TES 017 - Money Doesn't Make You Wealthy

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. Hey there. I'm Mel Abraham, the author of the brand new number one best selling book the Entrepreneur Solution and the founder of Business Breakthrough Academy where we teach you how to design a business and create a life, a life of financial freedom and peace of mind. And welcome back to this episode of the Entrepreneur's Solution show. And this episode is going to be really cool. I want to talk about something that comes up many times when I'm talking to entrepreneurs and traveling and speaking and working with folks and that's what does it take to build wealth? What are my philosophies about investing and savings and money management? Those kinds of considerations. So when we get back after this brief introduction, I want to talk about that. I'm going to give you the framework of how I see money, where I allocate money and how to start to get yourself to financial freedom. And so if you're out there on the road and you're not in a place where you can write this down, go ahead and text mylegacy one word. Mylegacy238470 no spaces. And I've got a special treat for you, a special worksheet for you that's going to help you try to eliminate your debt. And we'll talk more about that in the session. Again, text mylegacy to 38470 to get the worksheet and get the guidebook. And I will be back soon. See you on the other side.

Welcome to the Entrepreneur Solution where highly successful entrepreneur Mel Abraham becomes your entrepreneurial mentor. Here, Mel reveals his business building strategies and even gets a chance to answer your questions. Mel Abraham, a CPA by education, but an entrepreneur by exhilaration and a true believer in the entrepreneurial way of life. It's through entrepreneurship that we create community, support society and live our dreams.

It's where possibility meets reality again and you can have the life and lifestyle you want, one of freedom and peace of mind. Welcome to this episode of the Entrepreneur Solution where it's time for you to be bold, dream big and live life your way.

Welcome back to this episode of the Entrepreneur's Solution. I'm Mel Abraham, the author of the brand new number one best selling book, the Entrepreneur's Solution. It's been an incredible journey and I am sorry for maybe the space between my last couple of episodes, but with the book release and the book launch, the last six weeks, last 60 days have been a tremendously crazy whirlwind. But in a good way, it's been incredible. Within a couple of weeks we've been able to get this book out to, to over 16,000 people in 120 plus countries. The impact, the feedback, the things that I'm hearing, it's just, it's really heartwarming. It's really been a surreal experience and I know that many of you are part of that and I feel blessed. And so. Thank you, thank you, thank you. And so let's talk about this episode. In this episode, I want to talk about wealth. I want to talk about money. I know that's a, that's a tough subject. Sometimes people, when they hear about money because it brings up emotions, it brings up thoughts of inadequacy, lack, I can never get there, all kinds of things. And sometimes we take and make money, a poison money, a negative money, something that we ought not to talk about. I mean, they say parents never really talked about money, talked about sex or talked about politics. And the reality is that. But I think that we're doing a disservice to our youth, to our society and to the world to not have conversations around money. Not about greed, that's a different ball game. But about money. How does it work? How do you invest it, how do you create wealth, how do you do those things? And there's a guidebook that goes along with this episode just like every other episode. And you can get to that guidebook by going to melabraham.com session017 or you can just text me at 38470 mylegacy one word, no spaces. It'll give you a download link and we can get you all the tools and everything that you need. In fact, for any of the episodes, we can get you all that. So we've got a tremendous amount of resources for you. The idea here is to give you the tools to create a life, to create a business, to build something that's meaningful, profitable and purposeful and to give you the tools that I've used with my clients and with myself to build the things that I built. So let's talk about this concept of money and wealth. A lot of people think to be wealthy you need to have money. And I got to tell you that I don't think that's the case. Actually. Wealth isn't about money. It's actually more about discipline than it is money.

