This is the affluent entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money and scale your life while creating a
deeper impact and living with complete freedom. Because that's what it really means to be an absolute entrepreneur. Listen, one of the best things about what I get to do is I get a chance to travel and I get a chance to speak to people just like yourselves, at conferences, at meetings, at corporate functions. And I do a lot of keynotes, especially since the release of my new book, building your money machine and hit USA Today bestseller list. I get
a chance to do that now. The blessing, yeah, the blessing is the speaking. I enjoy it. I enjoy serving. More importantly, the true blessing is when I get a chance to speak to you, to get a chance to meet you, to get a chance to shake hands, to look in your eyes, to have the
conversations. And part of that is because it, it allows me the opportunity to hear what you're feeling, to hear what you're thinking, to understand more about how I can serve better and to see what I can do to put content out there that makes a difference, that moves you forward. And in a recent keynote that I did, I came off stage, 300 people, and I was doing book signings. I was sitting in the back
signing my book as people came up and doing pictures. One of the participants came up and asked me a question and I thought I would answer it here in this video and on this episode of the affluent entrepreneurship. So that was a really interesting question. They said, mal, what were the money lessons that you learned that transformed your relationship with money, your journey to financial freedom? And if we truly understood those
lessons, that it would transform ours, too. And so I wanna break down nine money lessons that I think that when you get these, when you viscerally get these, will transform you in a way that you'll never be broke again. And you may not be broke now, but I get it. You get what I'm getting at is that these things will move you forward. And so I'm just going to break down nine lessons for you here and allow you to take those, get them in your life, because I know
that they had a huge impact in mine. And a lot of this is stuff that I teach in my courses, on my programs, when I keynote and in my book, building your money machine, and here on the channel. So if you're not part of the channel, I want you to subscribe. So click the subscribe button, vote with your fingers by subscribing to this channel, and we'll keep putting some good stuff in front of you to move you towards financial freedom in a way that will make it easy,
simple, and clear. All right, so let's jump in. All right, let's look at this. What were the money lessons learned? The first one. The first one is this. And I think this is actually one of the most important, one of the most important lessons you can learn. One is this, that money can't be disconnected from life. Here's the thing, is that often we see wealth. We see money as a financial equation, as a formula, and there is a
recipe, and there is a formula for it. But the richness you experience in your life is never going to be found in a bank account. It's going to be found in your life. And the reason we want the wealth and I separate. And I'm very distinct about richness versus wealth, okay? And I know that is contrary to what some other people will say, but I think wealth is a statistic in a bank account. It's the number
of commas, it's the number of zeros. It's however you want to term it. And I see a whole lot of people that have extremely wealthy bank accounts. Extremely. Like, they have homes and they have assets and they have planes and they have boats, and they have all that. They live horribly bankrupt lives.
And so one of the things that I committed to myself when I started teaching, when I started doing the things that I'm doing, when I wrote the book, building a money machine, was that it was never going to be disconnected from life, that this wasn't a financial equation, but rather it was a life equation. And when you do that, you start to make decisions that are more appropriate and more meaningful
to what it is you want. And so when I say this, and you'll see how the book is written and some of the trainings I do, is that the very first thing I want you to do is to define the life you want. Define
what that looks like. Not financially, what that looks like. Because, actually, financially is the last piece of define what it looks like personally, relationally, from a family standpoint, from a health standpoint, from a spirituality standpoint, from a profession standpoint, all of that, because then that will inform the financial peace. Because if I don't have a real clear understanding of what I want my life to look like. Then I don't know what I'm creating.
And this was the struggle that I had. And it wasn't until, you know, I had a. I got into a bike accident. I was. I was mountain biking down a. Down a hill. I was on pavement. I was mountain biking to the gym, and my. I'm coming down a hill and my shoelace gets caught and I clip the brake. I flip the bike, I end up on my head, and I end up out cold. Great for concussion. I wake up, I got no feeling on the right side. I'm stuttering.
And they take me to the hospital. And three days after I get out of the hospital, a dear friend of mine comes over. I'm in a neck brace. I'm still trying to heal. I'm stuttering and still no feeling. And he says, I'm taking you to lunch. Now, this friend had retired at age 37 and had been living his life. And he takes me to lunch. We go to this sandwich shop that we really liked, and he looks at me after we order our food, and he says, how much is enough?
