The Psychology of People Who Have $1M Net Worth

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. Here's a number that you that should mess with you just a little bit. Most people never reach a million dollar net worth, but they earned enough to get there at some point in their lifetime. So the problem isn't the income, it's the behavior. And after 30 plus years as a CPA, as a money mentor, I've watched this play out again and again. High earners, they stall out. Steady earners, they compound. And the psychology, that's the difference. Okay, so today I'm breaking down the specific psychological patterns that show up consistently with people who actually cross that first million and keep on going. And how the emotional traps that keep everyone else stuck in, spinning their wheels and how to get out of it. So I'm Mel Abraham and this is building your money machine where we help you master your money, eliminate financial stress so you can live a life of choice. And that's because earning more doesn't make you free. The money machine does. So let's jump in. Let me clear something up, like immediately. People who hit a million dollar net worth, they're not smarter than you, they're not more motivated than you. And no, they don't all wake up at 4:17am and journal and meditate and manifest abundance. They just stop letting the emotions run their money. That's it. That's the whole secret. See, a million dollars isn't built by hustle. It's built by people who finally say, hey, emotions, I appreciate you, but get in the backseat. All right? See if your money keeps slipping through your fingers faster than it should. This is why. Okay, now quick pause here because I can already hear the comment section cracking its knuckles and saying, you know, but we're not talking about trust fund kids here. I'm not talking about crypto lottery legends. I'm not talking about celebrities who sneeze and accidentally make money. Good for them. That's a different game. I'm talking about first generation millionaires. No inheritance, no fame, no net worth, not the income it's not the people that you would read about. It's the boring ones. It's the quiet ones. It's the people who don't look rich because they were too busy getting free, building freedom. And once you remove the outliers, what's left isn't strategy, it's psychology. Okay? And here's the truth that most people never hear. A million dollars is not a mindset. It's not a vibe, and it's definitely not a personality trait. It's a behavioral line in the sand. And most people don't. They don't fail to cross it because they can't. They fail because they won't stop doing the things that feel good now but hurt later. They focus on what they want now versus what they want most. And we're going to talk about those things and we'll talk about the different psychologies that make the difference. And Psychology one is this delayed gratification. You've heard it now. The psychologists will call this delay discounting. But most people wildly overvalue today now and dramatically undervalue later. This is what they call delayed discounting, and it explains things like impulse spending, lifestyle creep, and 90% of Amazon purchases made after 9pm but the people who cross the $1 million mark, they learn to delay the gratification because they have a different identity and they use identity to drive it. They don't need the car to prove that they're winning. They don't need the house to feel successful. They don't need the lifestyle to post the highlight reel. Most people spend money to feel successful. Millionaires, though, will spend their money to stay free. So this delayed gratification, Yeah, I mean, it feels like, okay, put things off till tomorrow, but really it's about creating that freedom and freedom of choice and not to be beholden to status or image or anything like that today. So what do you do? Well, the first thing to do is add friction between I want it and I bought it. Make it harder to cross that line, to cross that chasm. That means taking the credit card numbers out of your purchasing apps, not using Apple Pay or Tap to pay or anything like that. Okay. And then ask yourself when you're going to make a purchase, am I buying utility or am I buying validation? Validation? That's fleeting. Utility is lasting. And I'm not saying to not buy things that you like. I'm saying to do it consciously and intentionally and aware and funnel your money first to wealth and then spend what's left, not the other way around. Okay. See Freedom shows up late, but ego wants overnight shipping on everything. And so this psychology is huge. And when you see first generation millionaires, they got this down, right? They realize that delaying the gratification on a number of those things will give them the latitude and the margin to build their wealth. That leads me to psychology number two. And this is this internal locus of control. Yes, this is a real psych concept. But people who build wealth believe deeply that the outcomes start with them. Not the economy, not their boss, not the system. They don't say, must be nice. They say, what do they own? How did they do it? How are they thinking? And they care less about the titles, they care less about the applause, they care less about the optics, and a lot more about the control that they have in their life, the leverage it gives them to have time back in their life, and the cash flow that it's going to generate over time, which is where their freedom is going to be based by building that money machine. Because they realize that the income is there to feed the lifestyle, but also to build the money machine through ownership, ownership of assets, because ownership feeds your future. So what do you do here? And this is a perfect time to do this, Track your net worth, not just your income. A lot of people say, how much do you make? I want to know how much you're worth. And not just your total net worth. I want your investable net worth. Because that's what your money machine is built on. Total net worth includes everything. Your home, your clothes and all the stuff. But if it doesn't generate cash flow, if it doesn't allow you to support a lifestyle down the road, it's not part of the money machine. It still may be part of net worth. But we wanna know what our investable net worth is. That net worth that's gonna generate cash flows for you down the road. And then the other thing to do here is to shift at least one goal from earning more to owning more, to take and shift that focus to how do I turn around and start to own something? Whether it's an etf, an index fund, or something of that nature that you can get into simply and, and easily and cost effectively. Because this is where