I remember when one million dollars actually meant that you were rich. Those days are numbered.
In fact, unless you are making close to a half million dollars a year, you still really aren’t free in most cases.
In today’s episode, I am digging into what makes us financially free and how you can do it in our inflated economy.
Increasing your cashflow is the way to build wealth and the best way to do it is with passive income.
See. how much passive income you could make by taking our calculator: https://bit.ly/49hulkK
Link to survey from show: https://www.consumerfinance.gov/data-research/financial-well-being-survey-data/
Listen on Apple Podcast: CLICK HERE!
Watch on YouTube: CLICK HERE!
Speaker 1 (00:00):
Hello, my fellow Ripples. This is Chris Miles, your cashflow expert and anti financial advisor.
Speaker 2 (00:07):
Chris Miles was able to retire twice by the time he was 39 years old, but he’s not content to just enjoy his own financial freedom and peace of mind. Chris wants you to have your own ripple effect so you can live free today. He’s not the financial advisor you expected. He’s the anti financianal advisor you deserve. He’s jumping behind the mic right now, ready to make waves. Here’s Chris Miles
Speaker 1 (00:37):
Welcome shots for you. Those that work so hard for your money and you’re now ready for your money to start working harder for you today. You want that freedom and cashflow now, not 30 or four years from now, but you want it today so that you can live that life that you love doing what you love. But most importantly, guys, it’s not just by getting rich because as you get more prosperous and wealthy, you create a rich life and in doing so can bless the lives of those around you. Thank you so much for tuning in today, allowing me to create a ripple effect in your life as well. Again, thank you so much for binging and sharing and making this possible because without you, honestly guys, we couldn’t do this ripple effect without you. So thank you so much today. As a reminder, if you haven’t done so already, if you want to know how you can actually create passive income now and maybe you’ve got some money to invest, you’re wondering how much money you could actually create with it, go to our website, money ripples.com.
There’s a passive income calculator you can check out there today to see how much passive income you could create in the next 12 months. And yes, guess what? It comes from my brain. It’s actually my calculation. So if you’re ever wondering, how would Chris look at my money? This is it. So go try that calculator out right now. Okay guys, so I want to ask this question is what does it mean to be wealthy? What does it really mean to be wealthy? What defines that? Is it a certain amount of money? Is it something else? Is it something deeper? Is it net worth? Is it income? How do you measure it? And to be honest, I’ve kind of been confused about this as well to some level because you have to kind of look at statistics or look at what people pull to see what they really feel is what’s considered wealthy.
And of course, as time goes on, that number creeps up on you, doesn’t it, because of inflation and things like that. But I want to take this a little bit different, and so I’m going to actually not only just tell you what is considered wealthy and whether you or not you fit in that category currently, but more importantly, what does it take to become wealthy regardless of where you are right now? Okay, so I’m going to talk about a poll. This actually came from USA today. This is from about four months back, October, 2023. And so yes, it’s a little bit dated, but not that much. And so they were asking it, what’s that real determination of who’s considered wealthy in America specifically? I’m saying wealthy in America because I know there’s several of you that might see our podcast or YouTube, our YouTube videos, and you might look at it and say, well, come on, you Americans are so spoiled.
I can live on 2000 a month and live like a king or a queen. I get it. Okay, America, it’s not the same. The amount of costs that you have to even live here is higher than in many places around the world. We’ve made it that way, and it doesn’t help that the government keeps printing more money, does it? So let’s just talk about what that really means right now. Okay? So number one is a million dollars, right? I mean, many times people say, well, if you’re going to become a millionaire, you should have a million dollars. Is that a million dollars net worth? Is that a million dollars a year income? Is that even just a million in assets? For one survey that they talked about, $1 million could actually be just 1 million in investible assets. For example, I talked about in 2006, right? In 2007, I went from millionaire to upside down, millionaire.
