It's not just you. Most people won't be financially free

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.

In a 2023 survey by payroll.org they said that as much as 78% of Americans are living paycheck to paycheck. That is a travesty. That is something that shouldn't be. And you sit back and say, is it really? Because maybe they're not making enough money. Well, look, let's face it, things have gotten more expensive. Costs have gone up. Grocery stores, gas pump, housing, everything is out of, out of line. But let's put that aside for a moment because. Because as much as we. We have those things to deal with, there is something else that is more sinister at work here that I think that we need to deal with, and that is this. It is less about the economics and more about the financial literacy that we have built into our system, into our society, into individuals. Because let's face it, we don't talk about money. We don't teach about money. We don't give the skills and the tools for people to understand money and how to use it as a tool to build the life. They want to have the richness that they deserve and to have financial freedom, which I think, quite frankly, is a birthright. And so there is something inherent in the system that we need to deal with and inflation and cost of living and all of that. But even if we get that handled, if we don't have the skill sets to handle the money, to do the right things with the money, we're still going to squander it. And so financial literacy is the key to taking control of your financial future. Now, that doesn't mean you don't have to earn more. That doesn't mean that you don't have to spend less than you make. That doesn't mean that.

You gonna avoid investing. Yeah, there's things you have to do, but without the literacy, without some of these things, we can't get past it. Now, I want to talk about the system, because the way the system works is that it is rigged, but it is rigged In a way to support certain characters in the money story of our economic world. And I want to break down some, some things that I think are holding people back, the seven things that are holding people back. That when we start to conquer those and get past those and understand where we are, which character we're playing, we have the ability to now take control of our financial future to remedy some of the challenges that we have and not be a statistic of 78% living paycheck to paycheck. Okay, so let's, let's walk through some of this because the characters in the story, there's four characters in story. When we start to look at.

At how the system is built, because when you talk about building wealth, there are certain character traits, there's certain personalities, there are certain functions that if you are in there, it starts to change the way this, this plays out. I'm going to jump to my iPad really quickly so, so you can see how this, this is, I'm going to draw this out for you because when you look at the four characters that can come into play, then you start to understand, hmm, where am I? And where is your focus? And I think that's the, that's the, the first, the first piece. Now I'm going to talk about your efforts to earn the money, your ability to build wealth and how they interrelate. Now, the first character in this story is the, what I call the conspicuous consumer consumption. Okay? Conspicuous consumption. This is, these are the consumers. These are the consumers. These are the people that are just consuming, consuming, consuming. They're spend, spend, spend, spend, spend. Now, I'm not saying that it is a flaw. We are all consumers. I'm a consumer, my wife's a consumer, my dogs are consumers, although we're buying for them. Okay? But the bottom line is that we need to understand that there's this element of consumption and society builds into our world. The marketing strategies, the, the marketing messages that we get bombarded with on the Internet, on social media, in, on the media, all of the things, the comparison, the keeping up with the Joneses, it's all bolstering a consumer mindset, which is I earn money, I spend money, earn money, spend money. And there is nothing that you're doing to build wealth, to build freedom. And when, when we look at the statistics, 10,000 millionaires were surveyed. 10,000 millionaires were surveyed and.

80%, 79%, 80%, eight out of ten of them were first generation millionaires, meaning that they created it in their lifetime. It wasn't inherited, it wasn't gifted. It wasn't one. That means that eight out of 10, that's pretty good odds. 31% of those.