And I'm looking at him like I'm in a neck brace. I'm stuttering. I'm in pain still. I got a headache. And I go, what, dude? I just came down on my head, grateful for concussion, and you want to ask about my life's philosophy? And he says, no, seriously, how much is enough? Because here's what I know. If you don't know where your finish line is, you will never stop running. He said, the finish line might be behind you, the finish line might be ahead of you, but you don't know
how far. You won't even notice when you get there. He says, that means that you'll heal from this accident and you'll get back on the bike, or worse, you'll get in a car, you'll be distracted, you'll be angry, you'll be focused because you're running, running, running, but you don't know where you're running to. And in the end, you'll crash and burn again. And maybe that time you won't be able to recover. And maybe that time you'll sit back
and say, I destroyed everything. And along the way, because you're so bent on acquiring, achieving, and accomplishing that you never take the time to appreciate and to be grateful for what you have or to realize that maybe you already arrived. And he said, until you decide what that finish line looks like, you'll just keep trying to beat the statistics in the bank account. And that's when
it dawned on me that I didn't know what my finish line looked like. I didn't know what success was going to be for me. I wouldn't have known if I had arrived or if I passed it up. And so I took the time, I took the time after that to, to reflect and, and to go through it. And many of the exercises that I teach and that I go through at the very beginning stages when I work with my clients is to define that finish line, to define that life, because it is that that
defines our money journey. If we don't do that, we disconnect it from life. And all we're doing is chasing a bank account. And that bank account never gives us satisfaction, never gives us fulfillment, and we don't know why we feel empty, but from the outside, we look successful. I truly want you to have a rich life, a life that you experience each and every day fully with the big bank account, because the
big bank account without the rich life is a bankrupt life. And so what we do in this process is, and you've seen me do this before, is you start with a vision, and that vision is going to help you define the plan. That plan will determine the strategies that fit the plan. And this is why, you know, there is no in the box. Some people will say, oh, Mel, just tell us what to invest, and just tell us what to do. The fact is that I don't know until I
know your life vision. I don't know until I understand the plan for the life vision. Then we have the strategies, and then those strategies will then define the tactics. This is what you invest in. This are the kinds of things that we do, and then from that, we know the specific actions to take, but that's how we have to build this. And so when I learned that lesson, that completely transformed my financial journey, completely transformed how I was looking at things
and what I was doing in the process. So that's lesson number one. Lesson number two is wealth creation is actually a behavior. Here's what I mean by this is that I was so focused on earning, earning, earning. And don't get me wrong, creating and making money is a very important thing, especially when it comes to building wealth. But it isn't the only thing. Too often, we think that making money is the only thing that matters when it comes to
wealth creation. But I can point you to a lot of people that make a lot of money, but they spend a lot of money, too. That means they got nothing left over. That means that they're not building wealth, but they're living high on the hog each day. At the end of the day, they're broke. Okay? And so the key isn't how much money you make. It's actually what you do with the money. Wealth creation is a behavior. Think about this. 10,000 millionaires were studied by Ramsey
solutions. 79% of them were first generation millionaires. That means eight out of ten were first generation millionaires. That's pretty good odds for us. When I say first generation millionaires, I mean that it wasn't given to them. It wasn't inherited, it wasn't won. It was created in their lifetime. Eight out of 1030, 1%, one third of them, never made much more than $100,000 a year. So it wasn't about making lofty sums of money,
but rather, it was about what they did with the money that mattered. And so, wealth creation is a behavior. In fact, your current money situation, good, bad, ugly, it doesn't matter. Your current money situation is not an issue. It's not a problem. It's a symptom. It's a symptom of the behaviors from your past. It's a symptom of the choices from your past. It's a symptom of the. Of the decisions of the past. Now, I get it. That could be confronting. I get it. You might go, wait a second. You're
blaming me? No, I'm making you responsible, because here's what happens. If we understand and when we understand. It's a behavior. It's a decision. It's a habit. All I got to do is give you the recipe for the right decisions, the right behaviors, and the right habits, and your whole result and your whole financial life transforms. It should be empowering. Okay? And that's what it was for me, is that once I understood that this was about how I behaved, the decisions I made, it opened up the
