Major Money Milestones To Achieve in Your 40s

Hey there, real quick before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience. Live it is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Have you ever looked to your finances and maybe you're in your 40s and thought, oh, should I be a little further ahead? Maybe you're wondering if you've missed your shot at financial freedom or if it's too late to even build the kind of wealth that gives you a life of choice. Well, here's the truth. You haven't missed anything. But the clock is ticking. If you're in your 40s and this episode's for you. Now, I'm going to break down exactly the money milestones that you need to hit right now to secure a future, but also to build real wealth and create a life where money is no longer a source of stress, but a tool for freedom.

Are you in your 40s and maybe wondering if you're behind with building wealth or maybe thought you'd be further along? I get it. I know, I've been there. I want you to know this is that you've not missed anything on this journey to financial freedom. There isn't one specific way, but I will tell you this, that if I could go back, talk to my 40 year old self, here's what I would tell them about money and about wealth, about life choices. I think that I found 11 different milestones that you should be looking at to kind of figure out where you're at now before you sit back and go, well, wait a second, I'm, I'm not even close to 40. Like my son is 30, 35. He's going to be 35. And you start to look at it and say, well, does this apply to me? Yes, it does. This will help you define the next 20, 30 or 40 years of your life and we'll get it dialed in. So I want you to stay with me and let's jump right to it. Let's just talk about one of the first milestones that you want to have in place. And as I said, this is in your 40s, but if you're in your 20s or 30s, to strive to have these things in place will get you that much further ahead of the game by the time you hit your 40s. All right, so let's do this. The first one is automate your wealth. Because here's what I, I realized is that willpower, it's overrated. We need to flip friction on its head. Think about this. They gave us credit cards not to give us credit. They gave us credit cards to remove the friction from the buying decisions. Because it's easy to swipe a card, it's easy to tap a phone, it's easy to just tap and go. And you've got it. The challenge is this, is that, is that we have very little friction in our buying decisions, but we have a tremendous amount of friction in our wealth creation, our wealth building decisions. If it's to make an investment, is it which account to go into? How do I get the money account? How much do I put? What do I invest in? All those things create friction. And that friction gets us to stop doing the things we should be doing. We need to flip the friction on its head. We need to put friction into the buying decisions and we need to remove friction from the investing decisions, the wealth creation behaviors. And so I wish I had automated more aggressively in my 40s. Now granted we back then, because it's a couple decades ago now and is that we didn't have all the tools and the technology we have today to automate it. But it is so much easier now to do that that there's really no reason or no excuse to say I can't. So here's what I want you to do. Specifically, if you are in a company with a 401k, just go to your HR and make sure that you are participating in the 401k. Make sure that are getting 100% of that employer match. Okay? And if you don't have an employer match, then I want you to follow the wealth priority ladder. We want you to over time, I want you to get to a point where you're putting 20 to 25% of your income away and you can max out that 401k. And one of the things to do is to just set it on automatic. Tell your HR department to just fund it. You won't. It'll be taken out of your check. You won't see it. You won't have to see it. You won't have to write a check. You won't have to make any decisions. You'll also tell them exactly how you want it to be invested. Don't make it complicated. One target date fund or two to max four individual index or ETFs. That's it. Low cost, low fee. Let it run and let it do its own thing. Okay, so set up automatic transfers to your investment accounts now. 401k. Also, if you don't have a company, you're not working for a company with a 401k, then you can set up an automatic transfer to a high yield savings account. You can set up an automatic transfer to an IRA account, you can set up an automatic transfer to a brokerage account. But what I want you to do is make it automatic so you're not thinking about it and you're not having to pull the levers, turn the dials. That's friction. Friction gets in the way and then all of a sudden we fall off the wagon. We don't do it. I wish I'd had automated more and more of my financial journey earlier on. Now 95% of everything we do right now is fully automated. Money comes in and it goes and it does the things it's supposed to do. From paying bills to investing to doing things. They are, like I said, my employees doing work for me. And that's the way I want to, I want to treat them. So you can also use some tools like auto sweep features that move money automatically to, to, to make that happen. So for instance, and businesses do this where, where money, they have money that comes into a bank account that's not interest bearing and it sweeps it out to an interest bearing account. So you, you make some interest and when you need money, it automatically brings it back in. So check with your banks, check with your brokerages, see if they have any auto sweep features that automatically will put money to work for you and then bring it out when you're spending it, when you need it. And then the third thing here is to make sure you're following the process that I outlined in chapter 12 of my book about the wealth priority ladder. Because this is telling you exactly what to do with every dollar that comes in, where you allocate it, what you do with it and how you do it. It's to build an unshakable foundation underneath you so you can have growth above you and do it that way. So that leads me to milestone number two and that is max out tax advantaged accounts. Stop leaving free money on the table. Okay? And you'll see this in the wealth priority