Never made much more than a hundred thousand dollars a year. So what that tells me is that it isn't about how much you make, it's what you do with it. And if we have a consumption mindset, we're spending it, we're not investing it, we're not creating the future. Now, the second personality and the second character in this story, if you will, is where most of us start out. And this is what I call the constant production. These are the workers. These, this is what we're trying to do. We go to school, we get a good job, we get a good career. We are trained to work and we're trained to spend. This, this left side of conspicuous consumption or consumer consumerism or constant production or workers is what we have been raised to do. This is not where wealth is built. Now can it be not through consumption, it can be through production. But the bottom line is wealth is built on the other side of this puzzle. And that's the thing that we need to understand, because right now what's happening is that they tell us to go to work, we earn money, we pay taxes on that money, we spend the money, we have nothing left over. We're living paycheck to paycheck, and we're not building wealth and we're not getting ahead. And it's this constant treadmill of earnings that I talk about. Now, the third character in the story is what I call the, the business creators, the business, business creation, okay? And, and they're the ones that are the entrepreneurs, okay? And they realize that they don't want to be. Be holden to, to the hours in the day. They don't want to be swapping hours for dollars. They don't want to be constantly on the treadmill of earning. They don't want to be constantly trying to figure out how do they get a raise, how do they get. Get additional income. Now, at the same time, they also realize that if they start a business, they could just in a sense, end up with a job if they're not careful because they're not running the business effectively and efficiently. That allows them to leverage their time and leverage their income. The idea here is this, just like the subtitle of my book, building your money machine, the subtitle is getting your money to work harder for you than you did for it. The idea here is those people that build wealth find a way to leverage their time, leverage their money. So they don't have to continually work so hard all their life to make it happen. And business creation is one of the key ways to do it. And we'll talk about the economics of this in a moment and why the system is built to help two of these categories and characters excel in wealth creation. And the other two, not so much. Okay, that leads to, that leads to the fourth, and that is machine construction. Okay, this is what my whole book is about, is how do you build a money machine? This is about being an investor. And so when you start to look at it through these sets of eyes, you have the machine construction, you have the, the business creation, the entrepreneurs and the investor, and then you have the constant production and the consumption. The fact is this, the, the left side of this, this model, workers and consumers typically struggle to get ahead because they're, they come in and they're, they're earning, earning, earning, spending, spending, spending. Now there are those workers that will actually earn and put money away. In other words, they're building their money machine, they're investing for their future. But the tendency and why people are struggling is that we have never been taught how to do that in a way that's efficient. Now, on the other side of this model, you've got the entrepreneurs and the investors. They understand that until they control their time, until they separate their efforts from the earnings and the efforts to earn those earnings, they're going to be beholden to the treadmill. They're going to be imprisoned by the treadmill of earnings. And the other thing that the investors understand is that when they can get their money to work harder for them than they did for creates this compound effect, the exponential growth of compounded interest, compounded value, it comes into play, which allows you to live without the efforts of having to earn. And so the other thing that happens is our tax system actually treats these people differently. And this is a very important element to understand. Workers will pay taxes at the highest income tax rates just the way the tax code is written, because you're going to pay what's called ordinary income taxes. But investors and entrepreneurs pay at a different tax rate because entrepreneurs, for instance, they get a chance to take a deduction for business expenses before they pay taxes. So there are certain things that are going on that they actually get a deduction for and it reduces their tax bill. And there are certain tax laws that are advantaged for business owners. And then for investors, same thing there is under the current law. There is, there are incentives for you to invest in, in certain assets to Invest in, in businesses, to invest in real estate, to invest in general. Because if you sell it, you get hit with a capital gain. If you hold it for over a year, right now, you get hit with a capital gains tax, which is very different than the ordinary income tax. For instance, the max capital gains tax for Getting state is 20% and it can be as low as 0%. But if you are a wage earner and you're a worker earning, earning your, your income, you're going to pay tax at ordinary income rates, which can be at 30% or above. Okay? So, and if you're in a state like I am, it is even worse because in California we have high income tax. We could be at 50% if we're not careful. So it's important to understand that there are four characters in this story. And we're trained by society, by expectations, by the job market, to be a worker and a consumer. And what we're not trained to do is to be an investor and entrepreneur. Now, I don't know that everyone is meant for entrepreneurship and not everyone has to be entrepreneurs, but if you truly want to find financial freedom, you, you certainly need to reduce the consumption, the, the consumerism, and increase the investing. And so what stands in the way are the next seven things that I think that we need to bring about that starts to understand, that starts to, when we eliminate this, it strips away the barriers to getting control of your finances, to building wealth, to finding that path to do that. So I'm going to walk through the, the seven things that I think hold people back and, and how to navigate those, because let's face it, if 78% of people are living check to check, it's not just you. It's not just you. You are, you're you. If you are feeling the, the, the tightness, that's okay. There is a way out. I, I went through it, okay. Living check to check, credit card bills, those kinds of things. Had to navigate it, had to build it, had to figure it out. But I didn't come from money. I wasn't born into money. I'm a son of an immigrant that came here with nothing. And so it is possible. It doesn't mean that it's easy, depending on your age, stage or circumstances, but it doesn't mean that just because it's difficult that it's impossible. So I want to start breaking down these barriers so you can take hold of your financial future. And no matter where you're at, you start and you start to build in a proper way and the first one that I think is really important to get a hold of is this realization that, you know, education. Now I don't mean degree education, I mean financial education. Okay, we don't talk about it now. You're listening to this show, you're watching this episode, you may have my, my book, building your money machine. If you don't, you should go get it and everything. Because we cannot expect that our system is going to educate us from a financial standpoint. And I'm not getting into politics, I'm not getting into any of that. But the system doesn't see it right now as important. But this is a life skill, let's face it. Here's the thing. There's very rarely a decision that you are going to make regularly throughout your life, throughout every single day as an adult that doesn't have a monetary element to it. We are constantly making money decisions, we are constantly making financial decisions. Do I buy this? Do I not buy this? How do I invest if I don't understand it? Is there debt, all those things, yet we don't see it important enough to educate. And so one of the biggest things that I think hold people back is the lack of financial education. And it's not your fault, it's the system's fault. And what that really means is you have to take control of it yourself. Shows like this, books like mine, education programs, getting mentors, getting coaching, getting, getting an idea. So you get control of it and you, you become in control of your financial destiny. Everything I do right now is to equip you, to empower you and to educate you to master your money, eliminate financial stress so you get a chance to live a life by choice. It's what this show is all about and what I do. So the lack of education.