you start to build something that pays you even when you're not in the room. See the applause, the status, all that stuff fades, but assets don't. All right, psychology number three. And this is the loss aversion awareness. Kahneman talked about this. This is not about TikTok. This is, here's the irony. You know, most people are so afraid of losing money, they make decisions that practically guarantee it. That's loss aversion. Millionaires don't eliminate risk, okay? Because they understand that when you invest, you will take on risk. There's no risk free investment per se. And I know that some people even think that. Cash, well, I'll just leave it in cash. Well, that's the biggest risk of all because I can guarantee you're losing money, you're losing purchasing power with that. So the key is this, is not to eliminate the risk, is to mitigate the risk, to manage the risk, to make sure that the risk you take on is appropriate for your age, stage and circumstances. They design around the risk, they design a plan around stupidity, including their own. And they ask this, what's the downside? Like, I make some speculative investments, but I know that the downside is it could go to zero. Then I asked the second question, can this wreck me? And the answer better be no. If the answer is yes, then it's too risky. So I'll make speculative investments. Will I? Could it go to zero? Yes. I could lose money. Is it going to wreck me? No. Is it going to piss me off? Hell yeah. I'll probably eat a bag of KitKats, okay. And pout for a weekend. But it's not going to destroy us. And then ask the other question. Will I still be standing if this goes sideways? See, millionaires are not risk takers. They're mistake avoiders. And so when you look at this, here's some things I want you to do. Stress test your big decisions before the emotions show up. Okay? If you're thinking of buying something, what's the worst case scenario? What's the best case scenario? What's the most probable scenario? And what happens if you lose your job? What happens if the market drops? What happens? We stress test portfolios. We with my clients. When we do the Money Machine master plan form, we literally stress test it. We run a thousand different scenarios for them. So we can look at it and say out of the thousand scenarios, 85% of them you're good. So we know the probability of success. And then it also identifies where our biggest risk areas are and where we could have some permanent damage. So by stress testing you can identify the areas, which allows you to now do the second piece, which is to eliminate the risks that could permanently damage you. So you do that and through that you start to stop swinging emotionally for wealth, but you start accumulating boring wins. You don't need brilliance, you need durability. In this journey and it starts with this awareness of loss and redesigning how you see risk and how you manage it. Psychology number four. And this is what I call time affluence. And this one messes with people. But here's what. What almost no one expects. As your net worth grows, the obsession with stuff actually usually drops. Why? Because we start to realize that time becomes the real flex. My ability to get up every single morning and decide exactly what I'm going to do that day. That I don't have a boss to report to. I don't have a place that I have to be at. I don't have the demands of my expenses that require me to go get the job and do the things, but I get to do it by choice. That's a different kind of flex. Time is the greatest currency. And I think we should be measuring our wealth in time. And as you start to understand that, and as millionaires start to understand that they're not looking to buy things to impress people that they don't even like, they spend their money to buy margin in their life, space, options in their life. And they realize that by having that space and options, they actually have room to breathe because they realize that the things that they buy don't actually make them feel alive. Here's the thing that I want you to do with this one. This one is to get us to start really refocusing on time as the. As the primary currency in our life. And so understanding how much the an hour of your life could be worth. And stop trading time for money. Stop finding a way. Start finding a way to stop trading your time for money. Because trading time for money is a challenge. And when you purchase something that is a status that is for ego, think about it in the terms of how much time do I need to put in to earn the ability to buy that? And now you know how much of your life you traded away to buy that. And does that make sense? Protect the white space like it's an asset. I protect my time so much, but I'm busy as all get out. But I'm busy doing the things that I want to do with the people. I want to do it the way I want to do it. That's where richness in life comes from. Okay? You can't build wealth when you're always rushed. Give yourself some space to appreciate, to have gratitude, to experience. That's the richness in life. Everything else is a statistic. Now, you might be sitting back going, great, Mel, but I don't even know where I am on this journey to millionaire status. Well, if you're not sure where you are on this journey and how much it's costing you and where you want to be, and this is the thing that trips up a lot of people, then here's what I want you to do. I want you to go grab my lifestyle cost calculator. You go to melabraham.com lifestyle. It's totally free. We'll hook it up for you here. And it'll allow you to start to understand what your current life costs, what your future life may cost. At least give you a direction so you can start to look at where you need to be and how to start building the finance to make that happen, but also to plug the money leaks on the way. Okay, that leads me to psychology number five, automation over motivation. This is what we would call behavioral consistency. This is where people get bored and where millionaires get built. See, if we are having to motivate ourselves all the time, that's using willpower. And don't trust willpower because it fades, it gets tired, and it's challenging. The folks that truly build millions and have that money machine working in the background, they do it by having systems and automation in place. So they're not relying on their effort. They're not relying on them to pull the levers, twist the dials, push the buttons. They're not relying on willpower. They're decisions that have to be made constantly. The fewer decisions, the less friction we have with our wealth creation, the easier it'll be. So they automate. They set systems in place to eliminate the emotions and