The Brutal Truth About Money Management No One Wants to Hear

I'm just going to say it. Most people aren't failing with money because they're irresponsible. They're failing because they're living inside financial lies they don't even really realize. They believe. Making more money, working hard, wait for the right time. Now, see, those beliefs are keeping you broke, they're keeping you stressed, and they're keeping you stuck. So today, I'm going to be breaking down the nine brutal truths about money management that will challenge everything you've been taught. And then I'm going to give you a simple five step money reset plan. You can start applying today to take control of your financial life. I'm Mel Abraham, a CPA entrepreneur and someone who had learned these truths the painful way so you don't have to. This is building your money machine where we help you master your money, eliminate financial stress, and live a life of choice. Okay? Because earning more doesn't make you free. A money machine does. Let's go do this. Okay, listen, Stop scrolling. If your bank account is leaking, if your investments are inconsistent, if you keep telling yourself, I'll get serious about money later, later has officially run out. Here's the reality nobody wants to admit. You don't need a bigger paycheck. You need a better plan. People don't go broke because of income. They go broke because they're playing the money game with no strategy. And in this episode, this is the strategy. Let's start to break these truths down and give you the brutal twists. The nine brutal tooths of money management that can completely transform your financial future. And a five step money reset plan. Okay, brutal truth number one. You're not broke because of your income. You're broke because of your decisions. I know that this one can sting a little bit, but most people want to believe that the money problems come from low income. No, it doesn't. I've coached people that make $40,000 a year and they quietly build wealth. I've coached people that make $400,000 a year who are broke by Thursday. Why? Decisions. The choices they make. See, when I got my first big raise, it was 20 grand. Okay? I thought I was a baller. So what did I do? I upgraded everything. Literally where I lived. The car, the clothes, the dinners, everything. Everything got upgraded except my behavior. And that lifestyle creep was like a roundhouse kick to my bank account. All right, this is why the stat says 73% of people earning over $100,000 a year still living paycheck to paycheck. That math punches. It does. Here's what I believe. 80% of your wealth creation is behavioral, it's not monetary. We don't have those issues. We've got to make some different decisions to make it happen. Now. I get it. You might say, but Mel, this is. I. This is what I earn. I can't make a different decision. Yes, you can. As hard as this is, remember, these are brutal truths. So I'm going to be frank with you. I'm going to be direct with you in a loving way. But I want you to hear it, because am I owning my value? Am I. Am I being disciplined with my spending? Those are all decisions, all choices that you get to make. Okay, so let's just. I mean, let's take a look at some of the math. Raise was $20,000 after taxes. I ended up with $13,000. What do I do? I upgrade my car for 6,000. I upgrade the place I live for 4,800. So there's 10,800 gone. I start eating out more, there's another $1200. And so all of a sudden I'm $12,000 in and oops, I got subscriptions for $400. Guess what? All I have left is 600 bucks. Big raise becomes $600 in progress. Yeah, it wasn't a smart thing for me to do. And what happens is that if I compounded that over the years, I would have been in a disastrous place. Okay? Awareness beats income every single time. This is about you being aware of your choices, your decisions, your spending and your income and what it's doing for you. Okay? All right, on to brutal truth number two. You can't out earn bad money habits. See, I've heard this before. If I just made $10,000 more, everything would change. I want to hand those people a calculator and a mirror. Because money, more money just doesn't fix bad habits. It doesn't. It magnifies them. And this is, this is the challenge that if we don't develop the skills, if we don't develop the habits when our money is. Is lower, we certainly aren't going to create them when it gets bigger. This is why I say I want you to start small. I want you to start wherever you are. I don't care if it's $5, $10, whatever it is, develop the right habits. When you first go to the gym, you don't walk into the gym and say, hey, I'm going to grab these 45 pound plates, put them on a barbell, lay on the bench and think that I can get Away with it. You're going to get hurt. You go over to the smaller weights, the chrome weights, whatever, and you start small. And to create the right movements, the right habits, okay? So when you go big, you'd go big in the right