I was not a net worth millionaire at that point. I did have enough passive income to pay for my bills and everything else, but I wasn’t a net worth millionaire because I had assets that did have some loans on ’em, but the total assets, investible assets they had were over a million dollars, right? And yes, it didn’t take long for me to fall under, especially as prices tanked on those, and pretty soon, especially because a lot of ’em were real estate based, my million dollars of assets went down below that. And that’s how people say, how do you end up over a million dollars in debt? Pretty easy. You watch your values go down, you still have those debts. Now, I say total debts, it typically wasn’t my net worth. My net worth was not a negative million dollars. If you looked at my net worth that time, it was more like probably negative half a million maybe, but still that had an effect on me that had an effect on my finances.
And so is it the million dollars? Well, the thing is, the truth is it’s really not. A million dollars is actually not much. They say the average person’s net worth right now is 1.1 million, but that’s the average. Remember, there’s ultra wealthy people skewing that. So what’s the median net worth of people? Well, from what they said, 193,000 just under $200,000, that’s the median net worth. That’s the middle person. If there’s a million people or 1,000,001 who’s number 500,001, who’s that person, right? Who’s the person right in the middle? Well, it’s a lot lower than the average. That’s why you can’t look at averages. And I’m going to be talking about median things. Median net worth, so is the median net worth of people is 196,000. Right now, that’s currently as of the end of 2022 and actually going into 2023. However, if you look at the top 10%, the top 10% of Americans that are wealthy, they’re actual median.
Again, there’s that middle person, right? The median person, the middle person, their net worth is actually $2.6 million. So even though the median person in America is about 196,000, if you’re in the top 10%, the person that’s in the middle there of the top 10%, it’s 2.6 million. That means there’s people on the other side that are higher than 2.6 million people below it too. They didn’t give the range, but they just said the person right in the middle of the 10%, the top 10% wealthy has a net worth of 2.6 million. So if right now you’re listening to this, you have a net worth of at least 2.6 million, you could pretty much assume that you’re at least the top 5% of Americans today. Now, that being said, and by the way, that’s top 10% not of net worth. That’s 10% of those with income. So those that have the highest income have a net worth meeting net worth of 2.6 million.
Now, according to a survey, so when you survey people what they think is a high enough net worth to be considered wealthy, it was 2.2 million. So just a little bit under. And so 2.2 million is what people feel like. However, those in the position right now where they feel like they’re wealthy, so not just what they feel like wealthy would be, what number that is in the future or down the road, but people that actually reported feeling wealthy, right? See, that distinction was actually only 560,000 net worth. So roughly about triple what the median net worth is those that were about triple that actually felt like they were wealthy, they felt like they were okay, meaning that they felt financially secure. Now, it may not feel like they were multimillionaires. Of course, that’s not what they’re saying. They just felt comfortable financially. So if you have over a half million dollars net worth, you might be in that category.
You say, I feel wealthy, and especially depending on where you live, you might feel that more than others. I imagine people in California feel a little bit differently than those maybe in Mississippi where the net worth might be drastically different just because of prices and everything else. So I get that this is again, just nationwide across America. Now, how about income? What do people consider being wealthy according to your income? Well, what was reported, 483,000 a year, which is about six times the national average salary, which is about 75,000 a year, just under 500,000 a year of income, people will consider you being wealthy. And it’s funny, I looked at that number, I said, that looks familiar. And then I looked up the tax bracket from 2023, realized, oh yeah, that’s the tax bracket about the place where the tax brackets go up. So yeah, that’s probably when they tax the rich, so to speak.
If you’re making about a half million dollars a year, you might be considered rich according to most Americans, just so you know. That could be a danger, couldn’t it? Especially if Americans feel victimized in any way feeling like it’s your fault. That could be a problem. That’s another reason why we might want to consider finding ways to save on taxes. How can we reduce your income? Can we do things with real estate investing to do that? Can you use businesses to actually reduce your income so that you’re not one paying a lot more in taxes than the average person anyways, but two, be able to actually be in a place that’s safer where you’re not as likely to be targeted by politicians that say they’re going to tax the rich, as they say, right? So anyways, I’m diverging a little bit from this, but just so you know, if we were to sum this all up, 59% of people surveyed said they never ever will be wealthy in their lifetime.