We tend to think about things and not. And not take the time to be disciplined about what we do with the money we are generating and use it in a way that makes sense, that builds and where it goes to work for us. So over time, we actually do build wealth. We don't need to make a boatload, a shitload of my, pardon the expression to become wealthy. We just need to be disciplined with what we take in and how we use it. And the earlier that we learn these habits, the earlier that we start to focus and change the way we do things, the easier it's going to be as we get later in life. We live in a society today where unfortunately the majority of our society between the ages of 55 and 65 have less than $60,000 saved for retirement. And I think that's a travesty, that's an absolute disaster to have that kind of a situation come up. Because we really need to think about how to just like, just like we educate people with language, with mathematics, with history, with sciences. I think we need to educate them with respect to financial responsibility and do that because when they have the tools, when you have the tools, the knowledge and the skills that are used by the wealthy, by the successful, building wealth doesn't seem so phantom, so mysterious or so difficult in doing that. But one of the things that we need to get over is the emotional attachments that many of us put towards that money. And we use money as a scorecard, if you will, and good and bad. And whether it exists or doesn't exist, whether you grew up with money or didn't grow up with money, it shifts and changes your emotional makeup as it relates to how you view it. And so if you look at money in a negative way because maybe you grew up without it, I mean, I grew up in basically a white collar home. My dad was an aerospace engineer. He had got his paycheck, he built his retirement. But you know, we didn't lack from anything. I mean, we had a tremendous amount of abundance and love in the household. We had a great family. We weren't living in some, you know, huge mansion, but you know, at the same time we weren't living in poverty. But it wasn't like we were Driving really expensive cars and expensive, expensive vacation. So we learned about that, but never talked about money, never talked about the concepts of investing and what it takes and the principles of compound interest and the principles of time value and the principles of those things that really are meaningful when it comes to thinking about how do you create wealth? And we can end up with these emotional attachments. And you need to. You need to reflect on yourself and say, when someone starts talking about money, what comes up for you? Is it something that is emotionally charged, emotionally negative, and everything? That's something that we need to deal with, because money has no emotion. It's simply money. It's a piece of paper, it's a coin, It's a representation of value. And there's no energy to it. There's nothing to it. It is a measurement tool that allows us to transact and create and do things from a business standpoint, from a personal standpoint, and do that. And it is us who attach that emotion to it. And so the question then is, if I were in a relationship and I was attaching constant negative emotions to that relationship, how far do you think that relationship is going to go? How meaningful, how fulfilling is it going to be? But if I come to that relationship and I'm attaching positive feelings, positive emotions in those, those types of elements and infusing that into that relationship, what's going to happen in that relationship? And I think with money, it's the same thing. And it's about taking those baby steps and understanding that, becoming aware of it, to move through that. Because when it comes to wealth, we can start at any age. It doesn't matter. You know, it's certainly easier when you start in your 20s than when you start in your 40s. And the things that you do in your 20s will impact what you have in your 40s, your 50s, and 60s. But the fact is, is it's never a time for you to throw your hands up and go.

That'S too late for me. Because it's never too late. It's never too late to take responsibility for your future, to take responsibility for.

The things that you have that don't have and what you want to do with it. You know, in my book the Entrepreneur Solution, I talk about this concept of responsibility, and I put a hyphen in between response and ability. Because what it really is about, responsibility gets a bad rap. It's about, you know, some people equate it to blame, and it's not. It's about your ability to respond to what is going on. And unless you're willing to take responsibility, you know, you feel crippled, you feel paralyzed, you don't feel you have the ability to do anything about what it is that you're trying to solve, to do anything to shift and change your circumstances. But as soon as I say I'm responsible, that's a place of power, that's a place of strength where you can move from there. So no matter what age you're at, no matter where you're at in your life, it's time to take responsibility. It's time to grab a hold of the handles on your wealth and let's move forward and let's understand some of the principles and where you want to go. Now, some of you may look at it and go, I got so much debt, Nothing. I have no idea how to deal with this. I'm going to give you a tool, a downloadable tool that's going to help you use either what's called a snowball method or an avalanche method to try to reduce your debt. And you need to be disciplined. If you're disciplined and you use the system, you'll find yourself out of debt in depending on how much debt, in a year, two years, three years, just in a couple of years. But you got to be disciplined. And once we get you out of debt, then we can start to build the wealth. Here's a couple of things that I think are general thoughts and general principles to think about. There's this thing called the rule of 72s. Now, we're talking about money, so I'm going to talk a little bit about math. I'm going to try to keep it easy for you because I know it can freak people out. But the rule of 72 says that I can invest a dollar at 7% and in 10 years it'll double. Or I can invest a dollar at 10%, in 7 years it'll double. And what's the importance of that? The point is this, is that if I can invest my money at a 7% rate of return, which is not high, and you can get 7% rate of returns in a lot of different investments without a lot of risk. If I can Invest money at 7% rate of return, guess what? In 10 years it doubles. What does that mean for you? If I had 50,000 today, in 10 years it becomes 100. In the next 10 years, that hundred becomes 200. So in 20 years I've quadrupled my money. The point is, is that you get the money to work for you. And that's the whole idea behind it, it's about discipline. It's about what are you doing with the money that is coming in. And there's a difference between those that are successful and wealthy and those that are not. And the difference is how they deal with things. Most people live their lives where they spend what they are making on the things that they want to have and they invest what's left over. In fact, in effect, what happens is what they invest is the afterthought. It's the secondary piece, it's the last piece. It gets what's left over, it gets the scraps, it gets the crumbs, it gets whatever left over.