way. See, there's a stat out there that says 55% of Americans impulse spend weekly. Okay? Bankrate.com said this. And so here's the thing. Let's look at the math here. Seven days, $7 a day. I mean, on small treats, that's $210 a month. If I took that $210 a month and invested over 30 years at 8%, that's over $306,000. Now that's not a latte. That's a quarter million dollar habit. Okay? People panic over a $200 dip in the stock market, but they casually spend $200 on DoorDash without blinking. Now, I'm not saying not to do it. I just want you to be conscious and aware that you're doing it and what the actual cost is. So you don't need more money. You just need fewer leaks. Okay? And this is the thing that I think we need to start to understand. Now, some people, we don't understand where we want to be, where we want to go. And so I want to give you access to a tool that I have totally free. Okay? So. So it's a quick pause, but it's because this is important. Most people don't even know what their financial freedom costs or what it looks like. So I want you to download my freedom number calculator. It's totally free. You go to melabram.com number. We'll hook it up for you. Below, you'll put some information and you can play with a calculator. You can see what it's going to take to have financial freedom and really dial it in. All right, on to brutal truth number three. Wealth isn't built fast, but it is built forever. See, everyone wants overnight riches, okay? Like the overnight oats. It doesn't work that way. You can't throw the beans out the window and have the beanstalk grow, okay? Real wealth is long term. Real wealth is boring. Real wealth is beautifully predictable. And here's how you do it. You have automatic deposits. You're buying index funds whether the market's up or down. ETFs, low cost, low fee. You've built yourself time and you've given yourself patience. And you have, you're following a system of a process, a hierarchy to optimize your wealth creation. If you don't have one, get my book or my training. The wealth priority ladder literally tells you what to do with every single dollar that comes into your life in the priority. That makes sense. Okay? 46% of Americans have three months of savings, max. Okay? People chase fast wealth, but they don't have a foundation. Let's give you a foundation. Let's get the things driving what matters. Because think about this. $500 a month at 8%. In 10 years, it's $87,000, okay? But in 20, it's almost $300,000. And in 30 years, it's almost three quarters of a million. That's only $500 a month, okay? It's boring until it's life changing. See, compounding is like your wrinkles. Nothing for a while, and then, boom, everything seems to show up. Okay? So boring wealth beats exciting poverty every day of the week. What I want you to focus on here is this. Don't worry about building it fast, but worry about building it forever. Okay? That leads me to brutal truth number four. If you don't have a plan, you are the plan for someone else's profit. See, banks love confused people. They make a whole load of money on fees and overdrafts and all the things credit card companies love. Emotional people, impulse buys, carry the balance. Buy now, pay later. Companies love impulsive people. Okay? Buy now, pay later. Don't worry about it. Okay? But if you don't have a plan, they certainly have one for you. Think about this. 27% of Americans feel confident creating a financial plan. Only 27%. That means that there's a full 3/4 of Americans that are part of someone else's plan. And when you don't know where your money's going, it usually ends up at Starbucks, Target, Amazon, living its best life without you aboard. Okay? Have a plan and be part of. Or be part of someone else's. It's one or the other. I think that you need a plan. We'll talk about that in a moment. All right, Brutal truth number five. Debt isn't the enemy, okay? Now, this might rub some people the wrong way, but the misuse of debt is. See, debt. Debt isn't moral. It's math. Good debt builds, bad debt buries. I talk about productive debt versus destructive debt. Destructive debt is that debt that you need to finance your lifestyle. The consumables, the things that happen. Productive debt is the things that acquire assets that are going to create cash flow and wealth over time. And one of the rules I say is that if the enjoyment from what you're financing with debt is shorter than the payment plan, you probably can't afford it. We shouldn't be putting consumables, lifestyle things on credit cards. The big screen TVs, the lavish vacations, the cars you have to finance for seven, eight years just to make it possibly affordable. Because if you carry balances on a credit card, say you carry $5,000 on a credit card at 23% minimum payments is going to take you 17 years to pay that off. And instead of paying $5,000, you're going to pay over $12,000 to get it paid off, okay? And that same $5,000 invested at 8% for 17 years is $18,000 plus. So if your credit card statement scares you, congratulations. Okay? It should. Let's get this thing paid off. Bad debt steals from, from your, your future and your freedom. Good debt, it creates it. Okay, brutal truth number six. You can't build wealth without liquidity. Liquidity is oxygen, cash, okay? You don't notice it until you're suffocating. Think about this, okay? We take for granted that we can breathe. We can take for granted that the oxygen is there. But you get yourself underwater where you can't breathe for a moment and really quickly, the value of that oxygen, that liquidity, goes up. 54% of Americans say they can't cover three months of expenses. 