That means only about 41% think it’s even possible. I imagine the younger they are, probably the more likely they feel it’s possible where the older, you kind of tend to lose hope, right? At least that’s been my experience with people I’ve talked to over the years. So again, that median income of those in the top 10% of income, 2.6 million, most people think you need at least 2.2 million of net worth to even be there. But income, they feel like you need to have just under a half million dollars to be considered wealthy. Now, let’s talk about what does it really mean to be wealthy? So here’s my take on wealth here. Your net worth, your income, your financial numbers have very, very little to do with your ability to feel wealthy. The truth is, wealth is an emotional thing, right? It’s all interpretation. There’s people that think that they’re wealthy, that really, if life were to throw a few curves, they might actually be completely broke.
I know this to be true with some of my friends in real estate. They have booming businesses making millions of dollars, and then all of a sudden the market throws a curve at them in 2022 and 2023 is interest rates rise and the market that shifts and they don’t know how to shift the market. And next thing you know, they’re bankrupt, the money’s gone. It wasn’t because they weren’t making a lot of money, but it’s because they didn’t have other things in place to make sure that they were safeguarded. They didn’t have enough reserves to factor in, and they might even had a few hundred thousand, but based on how their business model might be and how much they were spending, whether it be on employees or other types of expenses, that money was gone. And so that’s a key critical thing is that yes, that does have a little bit to do with the numbers, but ultimately what I’ve noticed is this, is that from my own experience, I felt wealthy before I became wealthy.
Lemme repeat that. I felt wealthy before I became wealthy. I identified as being wealthy before the numbers showed it. Now I fit all those categories they mentioned about net worth income, everything else, I easily surpassed those numbers to become in the wealthy, what anybody would survey would consider to be wealthy. That being said, guys, is that I’ve known people in that category that didn’t feel wealthy because it depended upon what that money did for them. Because for example, if that a lot of that money’s in the stock markets, they don’t always feel secure. You can never truly have freedom where there’s fear. Fear and faith cannot coexist in the same person at the same time. So if you have a lot of fear in your situation, it doesn’t matter how much money you have, in fact, the more money you have, the more you feel you might have to lose.
That’s a scary place to be, right? Because that scarcity was never controlled. And this is why I keep bringing up scarcity paradigm versus abundance paradigm, right? Because it’s not about the numbers. The numbers do help to a little degree, right? I’m not saying that they’re not important because we focus on numbers all the time. Like I mentioned at the beginning of the show about the passive income calculator that’s taking numbers of what’s potential in somebody’s situation. But I know many people have gone and put their numbers in there. Sometimes they even get a number that’s in the six figures, a hundred thousand dollars plus of potential passive income they could create. And you know what? In many cases some of those people say, really? Is that even possible? Yeah, I didn’t just pull those numbers out of thin air. They’re literally the money you could be using to create passive income, but you are not.
Why? Because you’ve been taught your whole life that the key to financial freedom to wealth is to save as much as you can pay off all the debt that you can. So you’re debt free, you got all this money in savings, but usually the savings they usually mean if it’s not in a savings account, it’s generally thrown into the stock market where it can go up or down depending on the whims of the market that day. And so you’ve been taught that that’s the key to freedom. But when you get to that point, and I know many of you, you might be listening right now and you fit in this category, we say, yeah, I actually saved up half a million or over a million dollars between my savings and my mutual funds or my retirement accounts. And guess what? I don’t feel free. Especially it’s true if you have money in a 401k or an ira, you’re stuffing money in that thing and it’s like money’s locked in prison, right?
You locked up your money in prison, you can’t access it. You can’t get it out unless one you get fired or two you quit. And even then, if you try to get to it, they only let you get $50,000 out of your 401k. They’ll say That’s all you can touch. Sorry, I know it’s your own money, but it’s really not because we’re the government. We determine the rules, not you. That’s the silent partner. That’s not so silent, especially every time they try to vote on it. So you’re really gambling your life away hoping that the government has your best interest in mind. That’s not the kind of people I like to teach. I don’t like to teach people that think that they can just trust the government and they’re going to take care of them all the time because the government always has American’s best interests in mind.