That's the way the majority of society live their life. And that's where I'm saying that we need discipline. The wealthy and the successful do it the other way around. They just flip it. So what happens is the money comes in, they invest what they need to, and then they create a life on what's left. So see the difference. So instead of going out and spending the money and then seeing what you have left to invest, you invest first, spend after. So now what happens is that your life gets designed based upon an investment, an investment goal, and the leftover money that you have. Now. The cool thing is being an entrepreneur is we actually have a tremendous amount of control and ability to influence, if you will, the kind of money that's coming in. If I need to make more money, I need to go out and hustle more, I need to go out and work more, I need to go out and create more. I need to build more value for my community, for my customers, for my team, and for everyone around me. Because when I build value, create value, that value comes back to me. And so that's the cool thing if you're an entrepreneur is because you have a lot more control than if you're just in a job collecting a wage. But doesn't mean you can't do it. I've got plenty of clients and friends that were in a job collecting a wage and they lived by this rule of invest. First, create the life on what's left and then move on and have made themselves millions over a period of time. So a couple things to take away just in this segment, and that is to one, get rid of the. Well, become aware of first, become aware of the emotional attachments that you may have to money. Two, if they're negative emotional attachments, understand where they're coming from and understand that money isn't an emotional thing, it's something that you're putting on it Create that positive relationship with your thought process behind money. Understand that it doesn't matter what age or where you are in life, that this is the time that you can move forward and start anew and create a disciplined approach to investing and putting money away to build your wealth. Understand that it doesn't matter when. When it is that you got to focus on discipline versus how much you make. How much you make has an impact, but the discipline has a much greater impact than how much you make. Because I know a lot of people that make a boatload of cash, but they got so much lack of discipline that they got nothing at the end of the day. And I want you to have a lot at the end of the day. I want you to have the peace of mind and the freedom that comes from having enough money to know that everything is taken care of. And then remember the rule of 72s or the time value of money. That money will earn for itself. The sooner you get it in, the more you get it in. And that even at a 7% rate of return, we can double it in 10 years, we can quadruple it in 20 years. So you want to get in the game and get in the game and stay in the game in a disciplined way and build that life based upon, not the expenses in, but your wealth out. In other words, invest first, spend second, not the other way around. Most people will spend first, invest second, flip it out, make sure you invest first, and then turn around and spend second. All right, so now let's look at some things of how I look at money, how I look at allocating my cash that's coming in, how do I build that wealth? And this is a framework that I use, what I call.