ladder. This is the time 40s year is a tipping point for you. So I want you to max out your 401k match. If you are not getting all the free money from your employer, it's literally free. You put 4% of your salary in, they match the 4%, that's 100% return. Y' all do not leave that on the table. So max out the tax advantaged accounts, max out your 401k match. Then if you qualify, you may want to look at getting into a Roth IRA because that money will grow tax free forever. You might also have a Roth element to a 401k which means that you may have the ability to contribute to a 401k that is Roth dollars, which means that you don't get a tax deduction for, but you won't get taxed down the road. And your 401k Roth will bypass income limitations. Because your Roth IRAs right now, there is an income limitation. If you make too much income, you can't use them, you can't qualify for them as a direct Roth contribution. But in a 401, you bypass the income limitations and you bypass. The threshold of the max is $7,000 or $8,000 depending on your age. But the max in your 401k is multiples of that. So we want to use that as best as we can in this milestone. And if I qualify for HSAs, to look at the HSA account as a possibility to put money into HSA is a triple tax advantaged, sometimes quadruple tax advantaged account. You put money into it, it's meant for medical expenses. You take a deduction going in. If you use it to pay for medical expenses, you take the money out completely tax free. You can invest the money while it's in the HSA and allow it to grow completely tax free. And you can take it out anytime for qualified medical expenses completely tax free. Now, limitations are you can only put so much in, but you have to have a qualified high deductible health policy. And if you don't, then you don't qualify for it. So it's not for everyone. If you have a lot of medical expenses, like when I was going through the cancer and all that stuff, it didn't make sense. It doesn't make sense because you'll, you'll have a high, high level of expenses. But maybe it does. Just look at it. At this milestone, you want to start evaluating where you're putting money and what you're doing to make that happen. Okay, milestone number three, own more assets than liabilities. I want you to focus in on building your investable net worth. Okay? Those investable net worth is a group of assets that is going to generate, be able to generate cash flow that supports your lifestyle. That's your money machine. That's what we're trying to do. Wealth really isn't about how much you make. It's not even how much you keep. Because I hear people say, well, it's how much you keep. No, it's, it's really not. It's how much you get to work for you. Because when your money is working for you, that's what's giving you the cash flow to live your life. So, so here in this, in this milestone and I've been doing this, Rod, that's the accountant to me. The numbers nerd in me track your net worth at least annually. I, I started tracking mine monthly though, in my 40s. There was really tracking it to see where I was, what I was doing, the decisions I was making. So this is a time to track my net worth and the things that impact it. So this is a time to make sure that you're reducing your destructive debt. High interest credit cards, lifestyle spending that's on credit, personal loans and things like that. So we want to make sure that we're eliminating destructive debt and focusing on acquiring assets that cash flow and appreciate. This could be investments, it could be real estate, it could be business equities, a lot of different things. By and large, at the very beginning, I don't want you to get into complexity. Even in your 40s. I don't want complexity. The easiest thing to Invest in IS ETFs and index funds. They're diversified, they're liquid. You have a variety of them you can get into. Okay. And they're simple to understand. You're investing in businesses, a bunch of them, and if one goes bad, they replace it with another and it just keeps on going. It's got a good history. Real estate's a bit more complicated. Real estate can be a little more risky because you don't have the diversification up front with it. And then other assets that are unique, like oil and gas deals, things like that. I would not be doing this at this point. I would wait till I have critical mass in my portfolio that's generating and then I might use it for a narrow slice, but that's it. So, so the focus now is to acquire assets that will grow and create cash flow over time versus sitting back and saying, I just got to get another raise. I just got to get another raise. No, if you're going to get another raise, great, but let's use that raise to create assets that will create cash flow and allow you to live that lifestyle. That's, that's the beauty of the money machine. Okay, number four, the fourth milestone is to diversify your income streams. Get off the freaking treadmill, okay? In other words, if you're only earning income from one income stream, and I just did an episode that I talked about 12, the 12 income income streams that I have, so you can go back and watch that, listen to that. So you can get a feel for where the income can come from and, and do that. I don't want all your eggs in one basket. And whether it's by choice you decide you don't want to keep doing that work anymore, or by not choice by getting forced out, downsized, outsized, laid off, things like that, or you have a health scare or something like I had something that limits your ability to do the work that you normally do to get that one income stream. I want to avoid that. So we need to develop income streams that aren't tied to our efforts and that are not tied to time to allow us to do that. That means that we have to develop these other assets outside and in the 40s. Once you've got stability in your income stream, stability in your life, usually because you're past the messy middle, this is the time to do that. Okay? So ask yourself the question, how can I make money even when I'm not working? Milestone number five, get serious about investing. Stop overcomplicating it. The biggest mistake that I see in 40s is that they don't have a simple investing strategy that creates cash flow and long term growth. Keep it simple, follow proven strategies. Don't get complicated, don't get creative, don't, don't follow the memes, don't follow the tiktoks and all that stuff. Simple, simple. I'm going to have a peace of mind fund in a high yield savings account, an emergency fund. I'm going to have my accounts that I have invested in diversified ETFs and index funds. Low fee, low cost, low complexity, full liquidity. And it's diversified. I'm not getting into esoteric investments or anything at this stage. I want to understand you. I want you to understand risk versus return, which means that you need to understand your risk capacity, your risk tolerance and your risk need. Okay? When you understand that, then you know what kind of investments fit for you. And the one thing you have to avoid is, well, one of the things you have to avoid is trying to think that you can time the market just get in and keep getting in the market. The stock market goes up 8 out of 10 years. 