The ONLY Money Rule ALL Rich People Use

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 met someone who makes a ton of money, but they still seem to worry about money? Yeah. See, it's like watching someone on that treadmill just bragging about how far they've gone. Yeah, they're moving, but they're not getting hit. They're not getting anywhere. And here's the truth. Earning more doesn't make you free. It just gives you a shiner, stress. I mean, that's the reality is that if you've ever been in that situation where you, you worked harder, you earned more, yet you still feel stuck in some sort of cycle, some financial loop. This episode is going to change how you see money forever. Because today I'm going to break down the one rule, the one thing that every rich person I've ever worked with understands and focuses on. It's completely opposite what most people are taught. Okay? And by the end, you'll know how to turn your paycheck into peace of mind, not just a bunch of payments. Alright? This is building your money machine where we help you master your money, eliminate financial stress so you can live a life of choice. Because earning more doesn't make you free. A money machine does. And that freedom, it doesn't start with the next raise, next client, the next paycheck. It starts the moment we get your money to work harder for you than you did for it. Think of this as financial education with a side of sarcasm, but a whole lot of heart. And I'm your host, Mel Abraham. And I used to think that success was a corner office with a big spreadsheet. But I learned pretty quickly over the years and many face plans that wealth isn't about bigger numbers, but it's about bigger choices. All right, so in this episode, we're going to pull it all apart. I'm going to give you a framework and give you a tool to make it happen. We're going to make the math simple and let's make it happen. So grab your coffee, grab whatever's going to fuel your dreams. And let's do this.

If earning more made people free, every doctor, every lawyer, every executive would be simply chilling on the beach somewhere. But you and I both know that's not the case. In fact, most of them are one bad month away from financial panic. Because the freedom doesn't come from the income. It comes from a money machine. And there's one rule that every wealthy person I have ever met. And I mean, like, the real kind of wealthy, not the Instagram kind of wealthy, but the wealthy people, there's one rule that they follow, and I get it. You've been told your whole life, work hard, climb the ladder, earn more, everything will just be fine. Yeah, okay, It's a lie now. All right, Maybe it's a half truth. And you'll. You'll see what I mean by that. Because if. Here's the deal. If your money stops when you do, then you're not free. You're rented. And let's fix that. And let's talk about how the real rich people actually play the game and how you can, too. It doesn't have to be complicated. I'm going to walk you through a framework. I'm going to walk you through the. The traps. And I'm going to walk through a model that we have used with our clients. And actually, not just our clients. This is the same model that everyone else uses. It's something called the affluence cash flow matrix. And when you understand this, it will. It will transform your journey. Because we've been built into a culture, this idea of what I call the earnings trap, this culture of an earnings machine. It's fueled by hustle, it's fueled by effort. It's fueled by caffeine. It is. Here's the formula. Work more, earn more, okay? And that usually leads to spend more, which usually leads to repeat it until you burn out. That's the game when we're playing. And listen, I used to live that life. I thought if I just worked harder, if I just built more, if I just earned more, I'd be free. Spoiler alert. I wasn't. I was that person running like crazy on the treadmill. I just might have had a nice, nicer pair of sneakers to do it in, okay? But I was not getting anywhere. See, the middle class gets stuck in what I call this treadmill of earnings trap. You look successful because you've got the car. You look successful because you've got the house, the memberships and everything. But secretly, you're one layoff or one emergency or one market dip away from financial chaos. That's not freedom. That's fragile, with maybe some benefits. I remember this really hit home for me when I was working with a client. His name was Mark. He came in and he says, and now, mind you, Mark was pulling in around $400,000 a year. He had the big house, he had the shiny car. He had the vacations. And he had one little problem, though. He was broke at $400,000 a year every single month. The cash that seemed to disappear faster than that box of crispy Krispy Kremes in the office break room, okay? And he kept saying to me, man, Mel, I just need to make another hundred grand or I need to make another 70 grand. And I'm looking at him saying, listen, buddy, no, you don't. You don't need more money. You need a machine. Because all of his cash flow was trapped in what I call the left side of life, the earnings machine side of life. That none of it was being used to create the right side of life, the money machine side of life. You'll understand this because I'm going to draw a matrix for you called the affluence cash flow matrix, where on the left side is where most people live, but on the right side is where freedom's found. Okay? And what most people do and is that we got into this indoctrination of earnings. And here's the thing. I'm going to jump to.