They don’t ever care about lobbyists. They don’t ever care about other politicians or even the other political interest groups that are out there swaying them and trying to help fund their campaigns and everything else. That never happens, right? Of course it does. US citizens, we ignored, and even me, even if I am in the top five, 10% of the wealthy in the country, it does not mean they give a crap about what I think because I’m not the top half percent of the country understand that I don’t trust them. And so when people try to lock their money away into these 4 0 1 ks and IRAs realizing that they’re really not liquid, and even if you try to get to ’em, if you can get to ’em, they slap you with taxes and 10% penalties because you didn’t hit 59 and a half yet, and even if you do hit 59 point a half, yet they still slap you with the highest tax rate possible on the income tax scale.
That’s ridiculous. And so this is why I find a lot of people not ever feeling wealthy. Now, I mentioned before I felt wealthy before I became wealthy. How was that possible? Number one, do I have enough income coming in to cover my bills? The truth is, if you have a job that can at least pay your bills, you’re doing pretty good. Now, I’m not saying you feel free. Remember, this is all perception, but if you can pay your bills you’re living from day to day technically, even though not from an investment standpoint, but at least from a day-to-day working standpoint, you are financially independent, meaning you’re not dependent upon other people. Now, you’re not financially independent based on passive income where you don’t have to keep working. You’re not work, but you are independent, meaning that you can sustain yourself. That is a good thing.
That’s first. Can you pay your own bills? Can you at least be paycheck to paycheck? If you’re less than paycheck to paycheck, you’re not quite there. If you’re at least paycheck to paycheck, you’re doing pretty well. Two, do you have some emergency fund money? Do you have some money in place just in case something were to happen? That alone will give you things. It drives me nuts sometimes I get some people that’ll reach out, just random people, probably not you, but there are people who will reach out saying, I’ve saved up some money. I’ve got $2,000. I’ve got 10,000, $20,000. What do I invest in? I could stop working. Okay? First and foremost, if anybody tells you could take 10 or $20,000 and stop working, it just works for you. It’s all passive. They are lying and selling you something that’s too good to be true.
I’m just telling you, I’m a very open person. I can believe that there’s a lot of things that I don’t understand. I don’t know. There’s possibilities that may be outside of the realm that I see. However, I will tell you this. You have like 25,000 bucks and you think that that’s going to start paying you $2,000 a month because you put into some thing that invest in crypto or invest in options trading or something like that. If you’ve been sold that bill of goods, you might want to get your money back if they even still have your money because those inevitably are scams. Now, that’s from a passive standpoint. Now, can you take 25,000, invest in a business of yours and make a few thousand dollars a month? Absolutely, but it’s going to require some time and energy and maybe some systems in place or people in place to allow that to happen.
So it’s not too good to be true because you still got to create, got to put in the effort, you got to put in the systems and the time and the patience. Even that time might be a matter of months. It could be a matter of years to get that to perform for you. So is it possible to take 25 grand and make a few grand a month? Yes. However, don’t expect it to be something passive where you do nothing. If they’re selling you that, they are literally selling you something that isn’t true. It isn’t real, okay? You get what I’m saying now? So having that emergency fund is important. It’s also important to know that you have money coming in beyond what you’re working for. This is why I emphasize so much on passive income. The reason that I felt free even before my net worth showed it even before my income showed it, is because one, I was controlling my expenses.
I was keeping my expenses lower. I wasn’t living on a cardboard box. I wasn’t living on rice and beans, but I was being a wise steward of the money I was spending. And then two, I was generating more income above and beyond what I needed to live. That’s the key to freedom guys. It’s all about cashflow. Cashflow means that you have more income coming in than expenses in whatever shape or form that is the difference in between your income and your expenses. That’s cashflow and that’s freedom. Now, if it’s the opposite, we’re more expensive than income, then have negative cashflow, and you don’t feel free, this is not a good place to be. You want it to where you have way more income coming in than your expenses. That creates more options, and when you have more options, you have more freedom. For me, that’s what changed.