Is causing people to end up in debt because we don't understand the dynamics of. Heck, even our kids are going into colleges. These 18 year old kids are going to college and you got financial aid offices that are telling them just sign on the dotted line and they're burying them in student loan debt that they don't have any concept or understanding of what is going to happen to them when they graduate and they have this albatross of student debt around their neck and they end up with a job that's paying them $25,000 a year. And so it's important for us to start to educate ourselves to take control back and do that. And that's the first barrier that I think that we need to pass through is saying I'm no longer going to allow the system to educate me. I'm going to go out and seek the right education so I can reduce my risk, increase my control, to eliminate the impact of debt, to understand how I can plan for retirement, emergencies and other things that I want in my life. So that's the first thing, because if we don't get there, the rest of these aren't going to matter. It is all going to stem from financial education. Okay, Number two is bad habits. Bad financial habits. Now, look, bad habits.

Are like smoking, drinking, gambling. These are, in some senses, can be addictions, but they're habits. Or we might have a spending habit or a shopping habit. We might have other things, but all those habits cost. And so there may be bad habits in our life that actually are costing us financially, and they actually could be costing us from a life force standpoint. You know, when you talk about smoking and I just, I literally just came back from Europe and they smoke a lot still in Europe. I don't get it. All right? But we know the facts. The odds are when you smoke, it's going to. It's going to impact your health. It's going to affect your health. And as a cancer survivor who's never smoked, I'm very, very.