54% over half. Okay, think about this. Two people. One has liquidity, one doesn't. Person A, that has no liquidity. When the market crashes, what do they do? They panic, sell because they don't have liquidity. And they sell things for a loss. They sell things in a declined market. Person B, who has liquidity, Maybe they have 20, $30,000 put away. They see opportunity and they can use that liquidity to buy things that are on sale, buy things that are, that have dropped, that are good companies, and do it. And then when the market recovers, the person that had no liquidity, they had $20,000 turn into 14,000. The person that did have liquidity had $20,000 turn into $26,000. The bottom line is this. It is created by the liqu, the foundation you create. Cash doesn't judge you. It just sits there quietly waiting to save the day. This isn't about when I talk about liquidity, this isn't about building wealth. It's about protecting wealth that matters. Liquidity is the difference between panic and opportunity, between panic and possibility. And that's why this is so important. Okay, brutal truth number seven. Investing isn't risky. Not investing is risky. See, people think investing is dangerous, but here's one guarantee. If you don't invest, you will never build your money machine and you will never have a financial future. Okay? Because what's really dangerous is inflation, is medical bills. Let's say a couple on average during, during retirement years will pay $315,000 in medical. Well, if you haven't built that, how are you going to pay for that? What's dangerous is an underfunded retirement. And what's dangerous is outliving your money. Here's the thing. Almost 40%, 38% of Americans own no stock investments. That tells me that they're not invested. That tells me that they're not in assets that beat inflation. That tells me they're not in assets that are, that are going to grow and build something for them. And part of it is because they're concerned that it's dangerous, that it's risky and they could lose it all. Well, the way we tell you to invest, you know, unless the stock market goes to zero, you don't lose it all because you're investing in the whole market. And last time I checked, the market never went to zero. Now, if it does, we got other problems. But the bottom line is this. If you're not investing, you can't expect that you're going to build the money machine that you need to have financial freedom in the future. You can't save your way to wealth. Think about this is that if you put $10,000 away from age 25 to 65 at 8%, you end up with a million and a half dollars. But if you're scared to invest it and you put it in a 2% savings account, if you can find them other than a high yield savings account, instead of a million and a half dollars, you end up with $300,000. You must be in the game investing to make it happen. And when you invest properly, you reduce the risk as much as possible. Yes, all investments have risk, but the key is to make sure that it's within your risk profile to make it happen. Because $10,000 sitting in a bank account is no way to get ahead. All right, all right. Your future self needs you to start and not to stall. That leads me to brutal truth number eight. Wealth that lasts is built by systems, not income. See, income feels powerful. It feels powerful because we have these big checks and we see these big numbers. But what's truly powerful is systems around your income, because that's really where the power is. When I automated our My wealth building. When I automated the money going in, the automatic investing, the proper, the proper processes that were going through, that's what gave me financial power. That's what allowed me to recover from the Ponzi scheme in 18 months. That's what allowed us to multiply our wealth over the years. Okay, no systems. You end up in a situation where Maybe you're making $200,000 in income, which is decent and good, okay, and a 5% savings, okay, you'll have $500,000 in 20 years. But if you have a right system that you're following even with 80,000 income and you do the 20% investing like we recommend, 20 to 25% in 20 years, you have 1.1 million less income. Proper discipline, proper systems. And guess what? You get more than double the wealth by doing that. Systems beat salary every single