First, I got to the point where I had a lot more income coming in than my expenses. I was more than living within my means. I didn’t have to shrink my means all the way. Notice, I didn’t have to just focus on only paying off debt, although I did do that too because I had to pay off a lot of debt as you well know. But it wasn’t just that. It was about increasing my income, reducing my expenses reasonably within. Well, that’s obviously reasonably within reason, right? Reducing my expenses to a point where at least I’m able to have those essentials taken care of. I’m doing what I feel like is needed, but I’m trying to be a wise steward of my money and then taking that difference, saving it, and then using that to invest to generate more income. Does that make sense? And that’s all you can really do is you can either generate more income or reduce expenses.
Now, if you do have debt, you could take that extra money, you have the extra cashflow, use it to reduce your debts, but sometimes that’s not the best place to put it. Many people we talked to will try to reduce all their debts, but in reality, those debts, like their mortgages for example, aren’t the things that be paying off or maybe some other car loans. It’s like, you know what? It’s okay. Don’t put extra towards those payments. Put it over here. Get that income up here so that it can actually pay for your payments for you, and then you have more money and you have more options and more freedom. That’s the key. Now, I am going to show you a survey. I’m going to put the link in the show notes as well, but this says survey again, comes back to those emotions to see how really financially well off you are a financial wellbeing survey as it’s called here.
So I’m going to show that to you right now. Okay, so you’ll see here on this survey, like I said, I’ll put this in the show notes. It’s consumer finance.gov. They have this financial wellbeing survey. Here’s a few questions and actually I like them. I actually tested pretty well for this because I answered in the positive every time, and I’ll tell you, I retook it twice because one of the questions was a little bit sketchy. I found out why, because it actually affected my number. So I’m going to share that with you here. But think about these, whether you’re listening to this or you’re watching this video, I do have this shared on the screen right now. Either way, I want you to start really answering this for yourself. Number one, I could handle a major unexpected expense anywhere from not at all. To completely, it says this statement describes me, not at all or completely, and anywhere in that scale, could you handle a major unexpected expense?
Remember, I went back to having that emergency fund. That’s critical that could you handle that unexpected expense or would you be stressed? Two, I am securing my financial future. Are you proactively using a plan to make sure that you have your future secure financially? Are you doing that? Not at all. The way to completely number three, because of my money situation, I feel like I will never have the things I want in life. Notice it’s a negative statement. It says, because of my money situation, I feel like I will never have the things I want in my life. Now, if you feel like that’s not a true statement, put not at all or very little or somewhat, if you feel like that’s somewhat the truth. Now, if you really feel like strongly I’ll never have the things I want in life that it’s closer to very well or completely.
So remember this one flip flops where if you were saying positively I could handle major unexpected expense, I put completely I’m secure in my financial future. I put completely as well, right? Because of my financial situation, I feel like I’ll never have the things I want in my life. I put not at all. I don’t believe that at all. Number four, I can enjoy life because of the way I’m managing my money. Notice it flip flops back to the other direction. So if you feel like you can enjoy life because of the way you’re managing your money, if that’s a hundred percent true, put completely, it’s not true at all. You can put not at all or anything in between. Here’s a good one. I’m just getting by financially. This is a tricky one and this is the one I had a test. I’m just getting by financially.
If you say I’m just getting by financially, if this means really, are you paycheck to paycheck or less than that, or are you very well off if you’re paycheck to paycheck or not even paycheck to paycheck where you’re not getting by financially at all? Now, if you’re just getting by financially, you might say somewhat, this would be paycheck to paycheck. That would be somewhat. However, if you’re not getting by financially, that would be answered in the positive completely or very well because saying, I’m just getting by. I don’t like the way it’s worded, right? I’m just getting by financially. But if you’re saying, no, I’m very well off here. I have more than enough income coming in from my expenses, you would put very little or not at all. You would be on that spectrum. I tested it out. It’s true. That’s what they’re really getting at is pretty much are you broke or do you feel very comfortable based on the income compared to your expenses?
If you’re feeling comfortable, it’s close to the not at all side. If you’re just not getting by at all, it’s completely so remember that all the last one in this section here, I’m concerned that the money I have or will save won’t last. Alright? Do you feel like the money you have or you will have or you will save won’t last if that’s a fear of yours? That’s more on the completely side. If you don’t worry about that at all, it’s not at all. Now there’s a few more. These are good ones. I really do like these questions even though I wouldn’t normally like some of this kind of stuff. I do like where it’s going. It says giving a gift for a wedding birthday or other occasion would put a stream on my finances for the month. Is that true? Is that always true?
