Let’s face it; millionaires do money differently than others. And today, I’m going to share with you seven of the best insights you need in your money plan to achieve your financial goals. And the best news of all is they’re not that difficult. You’re going to be amazed at how easy they are.
Transcript: Millionaires’ Money
Hi, my name is Annette Bau (bah oo), your host of the Wealth Inside and Out® Podcast. I’m a Certified Financial Planner™ and founder of The Millionaire Insider®.
For over 30 years, I have been advising and researching the top 1% of Millionaires.
I am passionately obsessed with money, mindset, and the intersection of self-worth and net worth and how the two connect and allow us to live fulfilled and wealthy lives on our terms.
From Humble Beginnings…
Growing up in the Midwest, I had a dream. I began investing $25 a month 35 years ago, and today have a multimillion-dollar net worth.
And, I teach the tried-and-true principles that only someone with over three decades of experience advising millionaires would know. This podcast is different – it’s about much more than money. We talk about mindset, success, money blocks, worth barometer, and all aspects of money and topics from practical manifestation, along with real-world how-to, and everything in between, with the goal of making your journey easier and more fun.
Think of this as coffee, actually, matcha tea, learning real-world, common sense, money, and life advice from a BFF that you can start applying today. If you want to create a financially free life you love, you are in the right place, my friend.
This is the Wealth Inside and Out® Podcast.
If you are ready to confirm your finances are in order, check out The Wealth Academy at https://themillionairinsider.com/twa for The Wealth Academy.
What you will learn
Free 20 Millionaire Insider Template Resource
If you want one of the best resources on millionaires, you can access our Millionaire Secrets guide here: 20 Millionaire Secrets. That’s 20 M I S.
This resource contains some of the most valuable, insightful resources available on millionaires, how they think and what they do. You can access this free guide, where I share 20 of the best Millionaire Insider secrets I’ve learned over the last 35 years advising and researching wealthy clients at https://themillionaireinsider.com/20mis.
The insight you’re going to learn in this resource is priceless, and it’s unavailable anywhere else because very few people have spent 35 years entrenched in the lives of millionaires. Again, you can access it for free at https://themillionaireinsider.com/20mis. You’re going to love this resource.
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Let’s dive in.
Millionaires’ Money – 7 Insights on How They Do Money Differently.
1. They manage their emotions.
When you make a money decision, it is easy to get emotional and end up making a really bad choice. One thing I found fascinating about millionaires is that most don’t. I always found it intriguing how well they manage their emotions.
There are two camps of people, and there are two brains.
There’s the reactive limbic brain that comes from our primal (referred to as a toddler or child brain). And it does what it wants to do.
The people in this group are more emotional and their out of control, primal brain is calling the shots. They don’t know how to push the pause button. If you look at their lives and finances, it’s sporadic; they have money, then they don’t. They often have volatile relationships, and their life is like a drama zone.
It’s exhaustive to watch, let alone to live. The other group is steadier and more stable. They make decisions from their prefrontal cortex. The choices they make are rational and their brain is more developed.
The second group which operates from their prefrontal cortex can pause and reassess, reevaluate, and redirect. They act out of intention, focus, and clarity as compared to those operating from their primal brain.
Common emotions when decisions are made from the primal brain, include fear, worry, and anxiety. The primal brain is our 2 million-year-old brain. It’s referred to as the “fight or flight” and is there to protect us.
Think of a child who wants a piece of candy or a toy. They are going to do whatever they need to do to get it. The primal brain is addicted to dopamine and cortisol, and it wants what it wants now, and it reacts accordingly if it doesn’t get it.
Some people do not have a developed prefrontal cortex often because they’ve gone through so much trauma in their life. If that is you, you should consider getting professional help. This will help you develop the rational part of your brain so you create your plan and strategy, and then implement it. It will also help you take the action you need to achieve your goal versus doing what you feel like doing in the minute.
To achieve anything, we’ve got to align both parts of our brains – the prefrontal cortex and the primal brain.
If you want to effectively manage your emotion, you need to elevate your Worth Barometer. You can go to https://themillionaireinsider.com/3 to access that episode. It will teach you everything you need to know about the Worth Barometer. A healthy Worth Barometer is critical to managing your emotions.
2. They have a plan.
And they prepare for the unexpected. It is interesting that when something happens to a fulfilled millionaire, they keep going. First, they assess it and then they make adjustments. And they continue on their course and don’t give up.
Their counterparts have something unexpected happen and they get derailed. The next thing you know, they’ve lost focus and are not doing what they’re supposed to do.
If you find that to be you, try this. Get comfortable being in a state where you feel uncomfortable and notice that you are okay.
After you have experienced the discomfort and live through it (Your primal brain wants you to think you won’t survive and reacts emotionally – don’t get drawn in.). Remind yourself that you have a plan, and you know what you need to do to achieve your goal.