8 out of 10 years. During, during those years, it will go up and down, up and down. In fact, intra, intra year markets typically will drop an average of 14%. But then they end up up at the end of the year, 8 out of 10 years. The problem is we try to time the ups and downs and the biggest hedge fund traders with the best computers, the best algorithms, the best analysts, the Wharton grads, all those people, they can't do it long term themselves. They might get it for a year, two years, maybe three years, but not long term. What makes us think we can? So let's not play that game. Let's just buy the market and let the market do the work. Now milestone number six, Be selective about debt. Not all debt is bad, but most is. All debt has two characteristics. It costs you in the form of interest. It stresses you in the form of the liability. The destructive debt that I want you to avoid, especially during this time, is consumer debt, lifestyle debt, credit cards, high interest debt, we need to avoid it. If you have balances on any of those things, we need to have a debt payment plan to get you out of debt. If you're not sure how to do that, you can, you can go through one of my programs or you can grab the debt breakthrough calculator. Go to melabraham.com forward slash, no debt. It's free. I walk you through how to do it. Get yourself on a debt payment plan. Start getting yourself out of debt when you get past your 40s. I want you out of the destruction debt that's in your life. You can have your mortgage. Okay, you may have some car loans if you do it right. We don't do seven loans on seven year loans on cars. Business debt, okay, you might still have some student loans, but I want you out of that too. The mortgages and everything. We need to leverage things strategically and wisely. A lot of people say, well, just take the money out, take the money out, take the money out, get loans, buy more property and keep doing that. Then you can do that. But then you can, you can find yourself over leveraged. What happened to a lot of people in 2008 when property values declined, they fell below the debt and they couldn't get rid of and they were given the properties away and they lost, they lost all of it. So as much as that's constructive, productive debt, to use it to buy real estate and things like that, if we do it wrong, it can be destructive. So be selective of debt. Number seven. Have a financial freedom number. Stop running without a finish line. I did this. I did this. Until I had my bike accident in 2009, I had no idea what the, what the, the finish line looked like. Now it's changed over the years. But you can't win a game that you don't know how winning looks. And how many of us get in this game of. I want to build financial freedom. I want to have wealth. And we don't know what it looks like. So define what your work optional number is. What that freedom number is, how much you need to be invested to make that happen. I have a freedom number calculator. We'll hook it up in the, in the notes below that allows you to do some of the calculations based on the 4% rule. It's a rough, rough estimate, but it's better than nothing. At least it defines you and says, hey, I'm going to the right trajectory, the right horizon, and in align your savings rate, your investments, your career choices, your spending choices to hit that number. Because if I don't know what that freedom number is, I don't know what my finish line is. I don't know when the race is done. I don't know If I have 10 more laps, one more lap, or I've ran three laps extra. I don't know. And a lot of people at this stage don't know where they're going. And at the same time it will change. So you don't have to be so precise. But I need to know that I'm looking in the right direction. Milestone 8. Build skills that build wealth, skills that pay the bills, that are strategic skills. Start to build financial literacy. It's the thing that stands in the way of wealth building more than anything else is our lack of financial literacy. And schools don't help us. We weren't educated in it. We don't talk about it. They don't want you to talk about. They demonize money and it's horrible. But yet there is very, there are very few decisions in a day that don't, do not have money attached to it. Think about it. So if we have so many decisions in a day that are connected to money in some shape or fashion, why not elevate our understanding skill up the money skills, the wealth building skills. You don't have to be looking at charts and doing the things like I do, but learn fundamental money management like my money plan workshop or Investing Simplified or the money machine blueprint or my book Just skill up, invest in yourself before you start chasing investments that you don't understand. That's how I got caught in a Ponzi scheme. I didn't understand it. And so I would look at it from that perspective. Milestone number nine, prioritize your future over material trappings. The greatest purchase that you can ever make is your freedom. I have seen and worked with doctors that made a million dollars a year that are actually broke on paper because of their lifestyle. They are living to the edges of their check each and every time. And they're surgeons. And I'm going, well, what happens if you can't do surgeries anymore? I'm in trouble. This is the time to start to prioritize what is what I call meaningful joys, the sustainable joy points of your life, the things that you really love to do versus the momentary pleasures. Prioritize the meaningful joys.

