Why Having Money Is Better Than Spending Money

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. Why does it feel like the more we spend, the further away we get from the life we really want? Listen, if you've ever felt stress, the stress of living paycheck to paycheck or had the regret of an impulse buy, or maybe you're looking at it and going, why is financial freedom seem so far out of reach? This episode's for you. Because in this show, I am about to reveal and walk through why having money is so much more powerful than spending it. Okay. And how to make a few simple shifts to make it happen in your life.

Spending money, it feels great in the moment, but what if I told you that the real joy comes from having it instead of spending it? And so here's the thing. Peace of mind, freedom, opportunities, all of the things that really drive fulfillment and wealth are the things that come from having it and not just spending it. 61% of people, according to Lending Club, are living paycheck to paycheck. It's a sad statistic and it shouldn't be that way. And I hope that you're not one of them. And if you are, we're going to get you out of it because you sat back and said, maybe ask the question, have you ever spent money that you didn't have only to simply feel this stress of paying it back later? What if you never felt that way again? That's what I want for you. But spending is a trap. And let me be really clear, I'm never one of those that says, I want you to cut, cut, cut, cut, cut, cut. I don't want you to stop spending. I'm never going to tell you to stop spending. But I do want you to be fully aware, fully conscious, fully intentional of the spending you make. So you know and you make it fully informed. The tendency or the challenge is when we don't have that understanding where we're, we're spending in emotional response or some impulse or something that isn't deliberately moving us forward to the dream life that we want, that becomes a problem, and that becomes the spending trap. Because it feels good in the moment, but it costs you a whole lot more in the long run. And so let's just break it down for you. We'll talk about the mindset, the psychology, Then we'll talk about some steps and the tactics to make it happen. Because here's what actually happens. The reason it feels good is spending activates dopamine. And dopamine is this temporary feel good chemical. And so when you look at it from that perspective, you can see how spending can actually be almost an addiction, okay? A therapy, if you will. They talk about retail therapy, and a study by Psychological Psychology Today shows that retail therapy is.

Really drives an emotional boost in the moment, but then it increases anxiety when the bills come in. So you're feeling good in that moment, and all of a sudden the bills come in. That becomes a problem. And that impulse buy creates this regret and this pain of regret. And if we don't get control of it now, all of a sudden we have mounting credit card debt, and we end in this vicious cycle of minimum payments that you can't get out of. And at the. And at a time where maybe interest rates are lower, you might be able to get yourself out of that. We're not in that time. Interest rates and carrying balances on credit cards for lifestyle expenses, It's a no, no. If you're trying to build wealth and live a financially free life, you can use the credit cards. I use them all the time. But you do not carry balances at 22, 23, 29%, because that will destroy your wealth. Okay? Keeping up with the Joneses is a mistake. Joneses are broke. Leave them behind. Okay, here's. Here's where we need to think about. Because the average American right now, based on a study in 2023, is carrying $7,000 in credit card debt. That's a lot of credit card debt. When you start to look at minimum payments, it's going to take decades to pay it down, and you're going to pay multiples of it by the time you're done. And that becomes this cycle of dependency that you can't get out of. Now let's look at the other side of it. The power of having money is driven into security and freedom. But let's just talk about the. The emotional side of it first, because imagine for a moment that you actually have money in the bank account, that you have money in a. In a peace of mind fund, as I call it in my book. Building your money machine that you have that money there. You get a chance to know that in an emergency, you're okay. The car breaks down and you need to put a new transmission in, and it's going to cost you a thousand dollars to do it. You don't go into debt for it. You're okay. There isn't a panic. Instead of panic, you just pay for it and you rebuild the cash. It's the confidence that comes from knowing that even though there are risks, you have a solution before the risks ever become a reality. That's the emotional benefits of it. The other side of it is this. Having liquidity and having cash and having money allows you to take, take advantage of opportunities when they come up. There are things that I have in my life that I wouldn't have if it wasn't for me. Having the liquidity and the cash available to invest at the time that it came up. And so whether it's a passion project, an investment, an opportunity, having cash gives you security, it gives you freedom, it gives you possibility, and. And it gives you the room to maneuver. Okay? In fact, a study, a recent study in 2022 said that just by having savings of $10,000, $10,000, it can reduce your financial stress by 37%. Okay? So it's not a lot of cash to the takes, and here it's cutting almost 40% of your financial stress away. It is a huge impactor on our lives. And if it is stressing us out, what's it doing to our health, what's it doing our relationships, what's doing to our productivity, our focus, all of that stuff. And you think about it and say if all you did was take $200 a month and put it away in AN S&P 500 fund over 30 years at 8%, conservatively, you'll have over 300,000 at the end of 30 years. What if you went more than $200? What if you went to $800? All of a sudden you're over a million dollars. This is the thing that. That comes into play. But here's another thing that happens, and we'll talk about some steps here in a moment. But having cash gives you the ability to negotiate in a whole different realm, to get discounts because you're paying cash, okay? To. To be able to do that. In fact, the home that my wife and I live in, this home was on and off the market, on and off the market. It's a beautiful home, overlooking. We're on the beach. We see we have 180 degree view of Catalina Island. Okay? It's a wonderful home. And I, when negotiating with the owner that was trying to sell it, it was on and off the market. I literally looked at him and I said, you got four hours to make a decision.