If your plan isn’t working, you can either reevaluate your plan or reevaluate the actions you are taking to determine the problem. It is as simple as that.
3. They first focus on their main income stream.
One common trait I discovered was that when they were focused on building their primary business, they almost always have all their eggs in that basket that they control. Once they accumulated a certain amount of money, then they diversify their assets.
It probably is a better idea to have more diversification of assets.
Most had retirement plans and even some personal investments, but their primary focus is on what they are building. The vast majority of those I research and advise, own their own company and are entrepreneurs.
They also have a winning formula. We dove into the Financial Freedom Formula in episode one at https://themillionaireinsider.com/1.
The formula includes a foundation (inner game), strategy (game plan), and execution (outer game). I’ll link to that in the show notes as that’s a good episode.
The bottom line is they have a plan and a contingency strategy that allows them to stay on course whether there is a pebble in front of them or a boulder.
In addition to focusing on their main income streams, they start with one course. I learned this from one millionaire: “FOCUS” follow one course until successful.
They focus and do it well. Once they have their main income stream flowing, then they diversify or expand. Once they amass their desired amount of assets, they diversify their investments often into residual and passive income.
I’m not giving you any investment recommendations here and I think it is important to diversify your assets. That said, that’s not what I saw millionaires do.
You’ve got to consult with your team of advisors and see what makes sense for you. The problem with having all your eggs in one basket is it’s either going to do well or terribly. And if it does well, great, if it doesn’t, then you’re not going to have money. So be aware of that.
4. They know their numbers.
You’ve heard me say this before, they know their financial numbers including their P&L and balance sheet. Your P&L is your profit and loss statement. It shows your cash flow, what’s coming in, what’s going out.
Your balance sheet includes your assets less your liabilities. Examples of assets include:
- Money in cash
- Cash equivalents including money markets
- Retirement accounts
- Mutual funds
- Hedge fund accounts
- Real estate investment accounts
- Third-party managed accounts, stock exchange funds, and holding companies like Berkshire Hathaway
They always have a pulse on their financial numbers. They monitor their monthly, quarterly, semi-annual, and annual P&L.
And they do a balance sheet typically annually and many know their daily numbers.
I recommend you track your daily income numbers. Once you set your goal, especially if you have a business, track your daily numbers.
I know what I need to do to hit daily and really what I need to hit every month. And since I’ve tracked that, there’s only been one month since I’ve been tracking that I haven’t hit my monthly goal in four or five years. Very powerful. Very important.
5. They forego income for the accumulation of wealth.
Their focus is on the end game and are more focused on accumulating money than earning it. They are in the driver’s seat of their life as compared to generating income where you’re more at the mercy of others.
If you want to hear the advice I got from a centimillionaire, that’s somebody that has a hundred-million-dollar net worth, I encourage you to go back and listen to it here: https://themillionaireinsider.com/13.
I share how my focus was on income and how he redirected me to focus on the accumulation of wealth. Because he had so much money, over a hundred million net worth, and a big income, I knew he knew what he was talking about and thank goodness I listened to him.
His advice was priceless. I also share three other insights I learned from centimillionaires, some good, some not so good, but they shaped my life. And they will impact your life too if you listen and apply them.
6. They hire advisors.
I used to think, they just hire advisors because all my clients obviously hired advisors. But what I found was that the ones that I continued to see that were fulfilled and wealthy, all had a team of advisors. And the ones that I saw that had money then didn’t, had an advisor then didn’t.
They also followed through. They had experts that supported them, and they were good at creating a plan and sticking with it.
One year I was the spokesperson for the financial planning association. And so, I was on TV and the radio. It was interesting.
Some of the people would meet with me because one of the partners made them meet with me. The entire conversation with the partner that didn’t want to be there would just be trying to convince me that everything was okay.
If you have questions or need support, click here:
How they choose advisors
This is one thing that I did not see, and I still do not see it to this day. People who have money and keep money and have an amazing life want to know what they need to do.
They’re not just looking to try to appease their partner and continue doing what they are doing if it’s not going to get them where they want to go. People who have money and retain their wealth, want different opinions. This is fascinating to me. Some people only want information that supports their beliefs.
And I’ve always been like, I want to know, I love hearing different opinions. Now, believe me, I hear some things and I’m like, okay, I don’t think that’s backed up by any fact. I want it backed up by fact, not by just what somebody wants to tell you.
But one of the things I see with people who are wealthy and have a great life is they don’t want advisors who tell them what they want to believe. They see value in the experience of somebody that doesn’t agree with everything they believe.
They also want an advisor that has already been there and done it as compared to someone who must relearn everything. In addition, they don’t want to reinvent the wheel, which I think is so important for all of us. A lot of them hire other professionals to pay attention to the details.
If you need support creating a P&L, click here:
It’s important that you get somebody that can pay attention to the details but that you don’t abdicate it.
For my book, If Only I Had Known, I conducted research with over 200 women and their advisors. One of the advisors I interviewed, shared a mindboggling story.
