Why A Million Dollars Doesn't Make You Rich

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. Does becoming a millionaire truly make you rich? Or is it just a misleading milestone? Listen, if you've ever thought about hitting that magical million dollars as if it's the answer to all your problems, this episode's gonna change the way you think about that and wealth forever. So we've been sold. This idea of reaching a million will make us financially free. And today's world, though, it's simply not the case. So in this episode, I'm going to reveal to you why a million dollars no longer makes you rich, but more importantly, what actually does. If you truly want financial freedom that allows you to live your life on your own terms, not chase some whimsical number, then you're in the right place.

A million dollars. It has been glorified, if you will, as the ultimate goal. But does it hold the same power as it once did? Because here's what I know. Even though you're becoming a millionaire is still a popular dream, and you know what? It's a huge accomplishment. I don't want to belittle that. It isn't what it once was. It doesn't necessarily make you rich. It doesn't necessarily give you the life that you want. And it might sound shocking, but that's what's true in today's economic reality. So I want you to really think about this million dollar number as if it means something and say, hmm, what really does make you rich? Because it's not really the number. In fact, that's one of the reasons that I wrote the book. Building your money machine is really for us to understand. How do you connect your journey to financial freed freedom to the life, the existence that you want? So you have the opportunity to live a life by your own design, by your own choosing, in your own way, because you have a life of choice, and that's what what happens. And. And maybe a million dollars will give it to you. Maybe less than a million dollars will give it to you, but maybe you need more. And so here's why I think that we need to be smart about this and not just chase the numbers. Let's just look at, let's go back a number. Let's take it back to when my son was born. My son was born in 1990. If you had $1 million in 1990, it meant it was very different than $1 million today, because you have inflation and you have price increases and you've got the purchasing power that just gets eroded away over the decades. And so $1 million in 1990 would be worth significantly more if we today it would be worth $2.25 million. So bottom line is to be able to buy as much stuff that a million dollars bought in 1990, you would need to have $2.25 million today. That's what inflation does. That's why I look at it and say, the magic million, if you will, may be something different. It may be the magic 2 million, maybe the magic 3 million. But I don't want you to chase the number. I want you to chase the lifestyle. I want you to chase the life, the richness in it. So because here's the thing, if you're living in the Midwest versus maybe in New York or San Francisco, cost of living is very different. A million dollars will last differently depending on your lifestyle, where you live, and those kinds of things. Sometimes you look at a million dollars, it might only last you 10, 15 years. But we have a retirement that we want it to last 30 or 40 years. And so that's why I think that we need to do the planning and the work that we do. It's one of the reasons I do the money machine master plans, where I literally take a client and I say, let's look at what you have. Let's look at the dream life you want and what that might cost. Let's look at the gap in between. Let's understand all your expenses, let's understand all your income. And we model it. We literally run a thousand scenarios and test it. If the market goes up, if the market goes down, if your income goes up, if your income stops, if you want to retire at 60, at 65, at 50, at 55, what does it do? What's the problem? Probability of success. So we can go into it informed, equipped, and understanding what happens. And this is the better way to go. So hitting the number won't necessarily get you rich. Here, here's the thing.

Wealth is more about more than just a bank account. Well, wealth to me is a statistic. It's richness that we want. And it's about how do you manage your money and get your money to work harder for you than you did for it? It's the subtitle of my book. The key to creating freedom, the key to building wealth at an accelerating rate isn't to just accumulate stuff in an account. It is to accumulate money and get that money to work harder for you than you did for it by making sure it's invested effectively, it's invested properly, and that it is growing. It is a system that you build around money and your spending and your habits that really start to drive it. Here's what I've seen. People who solely focus on the number often feel completely anxious and have a lot of angst because what happens is we tend to not feel it's enough. And one of the reasons we don't feel it's enough is we're not testing it, we're not planning it, we're not modeling it. Like, like I say to do so it's really about us, is shifting a mindset to looking at and saying, how do I stop chasing a dollar amount and start focusing on building a financial system, a money machine that supports your ongoing wealth, that supports your ongoing freedom. Here's to me, I think the real definition of richness and wealth, wealth and richness is about freedom and choice. It's about having the ability to live a life on your own terms. True wealth gives you the ability to make decisions based on what you want, on your values, not what you can afford. Too often right now, as we're growing, we make decisions based on what we can afford. And that's, that's the smart thing to do. But over time, the idea is to build that machine so you can make the decisions based upon what you want and not on what you do. I say that I don't want your, your decision making to be driven by the demands of your expenses, the demands of your checkbook, and the demands of the day. I want them to be driven by the dreams of your heart. And that's really what we're trying to get on. So it's. If we look at it from that perspective, then that moves to this next piece of us sitting back and saying the focus instead of being on a number should be on how do I create the experiences, the relationships and the life of fulfillment that I want and not just piling up money. And this is why at the very beginning, I want you to get a vision for your life. What is it you really want? And then understand what that vision then will do? Is it allow us to create the plan? In my case, it's a money machine master plan. And that plan will then define the strategy. The strategy will set the tactics, and the tactics will allow us to take the actions we need to make it a reality. That's what we need to do. Too often we, our vision is simply a number. That doesn't get us there. That just gets us a number. But is it giving us the life? And if that number doesn't give us the life, then why are we doing it? So that vision has to be reduced and connected to the number to drive us. So what does it really take to build wealth? There's four things. And when you get these four things, it changes things dramatically. So here's how I would look at this. This is something.