Sensitive to being around that. But that's one part of it. Yes, it can impact our lives, but the other part of it is it gets costly. And imagine for a moment if you took some of these bad habits and took the money that you're pouring into these bad habits and started to put it into your financial future, what that can. That can do, okay? And so you could be used to build wealth. And so we need to examine the habits we have. Now, there's another set of habits, though, that I think that we ought to talk about, and that is the habits around money itself. Okay. See, I believe wealth creation is a behavior. It is about the actions you take and not the money you have, but the actions you take with the money you have, which means it's a behavior that means that it's changeable. So the question is, do you have good money habits? Are you spending less than you make? Are you not going into destructive debt? Are you investing 20%? Are you following the wealth priority ladder from chapter 12 of my book? Are you doing the things that will actually impact you positively from a financial standpoint? Now you might sit back and say, I don't know what I'm supposed to do. It goes back to, number one, financial education. Okay, so bad habits, number three. Number three is negative. Emotions or money stories, y', all, here's the deal. When I first started doing this, I thought I was going to. I was going to give you the mathematics behind wealth. I was going to give you the columns, the rows, the formulas, all the stuff you needed to. To. To build wealth. I quickly found out that I couldn't do that because I realized if I didn't deal with the stuff between the ears, I wouldn't be able to deal with the stuff in the pocketbook. And that we end up with stories around our money. We end up with stories and emotions around our money. And it is those stories and that emotion that can actually hold us back from building wealth. If you believe that money is a bad thing, if you believe that the wealthy are greedy, if you believe that having money means you're selfish, all those negative emotions, they affect your choices, your decisions, and your habits around money. And so part of that goes back to, number one, financial education. Understanding that money is neither bad nor good, but rather a tool. A tool to live your life, a tool to achieve the things that you want to do, and a tool to fund the legacies you want to create. And that when we use that tool in a positive way, everyone wins. But when we use the tool in a negative way, because there are plenty of people that are wealthy and they use their wealth in a bad way, I get it. But that doesn't make it all bad. And so I think it's important for us to start to look at things through those eyes and say, what are the negative emotions I have around money? What are the stories I tell myself? What are the things that I might look at? Like you might say to yourself, I was not born into wealth. I was born on the wrong side of the tracks. People like me, whatever that me is, don't end up wealthy. And if that's your truth, that will be your future. But it isn't the reality of what happens, because there's plenty of people that are born on different sides of the track, come from different upbringings. There are the people that are born into wealth that end up destitute, and there are people that start destitute and end up wealthy. The key is about the emotions, the stories, and. And how we handle those in doing that. All right, number four is lack of goals. This is a big one in the sense that what I have seen in the years doing what I'm doing in talking to folks is most people do not have a plan for their life. This is why the very first part of my book and the very first thing that I do with the people that I work with is, hey, let's talk about your life. Because you cannot separate money from life. The reason we want the money is so we can have a certain life. And it's not to just have a bank account. The bank account doesn't matter if it doesn't give us the life that we desire. But in order to do that, we need to have specific goals. Goals and a vision for our life that is vivid, that we can move towards, that draws us towards that. And I ask you, do you have a specific vision for your life now? A holistic vision for your life. Meaning what's my health look like? What's my relationships look, spirituality, what's my family look like? You know, what are my friends look like? What does my career look like? What is my, if I'm a business owner, what does my business look? What does my money look like? All of the things it has to be holistic. We're not talking about just a bank account and being really clear about what the goals are in your life, the vision for your life. So we can set a plan. What I say is that we start with the vision. The vision allows you to create a plan. I, I help people build their, what I call your money machine master plan that literally builds it out for them so they know what to do, where to focus, what's driving their wealth, what the sensitivities are if things change and all those things to, to build it out, they see the probability of success. So they have a plan. From that plan, we build the strategy. From the strategy, we set the tactics. And then from the tactics they go take action. And it is difficult to build wealth if you don't have the right vision and the right plan in place. And most people don't. Most people don't take the time. They don't realize how important it is to do that. And so we need to have that in place. Number five. Number five is poor money management. This goes, everything goes back to number one, financial education. It's like if you don't have a plan, if you don't have a budget, if you don't have skills around money management, it's