Todd Romer's 5 Steps to Financial Success
Todd Romer, founder of Young Money University, has partnered with Mountain America Credit Union to offer members financial success tips to help you live a life that fits your dreams. Today we're talking about walking the path to greater savings.
In this video series, Todd presents 5 quick steps to help you think about and plan for your money differently. Read the information on all 5 steps and watch the first two videos below, which go over steps 1 through 4, and then follow us on social media to watch for the last video to be released.
Step 1: Make a decision to dream—cultivating your personal why
Get specific about what you want your life to look like in 5, 10, even 25 years. Why do you want to be financially successful? Maybe it’s to send your kids to college, travel in retirement or to buy a vacation home where your family can gather for years to come.
Once you understand your personal why, you will have the motivation and enthusiasm to manage your money and think differently. This is the turning point to reaching the goals and dreams you have for yourself.
Use this worksheet to help discover your why.
Step 2: Save money automatically with digital envelopes
We’ve all been taught to have a savings account. But why only one? It’s so easy to borrow money from that one all-encompassing savings account because it isn’t specifically designated for anything. Try setting up multiple accounts (digital envelopes) and label them travel, car maintenance, fun money, wardrobe or whatever makes sense for you. Decide how much to allot to each envelope each month.
This strategy gives you more control while giving your money more purpose.
Use this worksheet to discover how many savings accounts you need and what to name them.
Step 3: Just say no … sometimes
You can keep spending money on your favorite things. But if you truly want to get ahead and reach the goals and dreams you have for yourself, you will have to say no … sometimes.
To understand where your money is going, create a monthly cash flow plan. Start with the money you bring in each month, then list your fixed and variable expenses. This will give you a visual representation of what’s going where.
After working this plan for about 90 days, you’ll figure out what adjustments can be made. Creating a thorough cash flow plan will provide you with better control over where your money goes each month.
Use this worksheet to plot out your cash flow and budget.
Step 4: Invest money automatically
Many people have a hard time actually starting the investment process. Often it is because they are scared. But investing doesn’t have to be scary. Millions of people are doing it successfully.
If you’re new to investing, it’s natural to fear losing money. However, the history of the stock market (more than 125 years’ worth!) has shown that the average annual rate of return is 10–11% per year. That’s pretty amazing!
The key to creating wealth is to automate your investing on a monthly basis. Set up automatic payments to let your money grow on its own.
Click here to find out more about how compound interest works and how to create significant wealth over time.
Step 5: Including others in your financial success plan
Create more purpose and meaning by helping others financially throughout your lifetime.
Back in Step 2 we talked about digital envelopes. Start an account or “envelope” labeled “giving” and set up automatic payments every month. Suddenly you’re able to help individuals or organizations that have meaning to you, bringing joy as you manage, save, spend and invest money differently.
We hope these steps are helpful to get you on the path to saving money.
