[FINANCIAL ADVISOR REVEALS] How To Know You Are On Track To Be Wealthy

In this episode, Mel Abraham shares key indicators for wealth. Drawing on his financial advisory and CPA expertise, Mel dissects critical wealth-building factors. Learn prioritizing investments, understanding wealth drivers, and prioritizing liquidity. Avoid destructive debt and track financial progress. Gain insights into wealthy mindset and strategies for financial liberation. 

IN TODAY’S EPISODE, I DISCUSS: 

- The significance of internal evaluation over external comparisons

- Understanding and leveraging the four drivers of wealth

- The importance of liquidity in achieving financial peace of mind

RECOMMENDED EPISODES FOR YOU 

If you like this episode, you'll love these ones:

• My Greatest Money Lesson Came from a 6-Year Old
• Should I Rent or Buy a Home
• What to Do If You Think You’re Gonna Get Laid Off

RECOMMENDED VIDEOS FOR YOU 

If you like this video, you'll love these ones:

• My Greatest Money Lesson Came from a 6-Year Old: https://youtu.be/BV1_GM9Ku_M 
• Should I Rent or Buy a Home: https://youtu.be/Dy7NyPqrCHE 
• What to Do If You Think You’re Gonna Get Laid Off: https://youtu.be/QYOW2nUbDr8 

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The key to building the life you desire and deserve is to build your Money Machine—a powerful system designed to generate income that’s no longer tied to your work or efforts. 

This step-by-step guide goes beyond the general idea of personal finance and wealth creation and reveals the holistic approach to transforming your relationship with money to allow you to enjoy financial freedom and peace of mind.