floodgates for creating wealth in a fast way. Okay? Leads me to number three. Number three is there is a recipe to follow. And so what I mean by this is that once I started to understand it was behaviors, and I understand that it had to do with life, I had to sit back and say, okay, are there certain behaviors? Is there a recipe, a prescription that will assure myself the path to financial freedom? Assure myself a wealthy path to financial freedom? Now, that
challenges us is that. I'm not saying that it's easy, because, frankly, it probably isn't easy. And frankly, depending on your. Your age, stage, or circumstances, you might have a steep hill to climb. I get it. You might have a big builder to boulder to push. I get it. So it's not easy. But just because it's difficult doesn't mean it's impossible. We have to follow the recipe. And there is a recipe. It's one of the things that I talk about in chapter twelve of building your
money machine is the recipe. The wealth priority ladder literally takes you through, takes you through the step by step what to do with your cash. Okay. When you understand the recipe and you follow the recipe, you get what the recipe is building. The most difficult thing is just following it, staying disciplined to get in it. But once I understood that, just follow the recipe. Everything else took care of itself. All right. Number four. Number four is all debt has
two traits. Okay? I am not a believer that all debt is the devil. I am not a believer that all debt is the devil. I know that there's a lot of people out there that say, oh, debt is the devil. Avoid it at all costs. Now don't get me wrong. I would rather you be completely out of debt than be in debt. And part of that has to do with these two traits. I believe that there is productive debt and there is destructive debt. Destructive debt is the things that we want to avoid.
Destructive debt is financing your lifestyle for on things that you can't afford. Okay? So it is buying the stuff, the material stuff. It's the expensive cars, it's the big screen tvs, it's the luxury vacations that you have to finance because you can't pay for them in cash. I'm not saying not to do it. I'm just saying that if we are living beyond our means, we have a lifestyle that we cannot afford to pay for in cash, then. Then we are living beyond our means and we want to avoid
that at all costs. Okay? One of the biggest habits that all millionaires have is they live below their means. No matter how much the income is that they're making, no matter how much they make, they would rather be wealthy than look wealthy. They don't care what the outside looks. Now, I'm. I get it. Okay? So we want to avoid destructive debt. Productive debt, though, is the debt that can actually increase your cash flow, increase your net worth over time. It is debt like a mortgage on a rental
property. Okay? But we still have to be smart about it because these two traits that I'm going to talk about are the things that can actually put us in jeopardy. You can buy a bunch of rental properties with a bunch of debt on it and still put yourself into bankruptcy. In fact, it happened with, with Dave Ramsey. It's happened with a lot of people. If you look back to the 2008 crisis, a lot of people went bankrupt and they were using productive debt, but they were
misusing it when they did that. So here's the two traits. All debt, whether it's productive or destructive, debt costs. It's called interest. And any interest you're paying someone else is compounding erosion of your wealth. Any interest or any interest is paid to you is compounding growth of your wealth. I'd rather get paid myself than paid to someone else. So all debt costs, the second trait is all debt stresses. It stresses your finances and your financial situation because of the cost.
And it stresses your psyche because it is a burden that you know is there. Whether you think that it is stressing you or not, whether you consciously are aware of it, it is there. And you know that there's this burden, this albatross of debt out there. Whether it's student loan debt, whether it's mortgage debt, whether it's credit card debt, it doesn't matter what the debt is. It is stressing us out psychologically. It's impacting the quality of our life. Now, I don't
say this for you to say, well, then I can't use debt. I want you to be smart with the use of debt. We talk about it in my book, in my courses, and the things that I do. I want you to use it smart, understanding that it's going to cost you and it's going to stress you, and it's going to stress you financially. It's going to stress your psychology. Okay. All transparency. I have debt. I have a mortgage on this house. It's the only debt we have. No
car debt, no credit card debt. I mean, we use credit cards, but pay them off every single month. We don't carry a balances. We don't carry debt. I don't like owing anyone anything. And the only reason I have a mortgage on this house is because it's a 2.75% interest rate. Can't get that anywhere. All right, some point we'll pay it off. I can pay it off today, but I don't want to. And we'll take care of it from there. All right, leads me to number five. Let's look at this. I hope that this is
helping, but this is. These are things that really open my eyes up, uh, over the years. So every day is a good day to invest. Okay? Every day is a good day to invest. Here's the. Here's what I mean by this. I get asked, hey, Mel, is now a good time to invest? And my question back to them is, did you invest anything yesterday? If they say no, then my answer is, yes, today's a good day. Did you invest a month ago? No, today's a good day. Have you invested in the past? No, today's a good day.