My iPad, and I'm going to walk you through the affluence cash flow matrix. So you start to understand how the wealthy use their income to create the machine so they can have the freedom, because this is the one thing that they focus on. And when they get this right, that's when all of a sudden stress goes away and freedom comes into play. All right, so let's just look at this real quickly. This is what we've been indoctrinated into. We've been told, go get a good job, go get a good degree, go get a good profession, go build a good business. Because when you do, then you can generate income. And so you generate income on this side and you start to make money. Well, that means that that money is going to go somewhere and we're going to use it to pay our expenses. And those expenses are our lifestyle and the vacations and everything that we do. Now, the challenge is that that's typically where most people will stop. Most people will stay. The reality is that hopefully income minus expenses on the left side will give you cash flow, positive cash Flow. So, so you're going to have some money left over. So I make money, I spend money, I have money left over that's going to be used to, to build some things. And, and there's some different ways to do that, to build the money machine. Now if that's not the case, if you don't have enough income to pay your expenses, it's a whole different conversation, okay? Because you're living well beyond your means and that becomes a problem. We have to stop that. Now, the wealthy, this is where, where most people will stop is that, that this is the game they're playing. Just on the left side of this matrix, income minus expenses gives me cash flow. I, I live my life and that's all we do. The truly wealthy do something different. They take that cash flow and they know that the game that they're playing isn't about expenses, isn't about income, but about assets. It's about net worth, about investable net worth. That's the right side of, of this matrix. Because what the, what the wealthy do is they take the cash flows and they use it to buy assets. Now these assets, though, are special kind of assets. They are assets that are going to generate cash flow in the future without their efforts or with less effort. It's, it's the investment properties, it's the investments, ETFs, index funds and that kind of thing. Now they know that because they're not looking at just everything as an asset, like your shoes, your clothing, your cars, some cars might be assets. Most of them are depreciating, okay? They're not something that goes up in value or generates cash flow. The game that the wealthy play is a net worth game, not an income game. And so they understand that they're going to buy assets. Now sometimes when they buy those assets, there's liabilities involved because you might get a loan against a rental property, but now you have assets that are generating cash flow, that are building wealth minus the liabilities, which gives you net worth. Everything that the wealthy do in this is to build the right side of this equation. But most of us are only told about the left side about income and expenses. We're never told about the assets, okay? But here's how this, this thing really starts to, to go on, on afterburners. It really starts to, to, to generate and build, build the money machine in a big way. And that is this, is that they use those assets in the net worth to create cash, more cash flow because it gives us more income. And that more income is then Generated on the, on the left side to go and buy more assets. So they're running this cycle to build it in a way that itself perpetuates. When I was building my money machine, I was using a portion of my income to invest and grow. And then that portion of the investment generated other income that I reinvested and grew even more. And there, so what ends up happening is you have the compounding of your original investment, but you have the compounding of the cash flow from the investor. So this is what accelerates your, your wealth building and your wealth building journey. So here's the thing that, that when you look at what wealthy do is they realize that focusing on earnings alone, the left side of the equation isn't going to give them the freedom because they're trapped in the treadmill of earn, earn, earn, spend, spend, spend. Whatever I have left over, I have left over. The wealthy look at it differently. They know earn, earn, earn. But with the focus on using the earnings to buy assets that will generate more cash flow that is separate and apart from the efforts to earn it. Okay, here's the other thing that they know is that they realize that as they buy the assets, every asset they buy gets them closer and closer to their freedom number. Okay, their financial freedom number. And in fact I have a financial freedom number calculated for you to help you understand, well, what is my target, what are we trying to get to? And if you want it, it's totally free. Just go to melabraham.com forward/number, we'll