Because I'm coming in with 50% down.

This, and we're going to close this in 30 days.

Here's the approval letters, here's everything but the fact that I had the cash. I was able to negotiate the price down because the alternative was him to go to someone else again, have it fall out of escrow a fourth time, and then I'm gone. Because I said, there's three homes in here that I want. Yours is at the top of the list. If you don't answer in four hours, I'm taking the next one. And they'll get the deal. Having cash gives you power, gives you the ability to negotiate. All right, so here's the other thing. If we don't get this right, you're living paycheck to paycheck and relying on high interest debt. And we know what that does. You miss the opportunities. You have a problem as you start to age out and you sit back and say, gosh, how do I, how do I take care of myself? Because we don't have the liquidity, we don't have the investments, we don't have that. Okay? 50% of people have less than three months of expenses saved. They can't sustain themselves. And in. When you look at it from that perspective, it's, it's important to have it. So let's just talk about some mindset shifts and some practical steps. Okay? The first thing is this. Money is not for spending. Think about that from a mindset perspective. It is. And I know people will say, well, it's a tool. I actually think it's more than a tool. I think that money is your paintbrush. It's your paintbrush to finance the dream life you're painting. And when we get this right and we look at it from that perspective, every dollar you put out, you say, am I painting the painting I want to paint? Am I using it for the thing that moves me closer to the dream life that I want, or am I satisfying a momentary pleasure that will have a fleeting kind of dump of dopamine, and then I'm going to have the stress and the regret of having to get paid. People that actually have an emergency fund have, have a higher level of satisfaction. 70%. Okay. And so this is about long term gratification, but it isn't about deprivation. I want to be really clear when I talk about building a plan, when I do the money machine master plans with clients, and when I'm working with people in that capacity, one of the things that I say is it is important to create a plan. A plan that gets you to the vision that you have for your life. The plan isn't the important thing, it's the fact that the plan gives you the path that it is. So now you have a path to make your life real, the dream that you want real, and you know the steps that plan. Call it a budget, call it whatever you want. I call it a plan that gives you the permission to spend in a way and invest in a way to move you closer to your dreams. It also gives you the caution to not do that. And so it's important for you to, to look at it through those eyes. But at the same time, if you don't enjoy the journey to financial freedom, you'll never enjoy the destination of financial freedom. So in that plan, as you're building it, I want you to put in three to four sustainable joy points. The things that viscerally bring you joy, not momentarily, not the fleeting dumps of dopamine, but the stuff that's meaningful, that lasts. For my wife and I, a lot of it is travel. It's experiences, it's that thing. So we make sure that our plan has that in there. It's not the, oh, there's a sale at Nordstrom's or something on Instagram that you go buy because that's the, that's the dopamine dump and the regret down the line. Okay, so what I do want you to do is to make sure that you are having joy along the way. Deprivation isn't the path to a fulfilled life, but discipline can be. And so that mindset shift of realizing that your money is a tool and a paintbrush to create and live the life that you dream of, not just in the future, but starting today, to enjoy that journey. Okay, that's the biggest mindset shift that you need to make. So what are the steps? Let me give you a handful of steps that I think will set you on the path and a trajectory to take control of your spending. Because here's what it is. Spending is a behavior. It's, it's, it's you making a choice, a decision. And I tell people that no one out there has money issues. I don't care whether you're 100,000 in debt, zero in debt, or you have 100,000 in the bank. Account. No one has money issues.

What we have are money symptoms. They're symptoms of choices, decisions, and habits and behaviors of the past. Where we are financially is a result of the things we did previously. Where we will be in the future is a result of the things we will do today. And when we understand that, we can change our behaviors, we can change our habits, we can change our decisions to change our future.

That's the power of this. And I know it's confronting to say, wait a second, you're blaming me of the things I did in the past? No, I'm not. I truly am not. I'm trying to make you aware of it because it's in more control of yours than you thought. I made bad decisions. I've had bad financial habits. I've run up credit cards. I've been in debt. I lost one third of everything in a Ponzi scheme. So I'm not on some ivory tower saying, oh, shame on you, because I've done the same thing, and I still will do dumb things at times. I'm not immune to it. I will make an emotional purchase. There's a reason I got a $900 coffee maker. Okay? So all I want you to do is to be conscious, aware, and intentional about it. So now that we know it's a behavior, here's some steps I want you to take. The first is this. Start small. Wherever you're at, doesn't matter if all you can do is $5 and put it away in a savings account, fine. Start small. Set a first milestone. It might be $100. In a savings account, it might be $1,000. In a savings account, it MIGHT be $10,000. I did an episode about why the first hundred thousand is the hardest. And you can go and watch that episode. But one of the things is that by doing this, you are shifting and changing your identity and the person you need to be to have the wealth you deserve. And what happens is that when you look at it through those eyes, it increases.