Meaning this, you cannot win the wealth game sitting in the stands or standing on the sidelines. The only way to win the wealth game is to get on the field and play. And if you aren't playing, you're not going to win. If you're not in the game to build wealth, you will not build wealth. It's just, it's a simple math. It's a simple equation. It just doesn't, people don't realize, and there's no timing the market, okay? What we do is we get in the market and we just stay in the market
over a period of time. If you think about just data wise, statistically, s and P 500, if I took an s and P 500 index fund, the s and P 500, and I looked at it in 20 year chunks, of 20 year chunks, 90% of the time it is at 8% or above you're going to, you're going to make. Now, are there, are there years, one year, two years, couple years that may be lower or losses? Absolutely. But the
market typically goes up eight out of ten years. But if I look in 20 year windows, 90% of the time, you're going to make 8% or more, 59% of the time. In a 20 year window, you'll make 10% or more. So the key is to get in the game with a long term view. The key is to get in the game and stay in the game. Get on the field. All right. I got out of the game. I let fear scare me out of the game. I let someone create fear in me thinking that, oh, the market's going to tank and I
don't want to participate. And I got out of the game. The problem is I was scared to get back in, and I sat on the sidelines for over a decade. I lost a whole decade of investing. But not only did I lose that whole decade of investing, I lost all the decades after it, of growth, of that investing. It cost me millions when I did the math. You got to get on the field first, make the commitment, and we can talk about what to invest in. But if you're not on the field, it doesn't matter what
to invest in. You got to get in the game. Right. That's number five. And this, this is the other thing to think about. And this is number six. Active managers don't win long term. Okay. Active managers don't win long term. They just don't. Okay, here's, here's what I mean by this. Historically, we didn't have index funds. We didn't have EtF's. They were, they were some sort of a modern intervention of Jack Bogle and
the founder of Vanguard. But the idea was that you would get these active managers that would create these mutual funds, and they would decide what they're going to invest in, and they would actively manage the fund for you. And there was all these costs, and there was all these fees and everything attached to it, but it was the only way we could invest in a broad based type of fund. But data shows,
historical data, it's called. The Spiva study has been done, where they studied the, the returns on the long term basis of actively managed funds. In other words, you're paying fees for someone to decide what to invest in and do that over a period of time. And it was shown that over a five year. Now, can they beat the market? Can they beat the S and P 500? Can they beat the Nasdaq? Yes, in the short term, they can for one year, maybe two years, maybe three years, but long term,
they don't. The study showed that actively managed funds over a five year period, 62% of them did not beat the market over five years. And when you extend that to ten years, uh, 15 years, you go longer at 15 years. 82% of them could not beat the market. Y'all, if we're investing long term, there is no reason to try and use active managed funds with a whole heap of expenses and fees to think that they can beat the market, because the data has
shown that they cannot beat the market long term. They may get it in one year or two years, but they're not going to get it long term. So what do we do? And this is beautiful news for us, because it makes it much simpler for us to do the things we do. I created a special course called investing simplified. It makes it really easy, because instead of trying to figure out what stocks to buy, you buy the market. You buy the index funds, you buy the ETF's low cost, low fees, you keep more
money in your pocket, you do it long term. On average, you're going to get ten to 11%. Over the long term. If you do it right, you can get more. But point being is that you don't have to take inordinate amount of risk to get in the game and do it properly. All right, that leads me to number seven. Number seven. The probability of winning goes up with time. The probability of winning goes up with time. Here's what I mean, and this is why it's so important for you to.
To look at things through a long term lens. They did a study, the S and P. If you invest in the S and P 500, and you invested for one year, then 73% of the time. Remember, I said eight out of ten years, the market's up, so about 73% here. It showed that the market would be up, so 73% of the time, in a one year window, there's a 73% probability of success that you're up. Extend that five years. So now I'm investing for five years in the S and P 500. That 73% goes to 88%, almost 90%,
but now extended another five years. When you invested ten years or more, your probability of success goes to 94%. Y'all, I'm looking at this thing. Hold on a second. If all I did was invest in the market, avoid the active managers and all the expenses and fees, and I'd look at it for a long term perspective, and I have a 94%, 80% to 94% probability of success. I'm in. I'm in. All right, last two, last two. Oh, and these are really important. All right, number eight, the
Joneses are broke. What do I mean by this? Here's what I mean by this. And this is more important, I think, in today's world, than it has ever been. And this is why it's so important for you to start with a plan. Figure out what you want in your life first. Because what happens is that we fall prey to temptation, we fall prey to marketing, we fall prey to looking at the Joneses, the neighbors. Okay? The Josephs was a yemenite, a comic strip, and it was this comparison to the neighbors.