hook it up down below. But you can start to understand, well, what's the target? What's the number I need to give me financial freedom to pay for the life that I want? Now they also look at it and realize that as much as the left side of this matrix is the earnings machine and the right side of the matrix is the money machine, One gives you the fuel, the other gives you the freedom. They also understand the top part of the matrix are the producers of your wealth and your freedom. And the bottom part of the machine are the eroders of your wealth and freedom. And so when they understand this rule of net worth and how net worth works and the cash flow matrix, they now focus on different things. They're no longer looking at sneaky things. They're not letting things come in like subscription creepy car upgrades, $7 oat milk lattes. Those become a treat instead of a habit. And that's the thing that starts to look at it because they start asking ourselves how do I feed the Right side of the machine and the producers of my wealth and how do I eliminate the expenses, the eroders of our wealth? And so when you start to understand that things will drive things differently, this becomes a loop, this becomes the engine. This is the secret. The rich don't keep trying to run faster on the left side of this equation. They just make sure that their money moves across the matrix, buys assets so it'll continue to generate cash flow so they can build and buy more assets to the point where they have enough of a money machine to give them financial freedom to pay for the lifestyle that they want. Because if your money doesn't flow right, it's not going to grow, right? That's the challenge. Now let's look at an example of what happens when you do this wrong. And we'll look at an example of what happens when you do it right. When you do this wrong. Let's say you get a $10,000 raise, okay? And you feel good and you should, you deserve it, okay? But you go and instead of using the raise to build the right side, you decide, I'm going to upgrade my car, I'm going to upgrade my house, or I'm going to upgrade my life, I'm going to go get that fancy watch. Now technically you can afford it, but your expenses, when your expenses rise with your income, then all of a sudden you have not made any progress. You're actually standing still. Your net cash flow hasn't changed your lifestyle. Inflation may change the image to the outside world, but is still eroding your financial inside versus when someone does this right, they get the same raise, the $10,000 raise. Now I am one that has told people, when you get a bonus, a raise or something that's worth celebrating, I want you to celebrate. I'm not saying to put it all to building the assets. I am saying let's take a sliver off so you can celebrate your successes. If you don't have joy along the way, then that's a problem also. So let's say you get the same $10,000 raise and instead of upgrading your lifestyle, upgrading your car, your home, you decide to upgrade your asset base. So it might look like this. You take $10,000 and you take maybe $1,000 to go celebrate. And then all of a sudden you take a good portion of it, 30 or 40% of it, you know, and you use it to invest in index funds and then a portion, if you happen to be in debt, you use it to pay down the debt. What you're Doing is you're taking a piece to help your lifestyle on the left side of the equation and celebrate it. But then you're taking another piece and a bigger piece to build the machine on the right side of the equation. And the way to do that is to follow something that we call the wealth priority ladder. It's in chapter 12 of my book, but it literally tells you, if I have that, that money, what's the first place to put it, the second place to put it, the third place to put it? Because what happens is that when you start to look at and say, when I come into windfalls, when I'm making money and I'm looking at how I can use it to create the asset base, the net worth that I need instead of just the income, what ultimately happens is you're slowly separating your earnings from the efforts to earn it, because those assets will continue to earn without your efforts. It's exactly what happened with me. I learned this lesson the hard way when I found myself diagnosed with a cancer. At that point I realized, wait a second, I can't keep working at the rate that I'm working and still fight this demon called cancer. So what did I do? I had the money machine. I built the money machine. And I didn't build it because of the cancer. I built it because of the freedom. But the power of it was demonstrated during the cancer. Because I had the luxury, I had the privilege, I had the blessing of being able to shut everything down, to say, I want to focus all on beating this demon. I'm gonna focus all on getting past this. And all I had to do is flip the switch on the machine and the machine just generated cash flow that allowed me to live. It didn't. We didn't reduce our lifestyle, we didn't liquidate things, we didn't