basically say emotions, you don't get a vote in this. The path to a million dollars is aggressively boring. All right, hear that again. The path to a million dollars is aggressively boring and built on systems and automation. So what do you do here? I want you to automate your investing before you put in any lifestyle upgrades. So whether it's your 401k, making sure that you're getting the employer match or just contributions into an ira, I want that every time money hits your bank account, it automatically gets transferred to your financial future, a portion of it. And if you're not sure how to do that, get my book Building youg Money Machine. I walk through some of it. I give you the wealth priority ladder to do that. But make it automatic and then have it, once it's transferred, have it automatically investing into ETFs and index funds, low cost ETFs and index funds. You can get into an S&P 500, you can get into a total stock market index, a target date fund, those kinds of things. So it's happening in the background. The other thing to do is create rules while you're calm, not when you're emotional. You create the rules around your money. I have a set of rules for investing that I teach my students because when I didn't have a set of rules to investing, that's how I got caught in the Ponzi scheme. My emotions took over. And because my emotions took over, my financial intellect went down. I went straight from smart to stupid and I lost one third of everything I owned. But it's these rules, it is these systems, it is the psychology, it is everything that allowed me to rebuild. And within 18 months, and not just rebuild, build it up three times what I lost. Okay? The other thing I want you to do is stop checking your balances like it's a mood ring. Listen, if you're doing that constantly, that's an emotional play. And so what we need to do is systematically, whether it's once a month, you're checking on things, you're looking at the metrics. We give scorecards for our clients or dashboards so they know where they are each month to make that happen. Okay? Because consistency beats intensity every single time. So we need to get these things in place. All right? That leads me to psychology number six, and that is emotional regulation, core EQ skill. This one can be uncomfortable for folks. But stay with me because people who build wealth don't use money as a reward. They don't use it as a coping mechanism. They don't use it as emotional duct tape. Retail therapy is real, okay? They don't say, I deserve this. They say, does this actually help and move me forward in the life I want? They don't show and use money as therapy. They don't use it as status. And it's a terrible substitute for self worth. So what do you do here? You never make financial decisions when you're emotional. That's why I have a 72 hour rule. Put it in the cart and don't buy it for 72 hours. If you're trying to make a decision and you feel the emotions and everything and that, that pull, that urgency that marketers will put in front of you, man, back off. Give yourself some space. Allow the logical side to look at it and not allow the emotional side to make the choice. Separate the stress relief from the spending and create a set of decision rules on when you'll make the decision to buy, why you will do it. And the criteria, not a series of justification stories, which is what most people do. Okay, listen, feelings are great, but the feelings become terrible CFOs. And I want you to be an amazing CFO. All right, so here's the deal. You don't need more income to build wealth. You need fewer emotional leaks. We need to plug the psychology in that that works. Most people aren't bad with money. They're just inconsistent when life gets loud. And when we fix the psychology, the math will behave because math always maths out. And just to be clear, the psychology that gets you to the first million is about restraint, it's about discipline, and it's about a process and automation. There are later levels that beyond the first million, maybe at 5 million and 10 million, those are different games. But at this level right here, trying to get here, this is where most people will stall out. And so this is the time for you to start to look at the things you're making. How much of my emotions are involved? How much of my psychology is not proper to get me the right habits, the right behaviors, the right choices, the right decisions to make it happen? See, a million dollars, it isn't impressive, it's actually not a lot. But keeping it, growing it, and not blowing it because your ego had a rough Tuesday, that's the real psychology. That's the real success. That's the game I want you to Play. So remember, 80% of our wealth is behavioral habits, not monetary. And that starts with the right psychology. And now you've seen the psychology that is in with the, with the majority of first generation millionaires that I have worked with, observed, and coached. And now you can take that and put it into your life. And that will slowly transform how you see money, how you use money, how money becomes the paintbrush to paint the masterpiece called your life. And as you do that, you start your path to that money machine, that place where freedom lays. Okay? I hope that you found this valuable. I hope that this helps you to start to get the right mindset, the right psychology in place that millionaires have so you can install. And you don't have to wait till you have a million to get there. You do it right from the get go to make it happen. All right? All right, y'. All, I again, I hope that this was valuable. If you have questions, if you have comments or thoughts, do me a favor, send them to me. DM me, leave a comment. I love hearing from you. I love having the conversations with you. And while you're at it, make sure you subscribe and give me a thumbs up. YouTube likes it. And listen, I like it, too. All right. And it keeps the channel going. All right. Until, until I get a chance to see you on your path to financial freedom or out there. When I'm out there speaking, which is always cool to meet, meet some of the folks, the followers in the audience and in my community. But until that happens, as I always say, always, always strive to live a life that offers you. See you. Thank you for listening to the affluent entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com group and I'll see you there. And that's it for this episode of Building your money machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcast, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people. Because I truly believe that financial freedom is your birthright and I want to help each and every one of you claim it. Thanks so much.