So you see someone that buys a Denali or a nice new car, and you go, I gotta get a new car. But you see someone that's traveling a certain way, and you gotta travel a certain way, you start to make your financial decisions. You're buying decisions based upon what you see external to you versus making your buying decisions based on the desired
life you want. See, the problem is that most of the people we see out there that are parading things on social media and on TikTok and Instagram and their perfect facades of their life, these wonderful things that they doing, and you don't know the truth behind it. You don't know how much debt they're in. You don't know if it's all financed. Hell, I know that someone out there rents a fuselage. He has a fuselage of a private jethe. It doesn't
lead the ground. And there's people out there that are renting it from him to get video and pictures of them on the jet, coming off the jet as if it just landed, going on the jet as if they're going to take off. Like that's their lifestyle, y'all. And then you go and feel like that is what you want, that's what you desire, and that's what you should have. It's a mistake. Your comparison set shouldn't be other people. Your comparison set should be the plan for your life.
Your comparison set should be, how good were you yesterday? And am I better today? But when we allow the external world that may be a facade or fake to define how we make some decisions, we start to make some really bad financial decisions. When I finally started to just say, this is the life I'm going to live, and someone might live a more lavish lifestyle, more power to them. Some might live a lifestyle less than mine, more power to them as long as they're happy. Live your life, not someone
else's. And the other thing is that it leads to unhappiness when you're constantly comparing to what other people have and go, I don't have that. You spend most of your time looking at the things you lack rather than having gratitude for the things you have. The Joneses are broken. Don't go on the journey with them. Live your life. Stay in your lane. That's where success is. Make the choices that you want based upon the plan you created. That was based upon the vision you have.
All right. Leads me to number nine. All right. And that is this. If you don't know your numbers, you have no idea what your direction is going. So you don't know your numbers, you don't know your direction. That means that you need to be tracking things. You need to know where you are today. You need to know where you are a month from now, a quarter from now, a year from now. You need to know your numbers. Not, and I get it at the beginning, like, I just got a message from someone saying,
it looks like my net worth is negative. That's okay. Mine was negative at 1.2. And if you don't like the numbers, it's not for insult. It's not to judge you. It's not to beat you up, it's to inform you to now say, all right, what do I have to do? What's the next step? But if I never look at the numbers, I don't know if I'm close to my goal or miles and miles away from it. You have to measure the numbers. Now, we have scorecards that we use. We
have cheat sheets that we use. So on one sheet, I know where I am and what I'm doing and how it looks. You need to have a process, a system, and a way to track your numbers. It's not a lot of numbers, and you need to have a rhythm to review it. Some of it's going to be weekly, some of it's going to be monthly. Some of it's going to be quarterly, and some of it's going to be annually. It actually isn't a lot of work. What's a lot of work is the stress
of not knowing. All right, so those are the nine. The nine lessons that I learned. And once I learned them, I was on a different trajectory when it came to wealth, when it came to building wealth, getting me on the path to financial freedom. I hope that you will take this to heart, and you will use this as a checklist in your financial life, in your life to sit back and say, I need to get these lessons integrated into my life.
These nine things will change your world. And then when you take them and you couple them with some of the other teachings, the processes, the frameworks, and the things that I do in some of my trainings on this channel, on my speaking, in my book, building your money machine, it will bring it to life in your world. And I promise you, over time, your financial world will change. I believe that financial freedom is your birthright. We
just got to give you the recipe to claim it. So stay with me because I'm trying to give you the recipe. All right? I got no investments to sell. I got no insurance to sell. I just want to sell you on your dreams. I think you're entitled to it. Let's go claim it. All right? I'm on a crusade to light the path to financial freedom for a million families. And I want one of those families to be you. And then I want to recruit you to shine the
light for others. Right. All right. Until I get a chance to see you in another episode or on my journey out there speaking or just on the road. Right? All, as always, strive to live a life 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 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.