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Transcript

2:02

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 affluent entrepreneur. All right, so you're working, you're earning, you're making money. You got your job, you got your business. Everything's going together. But the question you got to ask. Yourself is, on the path to wealthy, am I going to be a wealthy person? Well, there's some things, there's some milestones. There'S some things that you might be able to look at that give you. An indication that you're on the path to becoming wealthy. So here's what I know. I have spent the last three plus decades as a financial advisor, as a CPA, as someone that's valued businesses, bought and sold businesses, helping people build their wealth. And all along the way, I've seen what works. I've seen what doesn't work, and I've seen patterns. I've seen patterns about what they do and what the wealthy truly do. So in this episode, I want to have a chance to walk through a couple things that might give you an indication that you're on the right path. And on the right trajectory to wealth. All right, so the first thing is this. The first element is this is comparing. Yourself to others, okay? Those that are wealthy, they actually don't. Compare themselves to others. They actually compare themselves selves. Because when you compare them yourself to others, one of the challenges is that it's a zero sum game. It's like, with that mentality, it's like. Wanting to take from them. So you have it for you. You know, the question isn't about comparing yourself to others, but are you using. The comparison to make your decisions? Marketers know this. Why do you think that the advertisements. That they are putting in front of you with fast cars, you know, attractive ladies, good looking men, fun, luxury, all these things, why do they put them in there? Because they know that it sways our buying decisions. And all of a sudden, you find yourself buying something that you weren't really thinking of buying. And all of a sudden, you go, how did I get this look? I bought a$900 coffee maker because I was swiping on my phone. I'm going, this is cool. I want it. I can, I can create my coffee. In an app, you know, and just. And then it's there waiting for me. But wait a second. The challenge is that one is that. When you start to use the comparison to make your buying decisions, you start to spend money that you didn't intend to spend. And one of the things that I know with, with wealthy people is they're very intentional with their money. Remember what I just said? Listen to what I said. I said they're intentional with their money. I didn't say that they were cheap. They weren't, they weren't someone that are hoarders or anything like that. Because I know a lot of wealthy people now. I do know some that are misers. Okay, be straight. But majority of the people that I know that have wealth are the, are some of the most generous souls, the generous people I know, because they realize, they understand what money is for. It is a tool. Is a tool to allow them to live the life that they want, but. Also to make the difference. They want to be able to get. Behind causes, to be. Get able to get behind missions and movements, to be able to take care. Of the people they love. And so when they make their buying decisions, when they make their choices, they make their choices from a place of. Value, in a place of values based. Upon what is in alignment with them. And not through comparison to others. So that's the first thing, is that. They make their own decisions. Okay? So if you're making your own decisions and you're not allowing the influences from outsiders to inform your buying decisions, to. Influence the buying decisions, you just might. Be on the pathway to wealth. Right. That leads me to something that's similar, something that's related. And what is what I would call. Your focus on evaluation? Here's what I mean by this. Are you internally focused? Are you externally, do you seek the. External validation of others based upon what you wear, what you drive, where you live, the things you have, all the. Toys, all that stuff to create worth in you? Okay, no judgment, but I gotta tell you, that's a fleeting self worth. Versus do you find value in yourself. For who you are and how you show up based upon who you are. And how you're congruently being in alignment. With the values, the things that are important to you? What I found is that most people that are really building wealth. And we'll do another episode on quiet millionaires. Most of them, they're not ostentatious, they're. Not parading magnificent castles and vehicles and boats and trains and all that stuff. I don't know if people own trains. But they're not parading that for the purposes of allowing people to see it. And lord knows, let's not get involved. Let's not even talk about what goes on on social media, because half the stuff that I see on social media is rented in debt and is a facade. So if you're looking at social media as an example of how they're parading, it doesn't work. So the question is, are you finding. The focus of your evaluation and worth. From an internal metric or an external? External means that then you're gonna. You're gonna always want to one up someone else. You're always gonna seek the attention, because why else are we doing now, granted. Look, I drive a nice car. I live in a nice hope. I live in a. In a beautiful, beautiful community. And look, let's face it, it's not cheap. But the reason we live here, the reason we do it, is not because. I want other people to turn their heads and look at me. I actually don't want people to look at me. We live a quiet life where we're at. And that's the way I like it. Because the reasons that we chose to. Live where we're at is because of. What it does for my wife and I. We get a chance to live our life out, to live our lifestyle out in a way that is fulfilling to. Us, to create the life that we want. And that's what I want for you, is to be able to look at it and say, what is really important. To me, what gives me value, not. From the external world, because that's fleeting internally for you. So that's the second. The second piece. The third is that the wealthy understand the four drivers of wealth, okay? And the question is, do you? When you are abiding by and you understand the four drivers of wealth, then you may just be on the path to becoming wealthy. What are the four drivers of wealth? Well, the first is this. It's your earnings. It's your income. Okay? A challenge is, when we stop there. We think that it's just that, but it's not. See, the income is just the catalyst. The income is just the fuel. The income is just what we start with. The question is, what are we doing with it? The wealthy understand that I have the. Income, and I'm going to take that. And I'm going to prioritize my investing. I'm going to, how much of that income am I going to use to build my financial future. And so what they do is, yes, they want to push the income up as much as possible, because the bigger the shovel is, the faster we get. Ourselves to financial freedom. But at the same time, they look at their investing or savings rate. What is the percentage of that income that am I setting aside so it will work harder for me than I. Did for it down the road? How much am I investing as a. Percentage of my income, as a percentage of my earnings? And what they're doing is they're trying to push that percentage up as high as possible. In our world wealth, the wealth priority. Ladder, we try to push you to 20%, to 25%, sometimes even 30%. Depending on your. Your current circumstances. It may be required if you truly want to be there. So, income first or earnings, and how. Much of a percentage of savings rate or investing rate are you putting? That's number two. Number three is time. Time. Now, here's