That it's the wealth driver's matrix, as I call it. And there are four things that actually drive your wealth. And the first is income and income. Income is all the money that's coming in. We want to have the opportunity. We want to be able to maximize and increase our income as much as possible. It could be through, through your job, it could be through side hustles, it could be through a business. Whatever it is, we want to maximize the income streams. Now too often what we see is that people think that that is the only thing that we need to care about. In fact, we were raised this way because we were raised to earn money, to make money. It was drilled into us at school and growing up. Get a good job, get a good career, get a good profession, build a good business, make money, make money, make money. The challenge is that the of the money doesn't solve the problem. It doesn't give you the rich life. There is something that actually drives it more. Now don't get me wrong, the bigger your shovel of income is to be able to put to your financial future, the better off you are. The faster you can get there, the faster we can get that money machine built. It is hugely powerful. But there's something else that we need to think about, and that is the second piece. And this is what I call savings or investing rate. This is really the percentage of the income that you're putting away for the future. And the higher the percentage is, the better off you are. And the fact is, is that this in actuality is a far more important element to building your wealth than the income is. I'll give you an example, and I've used this before. Someone who I know is, I was looking at his budget neurosurgeon Hugely, hugely skilled, extremely smart, $1.1 million in salary every single year. He's making really good money. Look at his budget. At the end of every month, he has less than 500 left over. Less than $500 left over. He's making $1.1 million. And yet on an average month, he's got $500 left to his name at the end of the day. And in fact, the only amount he has in an account put away is $40,000. His saving, his income is way high. His investing and savings rate is way low. He's not building wealth. He's not moving himself closer to financial independence or freedom.