going to cause you to overspend. It's going to cause you to go in debt. When you don't need to go in debt, it's going to cause you to buy things that don't matter. It's going to cause you to, to do things that actually erode your wealth and ability to have financial freedom versus building it. And so it is important for us to skill up. And that starts with financial literacy and financial education. And then number six, self sabotage. I don't know, you might know someone that does this, that when they start to get ahead, all of a sudden they sabotage themselves. They make bad decisions, they do some things that happen. This goes back to some of the stories and the emotions around money that might come into play. You might feel like, hey, I'm not deserving of this. How come I'm. I'm just. And you sabotage it, where you actually make decisions that destroy the wealth that you're creating. And this comes into play because here's what's happening, is that when you are growing to a level of wealth beyond where you already are, you are going to butt up against the walls of your comfort zone. And when we get outside that comfort zone, it starts to put pressure on us because we're unfamiliar, familiar with it, and it scares us in some cases. And so we'll. We'll tend to revert back to our comfort zone if we're not careful. But the fact is, if we want more out of life, we're going to find more out of life on the outside of the walls of our comfort zone. But self sabotage is the thing that can keep us holding us back because we don't even know what's happening. It's underneath the surface. Why do I always do that when things are going well? Why do I always make a decision that messes up when I'm finally on a diet and I'm finally working out, I'm finally losing weight, and then I go out and I see that cake, and I start eating the cake, and all of a sudden that gets me into a spiral of eating sweets again. I don't do that, okay? I haven't had sugar. I've tried not to have sugar since the cancer diagnosis and everything. I've tried to avoid it like the plague, but we tend to do that. Okay? And that leads me to number seven that I think comes into play in that. Money mistakes. And you're gonna see that a lot of these things will play together in that we make money mistakes. Look, I made a bad financial decision into an investment that turned out to be a Ponzi scheme that wiped out one third of my. My net worth. Everything I owned, one third of it was gone. Okay? And I had to recover. I had to rebuild. But the. The initial response was to shrink down. The initial response would go. Go into resentment. The initial judge me, to beat me up, to tell me a story. That I'm a loser, I'm an idiot. I don't know what I'm doing. I shouldn't be doing this. I'm never going to be wealthy. I see. Mel, you can't make financial decisions. And so what we need to understand is that we all make mistakes. I will continue to make certain money mistakes. Now, most of them now, because of the rules, will not leave a scar. They may hurt. I might pout and everything for a week or a weekend, but it's not going to destroy me like that mistake could have back back in the day when. When I lost one third of everything I own. So money mistakes happen. They're part of the journey. If you're on the journey because you're coming into unfamiliar territory, but when you have a set of rules, you have a set of criteria, when you have an education process, when you have a support mechanism, when you have coaches, you have mentors to keep you on path, those money mistakes will not derail you and destroy you. They might slow you down, they might back you up a little bit, but you will continue to move through it. So it's important to start to look at it through those eyes. So those are the seven things that, over the decades of working with people just like yourself, starting out, or those that have had wealth and built wealth, the stories, the things that I've heard, these are the seven things that they had to overcome. And if you're feeling any of these or all of these, that's okay. You're not alone. But if we allow them to control our lives, then we will not find the path to financial freedom. We have to start to change it. And when you change it, you take control back. When you take control back, you will be able to navigate the path the way you choose to, how you want to, and live the life of your choosing. And that's what I want for you, is to live a life by choice and not by the demands of the day or your checkbook or your expenses. So here's the thing. I want you to go back through this. I want you to use it. A checklist. Not a checklist to judge you, but a checklist to understand where you need to focus, to get more learning, to get more understanding, to grasp it better, and to move through it. When you move through it, I promise you, you're in a totally different world. I hope that this helps. I hope that this gives you some food for thought and gives you some. Some direction in your next steps on your journey. Financial freedom. Remember, I believe that financial freedom is your birthright, let's just go claim it. Let's give you the tools to make that happen. If you are not subscribed to this channel, make sure that you subscribe to this channel. We're going to keep putting content out. We're going to keep helping you along the way. I'm going to keep answering your questions because I, I think that you deserve to live the life that is your life by design and by choice. All right. Till I get a chance to see another episode or on the road as I'm out there speaking, as I always say, always, always strive live a life without losing.

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 affair 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.