The wealth creation priority ladder. You may have seen it in a lot of different forms. There's a lot of people that have versions of this, dealing with this, because I don't believe that you can build wealth without consciously and intentionally coming up with some way that allocates and says, here's where the funds go first. And so this is my philosophy, and it works for me. It's worked for my clients, and it continues. It's worked really well for me, and it'll work for you. Now, you may have other things that you want to add in, and that's fine, but start with something that is proven. Start with something that works. And some of the things that I do here, ultra conservative, and you may say, well, that's a little much, I get it, but I'd rather be conservative and have too Much than not be conservative and not have enough. And so that's the way I looked at things. And this is the way I've kind of managed things for the decades that I've been building wealth and working with other people. So the first, at the very first, the first element is I want to start to build what I call a comfort cushion. And that is something where I can say I'm not living check to check, and that if something happens for some reason, I at least have a little money to carry me for a couple weeks until I can figure some things out. And so the first thing that I do is that as I'm earning money, I'm putting money away to get to my comfort cushion. My comfort cushion. I think that the base comfort cushion, I would say, is about $2,000. $2,000 can give you a little bit of wiggle room. Now, if you have a lifesty is crazy expensive. $2,000 is not going to give you much, but it's the start. So let's make sure that you have a comfortable level to start. So your comfort cushion, and I'm saying is $2,000 is the base. Then this next piece of the process, and this is where people get eaten up, is that we have what's called consumer debt. So let's just talk about debt for a moment. Consumer debt is your credit cards, your student loans, personal loans, things that are used for things that you consume, okay. Not things that you invest and not, you know. So I'm not talking about real estate and I'm not talking about business loans, proper business loans, because we may use that in business. So I'm talking about your credit cards and your car loans, non business car loans, student loans, those types of things. That's what's eating up society. We've got a, as much as we stopped borrowing, we've now started to increase our borrowing in and our credit cards are going up and we've got high, high rates of interest on those cards. And people get behind in their payments and they cannot move forward because they become crippled because they're attached, they're shackled to the minimum payments on those credit cards. So one of the biggest things that we need to do to get financial freedom and peace of mind is get out from that consumer debt. We got to get these things paid off. I use credit cards, but I use credit cards as a cash advance card. Every credit card gets paid off at the end of the month. Now, you may say I don't have ability to do that and I get it. So let's get you the ability to do that by getting these, giving you a system to pay the credit cards down and then do not use them, cut them up or use them simply as a cash advance. Do not pay for what you want today with tomorrow's dollars. That's living beyond your means. And that's what society has done. We need to live within our means. We need to live below what we create just in case we have a hiccup. And so we want to get this paid off. There's a couple of ways to do and you can find a lot of information on it. But I'm going to give you a tool that's going to allow you to look at this. When you take your consumer debt, we need to pay it off. And there's two primary ways that you get paid off. Now some people will say, oh, pay the highest interest first. Some will say pay the biggest balance first. Pay that, you know.

The key is that there's a system that will give you the shortest time to pay off. And one is what they call paying based on a snowball process. The snowball process works off of getting many successes. So what we do is we pay the smallest balances first to get those paid off. Because can you imagine what it feels like to get one credit card paid off and feel. And you celebrate those micro successes and it accelerates you into the next one. Now what happens is we need to allocate and rank our credit cards in a snowball process based on the balances and we pay them in payments on everything else. But the lowest balance we pay as much as we can until that's paid off. Then we take the amount that we're paying to that and we put it to the next one and we keep going and we keep going. So that's called the snowball basis of paying debt off. Here's the real cool thing is if you go to melabraham.com sessions017, you're going to be able to download an Excel worksheet that actually does all the calculations for you and it'll compare the different methods and you can literally see how long it'll take to get this paid off. But it gives you a system, it gives you a record keep it gives you the ability to do it. The second way that you'll see people do it is what's called an avalanche, an avalanche process. And what they do with that is they'll rank them by the interest rate and they'll pay the highest interest rate the most first to get that Paid off. And then the next highest. And then the next highest. The key here is this. Let's figure out what your consumer debt is. Let's understand where it is. I know that sometimes in some cases it may not be a pretty picture, but let's get it figured out, let's get our arms around it, let's rank them by either balance or interest rate, let's figure out what the payments are, let's figure out what the cash is that you have coming in and let's allocate it and let's start paying it down. Because once we get that consumer debt paid off, now we can start working on peace of mind. Now we can start working on peace of mind. And this is the place where it starts to really get meaningful. What we're doing now at this stage is now I've got my comfort cushion, I've got my consumer debt paid off. That means I've got cash flow coming in. And now what I want to do is I want to start building up a cash store. And when I talk about this, because a lot of people will talk about retirement, they'll talk about a lot of things, but I like talking about peace of mind because it's meaningful. You think about what your life would be like if you sat back and said, I got peace of mind, I don't have to worry about things. I'm okay, we've got it dialed in and that's what I want for you. So now what I want you to do is take the excess cash and start building a fund. Now that fund, some people will say six months, some people will say 12. I'm really conservative. Like I said, I want you to have a 24 month, two year cushion now. May take a little while, but that's the effort you're trying to get. Get to a two year cushion of your monthly expenses. That'll give you, you know, God forbid something happens, you know, we lose our job or business goes south on us or we get hurt. I mean, my bike accident took me out of commission for nine and a half months. So understanding that peace of mind becomes important. And so I'm trying to give you as much room as possible. 12 to 24 months. I like the number at 24 months. Once you have that, now you can turn around and start investing or building up the college fund for your kids. I know that this may.

Get parents to.

