happen. So those are the nine things that I, I have seen as a consistent thread from people that are millionaires to billionaires and those just starting out that are really on a fast path to wealth that I see as a common thread. I think that you can use this as a checklist in your world and say, do I have how many of these nine do I have? How do I develop? I gave you action steps for each of them. Start to develop the skills, start to develop the mentality, start to develop the behaviors and the habits. And when you use the same behaviors and habits, you will get the same math equation with the same solution. I believe that that wealth creation is simply solving that math equation. And if we do the right things that have been proven over time to work, we will get similar results. But too often we don't have the patience to wait it out. When you look at the markets, they go up 8 out of 10 years. And when you look at the markets in the long term, your probability of success can be in the 90% based on data, based on statistics. It's when we're trying to hit it out of the park in a short term where we get burned, we get hurt, or we allow our emotions to take hold and we make emotional decisions, we get hurt. I don't want you to do that. I want you to follow process. I want to give you some tools, I want to give you some tactics and I want you to follow process. If you want a deeper look in the process, get my book building your money machine. Go deeper. I walk you through a lot of it there. All right? In the meantime, I hope you found this valuable and I can't wait to, to see on the road out there as I'm speaking or anything else. If you have questions or anything else that comes up, do me a favor, reach out to me, let me know. And if you haven't done so already, make sure you're subscribed to this channel and, and if you get a chance, share it, share it out to other people that could use this message. All right. Until I get the chance to see you again, as I always say, always, always strive live a life.

See you in the next one. Thank you for listening to the affluent entrepreneurship with me, your 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.

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.