sell things, we didn't drain savings accounts, we didn't do any of that. We had the cash flow machine running so we could continue our lifestyle, I could stay focused on healing and beating the demon called cancer. And then when I was ready to come back to the game and do it a different way, the challenge is this, is that had I not had that machine, I would have had to work for a living during the day and fight for my life during the night. And I don't know that that would have worked out as well as it did otherwise. See, that's the game that I need you to play is to start to look at things from a long term vision. Say over time, I will forego some things to give Me, freedom down the road. Okay, let's talk numbers for a second because I think this is really important. The Federal Reserve, in a consumer finance survey, they, they said that only 35% of of Americans own any investments outside their retirement accounts. Now I want you to get into your retirement accounts. I want you to follow the wealth priority ladder. But yet the average millionaire, according to Fidelity, invests at least 40% of every new dollar they earn. So interestingly enough, one study is saying that, hey, 35% of folks do not have anything other than their retirement accounts. And yet those that are actually wealthy average millionaires have 40% of their money being invested. Well, that's not going into just retirement accounts. It's going into other investments. It's going into brokerage accounts. It's going into building a full fledged machine. Now this isn't about being greedy. It is about leverage. It's about leveraging your time. It's about getting your time back. I truly believe that building wealth and measuring our wealth should be measured in time and not dollars. How much agency do you have of your days? Okay? Because when your dollars are working harder for you than you did for them, then all of a sudden you find freedom, you find choice in your life. So the rule here, it is, the only money rule all people, all rich people follow is this. Before you spend more, make sure that you're building your money machine. Make sure you're building your net worth. Instead of focusing solely on income, let's start to focus on building true net worth assets that will generate cash flow and support you down the future. Okay? So if a purchase doesn't feed the machine, then it's probably going to feed the problems down the road. Because the goal isn't to die rich. It's to live richly, to wake up knowing that your bills are paid, to know that your choices are free, to know that your life runs on your terms. That that's real richness. That's real wealth. Okay? So here's your challenge this week. I want you to grab a piece of paper. Better yet, I want you to download my freedom number calculator. I want you to go through it. I want you to run the numbers. I want you to know what your destination is. Okay? It's simple. It's a tool that is easy to use. It'll let you know how much you need, at least a ballpark as to living life on your terms. Because most people are chasing more without ever defining enough. And that's how we stay trapped. I did myself, okay? You can't Build a money machine. If you don't know what it's supposed to produce, you need to understand. Do I need a million dollar money machine? Up to 2 million, a 10 million, 100 million. What is it? Okay, grab the calculator, run the numbers. It literally will take two minutes. You can use it over and over again, change it, tweak it, do what you need, and then do me a favor, come back here. Because all these episodes, everything we're doing is to show you exactly how to use that number to design the money machine. More importantly, how to build the path to make the money machine a reality. I hope this helps you. I hope that it gets you to start to rethink how money really works, to start to. To focus. Yes, we want to optimize our, our, our income, our cash flow on the left side of the the money machine matrix. But we also want to maximize our assets on the right side. And when we do, that's where we find our path to choice, freedom, and options. Okay? You don't need another job. You need the right system. That's it. All right? I hope that you found this valuable and I hope that you will take it and go through this and do this over and over again. Shift your focus in the right way. And if this is something that you found out, do me a favor, give me a thumbs up and a like, I'd love to hear from you. Also, let me know what you think. Let's have the conversation. Let's keep you moving forward on your path to financial freedom because as I said, I always believe that financial freedom is your birthright. So let's just go claim it. Until I get a chance to see you in another episode or on the road and path to your financial freedom, always, always strive to live a life. See you in the next one. Thank you for listening to the affluent entrepreneurship with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com 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.