the thing with time, y'all. You don't control time. The only part about time you control. Is now the present moment. What are you doing this present moment? Here's the thing. Time is the greatest wealth lever out there. Watch what happens. I just did a live, and I. Had a young kid on there, and he said, young? He's 18 years old. He just turned 18. And he asked me a question, and this is a wonderful question, he says, because I talked to him previously, and he said, what should I do? I'm earning money. Where should I put it? And I told him, open up a Roth Ira. You're earning money. Open up Roth Ira. Max it out now. Roth Ira, for those that don't know, is a type of retirement account where. You don't take a tax deduction today, okay? You put the money in, and it grows 100% tax free. And when you take the money out. At retirement age 59 and a half. Or beyond, you pay zero, zero, zilch, nada, no taxes on it. Okay? So he's on the call with me. Again today, and he says, I funded the Roth IRA. Should I invest it, lump sum, or should I do it in small chunks. Like every quarter until it's fully invested? And I said, so? I said, so you said you funded the IRA. How much did you fund it with? And he said, well, I funded all. Of last year's contribution, which is$6,500. And I already funded this year's contribution, which is $7,000. I said, hold on a second. You're 18 years old, and you funded it with$13,500. And he said, yeah. Oh, my God. Think about the time here for a. Moment, because 13,500 invested at 20 years. Old is going to increase in value almost 90 times. He's doing it at 18. That means that this$13,000 he invested, if he did nothing else but left it in there and allowed it to grow at the average rates in the s and P 500 in that Roth. IRA, he's going to have more than. He'S going to have a million, too. And they never put another dime in because time is doing all the heavy lifting. And because it's a Roth, he could. Take it all out tax free time. The wealthy understand time. So the question really is, in your. Case, how much are you putting time on your side? In other words, pushing the investing percentage up and making sure that you're investing. Now, because it's the only thing you can control. The present moment. The present moment. And the fourth aspect of wealth creation is the returns you get on the investment. Here's the beautiful thing. If you start early, you don't have. To push the returns up. He doesn't need this 18 year old kid. He doesn't need huge returns to build wealth because he's got time on his side. The next indicator is this, is that the wealthy avoid using destructive debt or. Using debt to finance consumables. Here's what I mean by that. They do not finance a lifestyle today that they can't afford to pay in cash. Okay? Now, I'm not talking about a mortgage. I'm not talking about that. I'm talking about the big screen tvs, the luxury items, the clothing and the lavish trips that maybe you cannot afford. See, the wealthy will sit back and. Say, we don't finance those things because it's a consumable. And what I mean by consumable is. That once you consume it, it's done. There's nothing left on it. They'll use debt, productive debt, to finance. Things that will generate cash flow or. Build their net worth, but they will not finance things that destroy it or our consumables. Now, so the exception might be a. Car that you might invest, might use debt for, but we don't use the crazy seven year financing. You go no more than three years for Max. But it's a depreciating asset. It's a consumable. There's people out there on the Internet and tick tock trying to tell me, tell me that if you buy expensive cars, it's an, it's a. It's a transfer of wealth is the words that they use. Transfer of wealth. Yeah, it is a transfer of wealth. A transfer from your pocket to the dealership's pocket. Buying a vehicle that is not a. Collectible or something like that. But it is for everyday use. That's consumable. Okay. We don't finance for long term on. Something like that because you're going to lose in the long term. Wealthy people understand that. So they don't use debt to finance consumables. They don't. They don't do that because they see. That as destructive debt. Okay? Number five, they also know that liquidity is the key to their peace of mind. So they have enough in what other. People will call an emergency fund. We happen to call it a peace. Of mind fund, is that they have. Enough in there to make sure that. If something happens, life happens, something happens. They don't have to sell assets. They don't have to drain things. They don't have to start dismantling their money machine, if you will, to just survive. So they have enough liquidity to carry. Themselves through downturns and depending on your time, your age and stage of life. Like, I'm. I'm going to be 63. We have a fair amount of money. In liquid funds because we don't have a huge Runway. I'm not 23. I act twelve according to my life. But that's the thing that you want. To make sure you do, is they. Know that they have liquidity. Liquidity allows them to do a couple of things. One, they have peace of mind. Two, they can take care of unexpected things. Three, they also have the liquidity to. Take care of opportunities or take advantage. Of opportunities that might come up. Four, they know that if there's an economic downturn, they're okay. And they can sustain themselves and come. Out the other side actually better than, than most. Liquidity is your friend. And now, in today's times, where you can get five, five and a half. Percent of high yield cash account, it's not horrible to do that. So they keep liquidity in their world. So they have the ability to take care of opportunities and take care of unplanned situations without having to erode or dismantle the money machine. Okay? And then the other thing is that they look at how they're doing, and they track their numbers on a regular basis. But they track what happened from year to year versus from peer to peer. Let me say that again. They track what has happened from year to year for them instead of peer to peer. In other words, they don't care how. Good someone else is doing. I mean, they celebrate it, but they're. Not trying to make the decision or things come into play based upon what, how someone else has done. They are going to look at things. They're going to look@investable.net worth and net worth on a regular basis. They're going to simply look at how they did compared to last year and the years be what's the trend? Not what their friends trend is, not what the neighbors trend is, not what their parents trend is, not what any. Of this what is theirs. So they stay in their lane. So hopefully this makes sense. All right, those are the six things. That can give you an indication that. You'Re on the path to becoming wealthy. Okay, let's go through it again. One is that you're not comparing yourself to others to make your decisions. Number two is that your sense of evaluation is an internal sense of evaluation versus an external sense of evaluation. Number three is you understand the four. Wealth drivers of the wealth driver matrix. Number five is you avoid destructive debt for consumables. Number five is that you have enough. Liquidity to have peace of mind. And number six, tracking your numbers regular basis. And if you are doing those things. You are probably well on the path. To becoming wealthy because those are some of the things that the wealthy people are doing. I hope that you found this helpful. I hope you found it a value. Let me know what you think. Let me know if you have any questions. And I can't wait to see you. In another video, another episode or on the road until we get a chance to chat. As I always say, always, always strive to live a life out of you. 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 group and I'll see you there.