It’s a strange but true fact: some of the world’s highest earners have ended up completely broke. Think about Kim Basinger, Marvin Gaye, or even M.C. Hammer. They sold millions of albums, filled stadiums, and packed movie theaters. Francis Ford Coppola, the director behind The Godfather, a film that grossed a record-breaking $129 million at the time, flirted with bankruptcy three separate times.

Even the “King of Pop,” Michael Jackson, who sold over 750 million records and signed a contract worth nearly a billion dollars, was on the verge of bankruptcy in 2007. He couldn’t repay a $25 million loan on his Neverland Ranch. Jackson spent money as if it would never end, and by the time of his death, he reportedly had over $300 million in debt. The core of this issue isn't bad luck; it's a deep-seated challenge in the psychology of wealth and action.

Do you think any of them ever imagined the money would stop? Probably not. It’s a pattern many of us can relate to, even on a smaller scale. No matter how much you earn, you somehow find a way to spend it. We live up to our means, and sometimes, beyond them. We see this most dramatically with athletes like former heavyweight champ Mike Tyson, who earned nearly half a billion dollars—more than any boxer in history at the time—and still went bankrupt.

The Earn and Burn Cycle

Floyd “Money” Mayweather Jr. is on track to surpass Tyson’s earnings. Like Tyson, Mayweather came from humble beginnings. In one fight alone in 2013, he earned a guaranteed $41.5 million, which grew to over $80 million with pay-per-view sales. He’s an incredible athlete with a phenomenal work ethic, but he’s also known for his wild spending. He once lost his fortune to bad investments and reckless sprees, like carrying a backpack with a million dollars in cash for impromptu shopping trips.

According to his former business partner, 50 Cent, Mayweather has no income outside of boxing. The rapper described the boxer’s financial strategy bluntly: “It’s fight, get the money, spend the money, fight.”

Sound familiar? Maybe not on that scale, but the pattern is universal: Work, get paid, spend it all, and go back to work. It feels like the American way, but it’s a trap. A genuine path to personal financial mastery requires breaking this cycle.

The Worst Trade You Can Make

The fundamental problem is that if you work for a living, you’re trading your time for money. And that’s the worst trade you can possibly make. You can always get more money, but you can’t get more time. Life is made of priceless moments—dance recitals, date nights, quiet evenings—that you’ll miss if you’re constantly trading your time for a paycheck. Miss too many, and you start to wonder what you’re working for in the first place.

Right now, the primary money machine in your life is you. If you stop working, the cash flow stops. Your financial world grinds to a halt. You’ve become an Anti-Time Machine, giving away your most valuable asset (time) for something you need to survive (income).

Building Your Own Money Machine

So, what’s the alternative? We need to build a new money machine—one that works for you, even while you sleep. Think of it as a second business with no employees, no overhead, and no inventory other than the money you put into it. Its only product is a lifetime income stream. This is the foundation of building sustainable income.

To get this machine started, you have to make the most important financial decision of your life: What percentage of your paycheck will you keep for yourself? Before you pay rent, buy groceries, or spend a single dollar, how much will you pay yourself first? This decision, this single number, will shape the rest of your financial life.

I don’t call this savings; I call it your Freedom Fund, because that’s what it will buy you. By setting aside a fixed percentage of your income and investing it intelligently, you’ll eventually reach a point where your money works for you.

It’s Not About Being a Genius

You don’t have to be a financial whiz to achieve financial freedom. Consider Theodore Johnson, who started working for UPS in 1924 and never made more than $14,000 a year. He set aside 20% of every single paycheck and invested it in company stock. Through stock splits and decades of patience, his shares grew to be worth over $70 million. He wasn’t a corporate executive; he ran the personnel department. But he understood the power of compounding.

Or look at Oseola McCarty, a woman from Mississippi with a sixth-grade education who washed and ironed clothes for 75 years. She lived simply and consistently saved a portion of her earnings. At age 87, she made headlines by donating $150,000 to a university for a scholarship fund.

Then there’s Sir John Templeton, one of the greatest investors of all time. He came from a poor family in Tennessee and committed to saving 50% of everything he earned. He developed a simple but powerful investment philosophy: buy when there’s “maximum pessimism.” In 1939, as the world braced for World War II, he scraped together $10,000 and bought 100 shares of every company on the New York Stock Exchange trading for under $1. After the war, the U.S. economy boomed, and his portfolio exploded into billions.

The lesson from these three people is clear: by committing to a steady savings plan and paying yourself first, you can harness the power of compounding to reach unimaginable financial heights.

How to Make Saving Painless

You might be thinking, "This sounds great, but I’m already spread thin. I don’t have extra money to save." This is where the psychology of wealth and action comes into play. Most people don't save because it feels like a loss. Behavioral economists Shlomo Benartzi and Richard Thaler studied this and came up with a brilliant solution called "Save More Tomorrow."

The idea is simple: if it hurts too much to save more now, commit to saving more later, specifically when you get a pay raise. Here’s how it works: you agree to automatically save a small amount now—say, 3% of your salary. Then, you commit that every time you get a raise, a portion of that new money will automatically go toward your savings rate. You won't feel the "loss" because you never had that money in your checking account in the first place.

In their first study, employees who said they couldn't afford to save another dime were setting aside nearly 14% of their paychecks after just a few years. It's a painless system that works with our nature, not against it.

Your First Step Toward Freedom

The journey to financial freedom starts with a single decision. You can't start compounding your money until you have something to invest. The foundation of any strategic investment planning is setting aside a portion of your income automatically.

So, what will your number be? 10%? 15%? 20%? There’s no single right answer, only your answer. Decide on a number, commit to it, and then—most importantly—automate it.

• If you have a regular paycheck, contact your HR department and set up a direct deposit from your check into a separate retirement or investment account.
• If you’re self-employed, set up an automatic transfer from your checking account to your investment account.

Once you’ve made this decision and automated it, you’ve taken the most critical step. You’ve moved from being just a consumer to becoming an investor. You are on the path to converting your dreams into reality. This knowledge is potential power, but execution is where mastery lies.