time. Okay? Systems build wealth, salaries, fund it. That's the way you need to look at it. That leads me to the final brutal truth number nine. No one is coming to save you. Not the government, not your employer, not the market. Waiting is the most expensive financial decision a person makes. Okay? You have to get involved. You have to jump in and you have to realize that it is on your shoulders to take control, to reclaim control. To be the person that says, I am no longer going to be sitting in a cage waiting. I'm going to take hold of it. Because when you do that and you do it early, that's when the math works to your favor. When you do that later, it makes it more difficult, but you can still get there. Okay? Your future is a do it yourself project. Make it happen. So now you have the nine brutal truths. What do you do? Here's the five step money reset plan. I want you to think about. Okay? You heard a lot. The truths can feel heavy, but let's make it an action plan that is simple. Okay? So here's, here's what you do. Step one, get honest with yourself. This is about awareness. I want you to print the last 30 days of spending. I want you to see the reality clearly. I want you to understand what your needs and wants are there. In fact, I'd rather you do it for 90 days instead of 30 days. But let's just start with 30 days. I want you to get honest with yourself. Get real with yourself. That's the first step is awareness. Then step two, build your buffer. This is about liquidity. I want you to start with an emergency fund. I want you to start with your first one to three months expenses survival expenses saved this is the first rung. At some point I want to build that liquidity to a peace of mind for nine to 18 months. But let's just start now at one to three months. That means that you, you need to look at the numbers you're doing from step one and see how we can start to build, get a plan in place. Then step three, kill your wealth leaks. This is about debt and lifestyle creep. Okay, if you are carrying debt, if you other than mortgage, you're carrying consumer debt, destructive debt, credit card balances, I want you to get on debt payment plan. I want you to make sure that you have a debt payment plan. Get that one debt and start attacking it with a vengeance and start to get yourself out of it until you attack the next debt and the next debt. Okay? The other thing that we need to be aware of and be careful of in this step is lifestyle creep. This is the time where I want you to put a lifestyle upgrade freeze in place for 90 days. You're not going to do anything to upgrade your lifestyle for 90 days and use that additional funding to get out of debt and to build your buffer from step two. Okay, that leads me to step four. Automate your future. In other words, I want you to start saving and investing. I don't care if it's $50, I don't care if it's $100, I don't care if it'S $250. Automated at any amount and make it automatic. You don't have to push the buttons, you'd have to pull the turn the dials, you have to pull the levers. It's going to happen without you even thinking about it because consistency is greater than intensity every single time. Automate it and then slowly push it up. But start by automating your future. And then step five, set your target. You need a clear finish line. You need to know, what is my freedom number? Where am I going? What is the enough zone? Now, I'm not going to say that you'll stop, but I want you to know that the race you're running, is it a marathon? Is it a sprint? How is it an ultra marathon? Where are we? And to help you with that, grab my free calculator. The, the, the freedom number calculator. Go to melabraham.com forward/number. Well, it's totally free. You'll put your numbers in, but now you'll have a target to go towards. That's the step, the five step money reset plan. It's easy, it's simple, it's something that you can do starting today. Listen, your financial life doesn't change because you watch this video. It changes because you do something with it. And these nine brutal truths aren't designed to shame you. They aren't designed to guilt you. They're designed to free you. You're not building a bank account. You're building a life. A life of choice. A life of intention. A life of margin. A life that you can wake up inside and say, I built this. Start your reset today. Start your reset today. Go build your life. That's what you're here to do, all right? And if I can help you on that journey, do me a favor, let me know, all right? And while you're here, make sure you subscribe to the channel, all right? And if you want, share this out with a friend. Because you know what? The journey to financial freedom is always more fun when you share it with someone you love. All right? Till I get a chance to see you in the next episode, next show, or on the road, as I'm speaking, always, always strive to live a life that outlives you. See you in the next one. Cheers. For now.