Eliminate the momentary pleasures because those are fleeting. Those are dopamine dumps that get us to do things. And then all of a sudden once it's done, we go, oh, that was okay, but now I have the bill and I don't have any enjoyment. Okay, build into a plan 3 or 4 sustainable joy points that allow you to sit back and go, wow, I'm enjoying the journey and I'm not just depriving myself until I get to a destination. Okay, so prioritize your future over material trappings of today. Okay? And milestone 10 is plan for health and longevity. Wealth without health is useless. When I got smacked in the face with the cancer in 2019.

I had not seen a doctor in seven years. Not because I didn't want to. We moved, and all my doctors I left behind. I was feeling fine, I was feeling good, I was working out, I was eating healthy, except for a sweet tooth.

But I didn't have a proactive plan for my health, my vibrancy and my well being. And I waited to react to symptoms, and unfortunately the symptoms that came up got me to realize that I ended up with cancer. Now, had I seen a doctor and taken care of myself in a preventative, proactive way, would it have stopped the cancer? Maybe. But even if it didn't, the tumor would have never got to seven and a half centimeters. It would have never been so big that it literally jeopardized my prostate, jeopardized my kidney, jeopardized my bladder, and jeopardize my life. Okay, so prioritize preventative health care. Plus, the healthier are, the less you're going to spend on health care as you get into those retirement years. There's a study that says on average a couple from 65 in retirement will spend $315,000 on medical care during their retirement. That's a lot. So be proactive, take care of yourself, eat well, exercise all those things. See the doctors, see your holistic doctors, whatever, but make sure that you're taking care of your mental well being, your physical well being, your psychological well being, because it matters. If you have all the wealth in the world, but you cannot enjoy it, what's the use of it? So, so really start to dial on that. And the last milestone is get a mentor, coach or advisor. This will shortcut decades into days.

Now, I was fortunate because I had some great mentors and some great coaches over the years that helped me out, that I had trust in, that trained me, that gave me the tools, that allowed me to make the mistakes, allowed me to skim my knees, pick me up, kick me in the rear when I needed. You don't have to walk this alone. Learn from those that have already walked the path. Learn from those that are willing to give to you, like I'm doing with my show and my book and all that stuff. Get a trusted mentor who's been there, who's done it, who's been through down markets, who's been through up markets. Don't find someone that's coaching you, that's mentoring you, that has never seen a recession, they've never seen a down market, they've never had to deal with it. It's easy to make money. When the market's going up, everyone looks like a star. But when the market's volatile, like it is kind of now, a lot of people get shaken away because they do not understand how to navigate it. So get someone that has been through it all and that has done it. Sometimes that means that they're going to be a little older, like me. Okay? But avoid someone that is a sales driven advisor because what you want is someone that's focused on strategic guidance and not commissions. And maybe join wealth building communities. But be careful because we can drink the Kool Aid of the community and they talk only one thing. And there's only one way to solve the problem. Personal finance is personal. We want to create it for you the way you want it so you have the life that you want, not what everyone else says. All right, so Those are the 11 milestones that I think that should be priorities. Moving into your 40s, if you're in your 20s and 30s, get those on the radar already. If you're in your 40s, let's get them dialed in. If you're past your 40s, let's start working on them. Bottom line is this will shift your trajectory, it'll change your direction, and it will change how far you can go on this financial freedom journey. Okay? Too many people are sitting back waiting for the right time. Well, the right time is now. Is now to just take hold, to make a decision and to get in the game. All right? Know that you don't have to do it alone. That's why I have this show. That's why I'm here. That's why I'm out there speaking and doing the things that I get to do. All right? So make sure you subscribe to the show and don't do this alone. Invite someone along for the journey, share this out to someone else, allow them to get the message, and I hope that I get a chance to speak to you, see you, have a conversation with you on your road to your financial freedom. And until I do, always, always strive, live a life that I always do. See you. Thank you for listening to the affluent entrepreneurship with me, your host, Mel Abraham. If you want to achieve financial living, collaboration to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com forward/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.