This family had an $85 million net worth. Her husband died. Their CPA of over 20 years took over the management of her affairs.
Well, guess what? After the husband died and no one was overseeing the CPA, he became a silent partner. She got a call from her alma mater who shared that her $2 million check had bounced. That’s when she found out that he had been stealing money from her.
So you can delegate, just don’t abdicate. Make sure you have a check and balance.
I prefer an independent CPA, attorney, and financial advisor. I realize a lot of people love family offices. What I don’t love about that model is that you don’t have the independence of each party reviewing it. It can be a problem when you don’t have a check and balance.
The other major takeaway is that people who sustain their wealth don’t fall into the KKDK, meaning what they know; they know that they don’t know. One of the biggest challenges some people have is a belief that because I’ve been successful in this area, therefore I know how to do a financial plan or I know how to do investment planning.
Delegate but don’t abdicate
Fulfilled and wealthy millionaires who retain these attributes don’t fall into that. Another important takeaway is to not abdicate your responsibilities. I want to stress this.
Another couple whose daughter I interviewed shared a story about her parents. They had like $10 million. Their goal was to leave each of their five children $1 million. At the time, estate taxes were about 50%, so they were going to be able to do that.
They got a call from the Lakers coach asking, “Why are you selling your beachfront property?” They Replied, “We are not selling it.” The coaches responded, “I’m buying it.”
They found out that their advisor had been stealing from them. So just because you hire somebody does not mean you go to sleep at the wheel. You’ve got to still pay attention. I cannot stress to you how important that is.
7. They consistently execute.
And then the next thing is execution. If you’re like me, you love planning, you love visioning, you love dreaming, but we’ve also got to take the time to create the plan and then execute it.
And well, one of the things that high net worth individuals do money so differently is that they execute. And they execute whether they feel like it or not. They are not governed by how they feel in the moment.
They’re focused on the feeling they want when they achieve their goal. Big difference. So, you must know what you want to feel when you achieve your goal. All people set goals because of the belief of how they will feel when they achieve their objective.
If you can start working on feeling that way now, then when we achieve it, it’s a lot better. The other issue is not allowing that primal brain to dictate your actions by determining your action based on how you feel in the moment. If you’re sick, there’s an emergency, or you have a preplanned vacation, that’s fine, but I’m talking about just not feeling like it.
If you need help with your mindset, start here:
Like today I felt really tired, and I don’t know why because I got adequate sleep last night. Granted it is a little hot here in Phoenix.
I’m down for a few days to do recordings and I had some meetings I needed to be in my office for and I was just like, oh, I feel like I need to take a nap. And I thought, “Nope, I’ve got to get down there and I’ve got to do my recordings.” I like to be six weeks in advance and I’m not quite there.
Once I got here, I got situated and I got into it, and then I thought, oh, I love this. I’m so into it and this is my give-back work. I mean, this is something that every day I wake up and I’m like, okay, this is something in my life. Do I really want to do it?
And I really do because I know by giving you this insight, it’s going to help so many of you on your journey. And if even one person creates a financially free life they love and creates a fulfilled and wealthy life, I have achieved my objective. So that’s why I’m doing it. And actually, my goal is 10 million women, but even one makes it worth it.
Recap Millionaires’ Money
1. They manage their emotions, and they spend time making sure that they can push the pause button when their primal brain kicks. They
take time to allow their prefrontal cortex to bring in the rational brain and the logical brain. And not that emotional child brain.
2. Fulfilled millionaires have a plan, save money, and they prepare for the unexpected.
3. They begin with their main income source and initially put money back into their company.
4. Most millionaires know their numbers. You’ve heard me talk about this before, but it’s so important how many people don’t know their
numbers. It’s embarrassing for me to say for years I kind of knew my numbers, but I didn’t know them like I know them now.
I monitor my income numbers daily. They forego income over the accumulation of wealth. As a reminder, millionaires on average make less than a hundred thousand dollars a year.
5. They forgo income over the accumulation of wealth. Because they’re more focused on accumulating wealth than earning income.
6. They hire a great team of advisors. And want advisors with the confidence to provide different solutions.
7. They execute regardless of how they feel in the moment.
So, I want to thank you so much for joining me today.
Free Financial Freedom Formula Template Resource
Now before you get back to your day, I want you to set time in your calendar to start creating your financial freedom plan. If you need support on that, you can go to Financial Freedom Formula and download the guide.
This resource will guide you step by step through what you need to do to get started. Again, the link is https://themillionaireinsider.com/ffg.
Even if you’re not where you want to be financially, or you don’t know but want to know things are taken care of, I encourage you to download this free guide. Go to https://themillionaireinsider.com/ffg and download the Financial Freedom Guide.
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Thank you so much for joining me for The 9 Questions Highly Successful People Ask.
I’m Annette Bau (Bah oo), your host.
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Bye for now.