So we need to make sure that we're pushing that up. So managing that becomes really important. It leads to this third piece. Now, this is about the returns. This is about how you, how you actually invest. And this is a balance really, if you will, between returns and risk. Because we can try and get 20, 30, 40% returns, but you're taking on a tremendous amount of risk. Risk is, is kind of the, the element that you need to look at based on your age, stage, facts and circumstances so you can decide and determine how much risk is appropriate to build your portfolio around. If you're 20 years old, then you can, you can sustain yourself in a downturn and maybe be a little more aggressive. If you're 60 years old and you're closer to retirement, we don't want to be as aggressive. So your risk tolerance, your risk profile, your risk need, and your risk capacity are different at every age, stage or circumstance in life. And so what we do is in this, in this piece, it's really about you understanding what your asset allocation is that fits your risk to get you the returns to build a portfolio. All right, and that leads me to this last piece. In this last piece is literally time. It's time. And here's the thing with time, when we look at it, you cannot control time. You can't control the past. I can't change it. I can't control the future. I don't control it. The only time I control is the present is the now. And so the real question is when to invest. And the answer to that question is always now. If you're not investing right now, that means you're not in the game. If you're not investing right now, that means you're in the stands or you're on the sidelines watching. That means you're not in the game. You cannot win the game of wealth without being on the field playing the game of wealth that means you need to be investing. Now, I'm not telling you what to invest in. What you invest in is dependent upon your risk profile, where you are, what the plan is, what the strategy is and all that. But you have to get in the game. And too often, especially when we're in volatile times, I will have people say, hey Mel, is, is today, is, is now a good time to invest? And my response to them is, are you investing already? And they say, no, then now's a good time. Because what I do know is if you're not in the game, the one thing that for certain is you won't win because you're not in the game. Now that means you get in the game. You do it smart. You follow a process, you follow frameworks, you follow proven strategies, you follow, follow proven systems that have withstood the test of time. The systems that have worked during up markets, the systems that have worked during sideways markets, the systems that have worked during down markets. The challenge is too often we're trying to look for that get rich quick. This is a long term view. The stock market goes up 8 out of 10 years. The longer we look, the higher the probability of success is. This is why we look at, at it from that perspective. So the point of, of time is that time is always about now and getting in the game to make that happen. These are the only four things that will drive your wealth. It's important for you to sit back and say, okay, how do I increase my income? How do I increase my savings rate? How do I get in the game right now? And how do I make sure that I have an appropriate level of risk given what I want? All right, with that, I want to touch on one other piece. Because when we tend to focus solely on the dollar figure, there are some things that can happen, some problems that can happen. Because I just gave you the four wealth drivers, you now know the four things that you need to manage and control to drive your wealth. But it's not driving your wealth to a number unless that number is attached to the life you want. People will. One of the first pitfalls is this, is that people will see the number as the solution to their problems. If I just had another million dollars, if I just made a hundred thousand, that isn't the solution. Because if we did not create the skill set to manage it, to control it, to grow it, then our, then we will dissipate the number. We won't be able to use it for what it was meant to do. This is why I did I did a recent video of the most critical crossing point. Tipping point for your wealth journey is, is getting to that first a hundred thousand dollars. Because in that journey to that first a hundred thousand dollars, you will push up against your comfort zone. You will push up against your skill level. You will have to develop new habits, new understanding, new skills, new behaviors to make the hundred thousand possible. And when you make the hundred thousand possible, you make the million possible. When you make the million possible, you make the 2 million possible. It is. It is the important thing. But the reality is, when you make the 100,000 possible, you make your journey to the life that you want possible. And here's the other challenge with just chasing a dollar number. If we're not chasing a life, we will continue to move the goalposts. We will continue to change the number. I did this. I did this. And it wasn't until I had a bike accident that a friend of mine kind of put it in my face. And this was. So I was riding down a hill on a mountain bike on the street, because I was riding to the gym. My shoelace got caught in the chain. I clipped the brake, I flipped the bike. I ended up on my head. Grade 4 concussion. I was stuttering. I had no feeling on the right side. I get out of the hospital two days, three days after I get out of the hospital, he comes over and we call each other brothers. We've known each other that long. He was retired at 35 years old and had been living. And he says, I'm taking you out. I want to chat with you. So he takes me out to a sandwich shop, and we sit down and he looks at me and he says, how much is enough? What are you talking about? He said, I'm in a neck brace. I've got head trauma. And you want to ask philosophical questions about life? He says, no, I'm serious. How much is enough? You got on that bike, you were angry, you were distracted, and you weren't paying attention. You flipped it because of that. You ended up in the hospital because of it. You're going to heal from it. You're going to heal fine from it. Hopefully, he says, but here's what concerns me. You don't know where your finish line is. How much is enough? If you don't know where your finish line is, you will keep running the race. You'll get back on the bike. You'll keep riding and riding and writing until you hit burnout, till you hit breakdown, till you flip it again. And God forbid, maybe it's that time you don't come back. He said, we. If we don't know where the finish line is, we don't know what kind of race we're running. It might be behind you already.

But it is important for us to know where we are, at least for the time being. It's why we have the vision. We create the plan, we create the strategy, and now we can change it, but we change it with a reason. And we understand we're not chasing some mythical number. A million dollars, two million, five million, ten million, a hundred million. It doesn't matter what it is. That's just a number until it gives you the life you want. All right? And so the other thing that I noticed when we chased the number is that even when we achieve the number, because we hadn't defined the life, that gives us richness. Remember the joy points that create sustainable joy, the things that create the experiences and the. And the. And the feelings and the relationships that matter. Because we didn't do that. We didn't live into it. We get there and we have this big bank account and this bankrupt life, this emptiness inside of us. So I don't want you to chase the number for the number. I want you to chase the number because it fuels a lifestyle that you want, all right? True financial freedom. It's not in a bank account. It's why I want you to focus on building a money machine, a system, a process that allows you to fuel an existence, a life that you want, not to fuel a bank account that you desire. True financial freedom is created from a money machine that continually generates wealth, continues to grow, not just from saving millions of dollars. It's going to give you a series of income streams. When I look at the plans and I see that the income will carry me till 90, 95, and then pass the machine on to my heirs to allow them to live. Okay? That's true richness. That's what I want. And that's why I think a million dollars as the goal, as the sole goal is a mistake unless it gives you the life you want, the dreams you want to have, and make it from that perspective, okay, I hope that this was valuable to you. I hope you. You take the four wealth drivers and start to use them in a way that you start to build the wealth that is intentional for you, but not because you want a bank account, because you want a life that outlives you, as I always say. All right? I hope that you found this about. If you have any questions or anything, please, please, please let me know. And in the meantime, if you have not subscribed, subscribe to this. Stay on this journey with me. I truly believe that financial freedom is your birthright and I want to light the path for a make that happen. And I want one of them to be you. All right? And listen, share this out, Share this out. Because, you know, doing this financial journey, it's so much better when you have a partner in crime doing it. All right, I'll see you in the next episode. Until then, keep soaring high and always, always strive to live a life that outlays 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 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.