Not feel well when I say this, but you don't have a responsibility to pay for college for your kids. Hear what I'm saying before you Start sending me nasty messages and everything. Your kids have an opportunity to go to college. There are vehicles in which it can get paid. There are grants, there are things, there are scholarships. They need to do well to earn it. But for you to go into 200. I've watched parents go 200, $250,000 into debt for kids that are going to get a college degree in a degree program that really isn't going to give them the ability to get anything paid back. And all I'm saying is that this needs to be a convers between you and the kids about them being responsible for their future. Give them an education. I believe in education, but that doesn't mean that you have to put yourself on the verge of bankruptcy because you've gone so far in debt to make it happen. And so there's plenty of institutions, there's plenty of programs and aid that can help you through it, investigate it early and build on it. But once you've had that peace of mind fund in place the 12 to 24 months now start putting money away and start building towards the kids college fund and being able to do that and build from there. The third piece is now I've got my peace of mind fund, I've got the college expenses taken care of. Now I want you to start thinking about paying your real estate off. If you own a house. Let's start paying that loan down. Let's get out of debt. What I'd love to see happen for you and where I find financial freedom is when I find myself debt free, cash flowing and able to do the things that I want to do, with whom I want to do it, when I want to do it and where I want to do it. And once I've built that. So we've got our comfort cushion, we've stripped out our consumer debt, we've got our peace of mind fund, we've got the college fund in place and now we're getting the real estate paid off. Once we've got the real estate paid off, then all that money beyond that becomes our freedom fund. That is what gives us the ability to build beyond do beyond. And so that's really the, what I look at as the five, the five steps of what I call the wealth creation priority ladder. It's how I prioritize things. When I was growing, when I was building, got that cushion paid off my credit cards, I don't run credit card balances, built that peace of mind fund. Thank God for that because I've had a couple of accidents that have taken Me, taking me out and we're paying down the real estate and now and built that freedom fund. And so that's the way that I would invite you to think about wealth, think about how you're doing things. The key is this. It's not about the money, it's about the discipline. You can see that this system, this five ladder priority system is going to require discipline. It's going to require you to say, no, I can't do that. I got to do something else and do it properly and be smart about it. Because the sooner you do this, the more disciplined and systematic about it. You will open up your eyes. I promise you will open up your eyes. 10 years, 20 years down the road and go, oh my God, I had no idea that I had this. And use the tools. Go to melabraham.com session017, download the debt breakthrough calculator and figure it out. If you've got debt, figure out what it's going to take to get you out of debt and get on that system that is going to help you tremendously to move forward. So I hope this helps. I get this question all the time, so I thought I would just do a quick session of my thinking on wealth and wealth management and money and give you my thoughts on it. So I hope you found this of value again. You can get the tools in the guidebook for melabraham.com session 017. And if you haven't already, go ahead and subscribe to this so you can get more tools, more things and resources to help you build a business, build a life, build financial freedom, and do the things that you want to do. And while you're at it, share this with a friend. Let's give them the gift of bringing their dreams alive to give them the tools to live differently, to create legacy today. If you have a question that came up from this or any of the other episodes or anything with respect to business success, wealth or money, go ahead and send me a question. Go to askmelnow.com you can leave me a voicemail there. All the questions I go through, and many of them I answer directly on an episode to make sure that you get the information. In fact, this episode is because people had asked me questions, so be part of it. If you're not sitting by a computer, you listen to this as you're running or driving or doing something. You can't write this down. Just text, but don't text while you're driving. Okay? Text mylegacy. No spaces to 3, 8, 4, 7, 0. You'll get the download link and everything else. So again, I hope that you found this valuable. I hope that you'll look at money differently. And I invite you to look at it differently and look at your wealth and your future differently and realize that no matter where you are, it's time to start. And no matter where you start, you've got the discipline to build and continue to build. And that you've got the time value of money on your side when you do it smartly. Get out of consumer debt and build from there. Thank you for being with me. Look forward to seeing you on the next episode. And until then, may your vision be grand, your journey epic, and your legacy significant. See you soon.

We hope you enjoyed this episode. Make sure you subscribe so you get access to all of Mel's business and success tips. And if you like this episode, share it with a friend. If you have a specific business or success question, you can ask it at www.askmel.

Remember, it's all about being bold, dreaming big, and living life your way because the world needs you. Until the next episode, may your vision be grand, your journey epic, and your legacy significant.

And that's it for this episode of Building youg 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 Podcasts, 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.