The ability to save. There's a University of Kansas study that found that people that started small saving small amounts had a 50% more likelihood to continue to save because they started to create a habit. It's behavior. Okay? Now, to make it easier, that's. Step one is to start small. Step two is to automate it, to take the friction out of it, to not have to think about putting the money away. So what I want you to do is to to set an automated transfer to a high yield savings account every week, every month, every Every two weeks, every time you get paid, there should be a percentage or a dollar amount that goes in the savings account. Out of sight, out of mind, without thinking. The less friction there is in creating these habits, the easier they will be and the longer they will stay.

So that's the first two steps. This, the third step is I want you to go and look at the your expenses. I want you to look at them and start cutting unnecessary expenses. Audit your spending. Are there unused subscriptions? Are there things that you're spending out that you don't need? Okay? And in that process.

I want you to log okay your spending, but here's how I want you to log it. I want you to log what you spent, I want you to log why you spent it, but then I want you to log what you were feeling when you spent it. What I'm looking for is a commonality of triggers, because you might look at it and say, man, I was feeling stressed, I was feeling stressed, I was feeling stressed. And you realize that your spending is triggered by stress. And when we understand the trigger, we can change it. Okay? All I'm trying to do is figure it out so I can shift the behaviors which ultimately will shift your identity and will change the course of your financial future. Okay? That leads me to the next step. The next step is to invest wisely. So, so step step number four is invest wisely, Start small, start diversified, get into an etf. And if you have, follow the wealth priority letter in chapter 12 of my book, if you don't have it, go get it. I tell you exactly what to do with every dollar when it comes in. And if you are an employee and you have a 401k at work and they match, that's the first money you get. You get the free money.

And if not, then I want you to maybe start a Roth IRA or participate in the 401k, maybe the Roth 401k, but start putting money away and then investing it. Now, that means that in the roth, in the 401k, just because you put money in there, it's not invested. There's a second step that you need to do to invest, and that means you need to make a decision where to invest it. And so you're going to look at ETFs and index funds, low cost, low fee, and look at how to build that out. And if you just do an S&P 500 fund for the beginning, you can't go wrong in the long term. Okay? You can't go wrong in the long term. And so invest wisely, but invest consistently with what you have. All right? And then the last piece of this is this. I'm going to challenge you. I want you to find a way to get a hundred dollars this week and put it in a high yield savings account or a brokerage account or something that's going to earn something more than 2/10 of a percent. And when you get that hundred dollars this week and you put it away, I want you to to post, I want you to tag me, I want you to let me know in a comment that you're in the game. Because one step at a time, we'll work together and we'll get you there. Because having money is much more powerful and long term fulfilling than spending money. Now, let me be clear. I said having money, not hoarding money. So you're still spending it, but you're doing it in a deliberate way that gives you joy and sustainable joy for the long term. And it's moving you closer and closer to the dream life you want. All right? Because spending money is a momentary pleasure, it's a dopamine hit. But having money feels good for the lifetime. And look at it from that perspective, because if it wasn't for doing it this way, I wouldn't be living the life that I live. And I'm blessed, I'm privileged. I feel that. But I didn't come from that. I wasn't born into money. My dad didn't have it. My dad was an immigrant, came here at 17 with nothing. I didn't inherit anything. It was. I built it from scratch. I lost it, rebuilt it, I did it. The same things that I'm asking you to do. I don't care age, stage or circumstance. It is possible, no matter what your age, stage or circumstance is. And it's simple when you understand the principles. Now, what I didn't say is that it's easy. Sometimes it's not easy. But just because it's difficult doesn't make it impossible. And I'm here for you, to support you on this journey. All right? Let's do this together. Let's make it happen. I want to see you soar. I want to see you on your path to financial freedom. Because I believe financial freedom is your birthright. And I want to light the path to have. Have you claim it. All right? Until I get a chance to see you in another episode. I hope you found this of value. I hope that this was helpful. And do me a favor, if you haven't done so already, subscribe. Share it out. Leave me a comment subscribe, Leave a review. Just let me know you're out there, all right? And I can't wait to see you on the road to your financial freedom or on another episode of the Building your Money Machine show until I see you always, always strive without losing.

Thank you for listening to the Affluent Entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to 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 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 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.