- Introduction: Leo Gura from Actualized.org discusses money management via the creation of budgets in a concise video presentation. He offers a downloadable Excel worksheet for personalization and strategic financial planning, maintaining that a reliable budget is crucial to financial stability.
- Budgeting Tool: Leo advocates for using a budgeting tool, which he claims has sustained his financial independence throughout his adult life. This instrument aids in tracking income and expenses, fostering financial clarity and control. It ultimately wards off potential financial crises due to ignorance or negligence.
- Expense Tracking: Leo highlights the importance of keeping tabs on where money is spent, emphasizing that this activity isnÂ’t dull but rather an exciting exercise in visualizing one's financial future. Accuracy, around an 80-90% rate, is considered important for this process to stave off financial struggles.
- Financial Planning and Attitudes: Leo underlines that financial stability is essential for pursuing an extraordinary life, in contrast to common advice prioritizing passion and spirituality above money matters. He promotes using his provided worksheet to examine current lifestyle expenses and envisage ideal lifestyle costs, thereby forming a financial vision for one's life.
- Expense Customization: Leo encourages customizing the worksheet to comprise all recurring expenses, even minor ones like contact lenses. Each category of the expense should be realistically considered, and the expense listing must be comprehensive to provide an accurate image of monthly and possibly annual costs.
- Ideal Lifestyle Budgeting: Leo suggests creating a budget for the dream lifestyle—a symbolic target to strive for. By drafting this ideal financial plan, individuals can determine the financial resources required to live their desired life. This process involves assigning costs to housing, insurance, groceries, entertainment, and other dimensions of one's aspirational lifestyle.
- Importance of Detail in Tracking Expenses: Emphasizing the necessity of finely detailed, realistic expense accounting, Leo counsels that even minor, recurring costs be included. He advises against integrating major one-time purchases into monthly expenses– instead, regular annual expenses like car maintenance can be divided into monthly expenses for accounting purposes.
- Customizing Expenses: Viewers are urged to tailor the worksheet's expense categories according to the specifics of their lifestyle. Categories can include rent, car payments, groceries, household supplies, etc. It is crucial to capture all recurring expenses, however minor, for an accurate budget overview.
- Accounting Both Real and Ideal Expenses: The worksheet contains columns for current and ideal monthly expenses. This arrangement encourages individuals to assess their current lifestyle costs and forecast expenses associated with their ideal lifestyle. Engaging in this exercise spurs a vision for the future and sets tangible goals to aim for.
- Accuracy in tracking expenses: Leo emphasizes the importance of accurately and comprehensively tracking monthly expenses, including small, recurring costs like prescription medication, magazine subscriptions, and Amazon or Netflix charges. Even basic necessities like toilet paper and electricity must be monitored. This extensive list of expense categories will take time to compile, but it will allow users to assess their income needs per month and per year.
- Consideration of expenses: He acknowledges that some expenses, like cell phone bills and rent, are easier to average out whereas others, like electronics, are trickier. He suggests treating electronic purchases as monthly expenses by averaging out the annual spend. Meanwhile, non-recurring big expenses like remodeling a kitchen or buying a car should not be included as monthly expenses. Annual expenses, like car registration costs, can be divided by twelve to capture them as monthly expenses.
- Estimation of expenses: Leo advises viewers to be realistic in their estimations. He discusses the tendency to underestimate and recommends erring on the side of overestimating costs. These initial guesses will be refined over time, as they are verified against receipts and bank statements.
- Creation of an ideal budget: Leo encourages viewers to consider their ideal life and derive a practical, realistic budget from it. He warns against getting caught in the trap of maintaining an extravagant lifestyle and suggests reflecting on whether such a lifestyle would truly provide fulfillment and happiness. He endorses investing in experiences over material possessions, as the former usually provide more satisfaction.
- Process of managing finances: Lastly, Leo proposes a methodical approach to finances: spending 60 days tracking expenses, customizing the worksheet to reflect these expenses, and reviewing the budget every quarter. This encourages honesty, accountability, and reality-based financial planning, which ultimately leads to financial stability and peace of mind for a quarter or even half a year.
- Spending money strategically for fulfillment: Leo proposes spending on experiences, like traveling, that provide personal growth, revelations, and unique experiences over material possessions, which can lose their charm over time.
- Regular review and update of budgets: Once a budget is created, it should be reviewed quarterly to account for changing expenses, price fluctuations, and new expenses. Keeping the budget updated helps maintain its effectiveness and relevance to current financial expenditures.
- 60-day expense tracking exercise: Leo suggests a 60-day exercise where all purchase receipts are collected and categorized at the end of the period. This activity allows comparison of actual expenses with the budget plan's estimates and corrects any discrepancies, thereby improving the budget's accuracy.
- Budget facilitating career and lifestyle decisions: By comparing current financial status with the ideal budget, individuals can ascertain if they need to advance in their existing careers, switch careers, or start a business. The budgeting exercise possibly reveals expenses that require cutting back, aiding in optimizing the budget.
- Budgeting and mental peace: Budgeting reduces financial worries and helps individuals lead a smoother life. The anticipation of achieving personal and business goals, as stated in the budget, evokes excitement rather than financial anxiety.
- Accounting for all expenses: Leo emphasizes that maintaining all expenses' accurate accounts is essential to comfortably manage money. He ends by encouraging viewers to engage with his videos and website for more advice on mastering life, covering various topics like finance, career, relationships, and mindset.