Often true, sometimes rarely, or never true. I think that’s a great, do you feel free to even spend money? There are people that have plenty of money but may not feel like it might put strand their finances. Now, that may or may not be true, but that’s the thing. Is giving a gift for a wedding or a birthday or some other occasion, would it put a strand on your finances or do you feel free to spend however you want? The next one? I have money leftover at the end of the month, so do you have extra money each month? Is that always or never? I’m behind with my finances. Do you feel like you’re kind of falling behind? You’re not really keeping up with your finances. This is more of a stewardship type question. And then the last one, my finances control my life. Now remember, this is a flip-flop.
Do you feel like finances control your life or do you feel like you control the finances? So if you feel like your finances control your life, you would put the always. If you feel like you’re in complete control of your finances, that’s closer to the never side. Now they’ll have you answer a few questions about your age and that whether you read ’em or did ’em yourself, and you’ll get a score. The higher the score, the better the even has some demographics with it. I would challenge you to take some kind of test like this because this is more, this kind of gives you a very objective point of view, but it also addresses the emotional side. I think it’s a great way to tell how secure do you truly feel about your money? This is where wealth really comes in. You can look at wealth as being a number based on averages and what everybody else says, but in truth, is it really that or is it more something where you feel like it’s based on how you actually really feel?
That’s what I’m telling you guys. You can actually be wealthy before you are monetarily, financially showing up wealthy compared to the other people. It doesn’t matter how you compare to other people. Remember that it does not matter how you compare. It’s about what is your finances actually doing for you. You could be somebody who’s single. You could literally live on 2000 a month. You might be more free with 4,000 a month of passive income. Then someone who spends 20,000 a month, only getting 4,000 a month passive income. Understand what I’m saying there? Someone could be spending 20,000 a month but only be making 15,000 a month or 10,000 a month. They would be feeling completely broke regardless of their income or regardless of how much they’re spending. And again, it’s not about what they’re spending, it’s about what’s that difference in cashflow and what’s your financial foundation?
Do you have those reserves in place? Do you have your money where you’re being a wise steward, you’re watching the money coming in and coming out? You’re being proactive and actually making a plan. It doesn’t matter how much money you have, if you don’t feel like you have a plan, which is pretty much what everybody hires us says. They’re like, I know my money could be doing something more, but I don’t know what that is. I don’t know how to make it work. Or, I’m scared because I’m not certain. I hear different things about the markets. Or I’ve seen things in my own life where there’s money been lost in different market things that I’ve done. What if my investments go south? What if something goes wrong? How do I make sure that I can make it? I don’t want to lose that hard-earned money I have.
I get it. The truth is, we don’t want you to lose that either, right? We want you to be able to make it and prosper. That’s the whole purpose of what we talk about in this show is that you do things wisely. You’re a wise steward of your money. You invest it wisely, and then that creates freedom. So my challenge to you is simply this is are you wealthy? Are you not that wealth? Money helps, but it’s not everything. You’ve got to have an abundance mindset that supports it. Also supported by the financial foundation and the plan that you have in place. Make those two work together. And guys, I’m not saying you’re bulletproof, but you’re going to feel pretty dang good. You are going to be and feel free. And that to me is the true measure of wealth. Are you a free person?
Are you someone who’s abundant, prosperous, and then also has a heart of goal that you’re willing to give and help and uplift others as well? Creating a ripple effect in their lives? That to me, is a true measure of wealth. I want you to go and make it a wonderful prosperous week so that you can create a prosperous and wonderful life and abundant life, a life of giving and service to others that makes this world a better place. Go and make it a great day, guys. Your net worth, your income, your financial numbers have very, very little to do with your ability to feel wealthy. The truth is, wealth is an emotional thing, right? It’s all interpretation. There’s people that think that they’re wealthy, that really, if life were to throw a few curves, they might actually be completely broke. And so that’s a key critical thing is that yes, that does have a little bit to do with the numbers, but ultimately what I’ve noticed is this,