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Knowing your financial metrics is extremely important. It’s what lets you gauge if you’re on the right track or if you need to make some changes. We track net worth, income, expenses, and other things using Personal Capital.
But, for all of its awesomeness, it’s missing one key component: the actual structure of how money flows in and out of our lives.
Enter the Money Map. A Money Map is like a treasure map of your finances. It outlines how all the money in your life comes in, and where exactly it all goes. It’s a visual representation of your accounts, and can help you picture what things might be broken and what’s working out well.
Our Money Map
As we’re combining finances later this year (it’d have been a hassle to do before we close on the house), we went through the exercise of creating our Money Map. Since we’re using mostly accounts I had previously set up, this was an extremely helpful exercise for Kristin particularly.
Without further ado, here is our Money Map:
Follow The Money: Kristin’s Cash
So, what’s going on here? Well it is actually pretty easy. Let’s start with Kristin’s paycheck. First, we take 10% out immediately for her ESPP. We will end up selling this at some point, which we’ll use to fund other random things. IRA’s, and other investment opportunities in particular will be our focus to start.
We also cut out enough of her paycheck to max her 401(k) – we aren’t there yet but we’re working on it. Anything remaining after that gets dropped into our Hybrid Emergency Fund. We’ll top that at 3 months of expenses and an additional six in an investment account at Fidelity.
We also have additional savings goals for a vacation, what I’m calling an “opportunity fund”, and a new car at some point. Our opportunity fund will essentially sit until we find something we want to invest in, like potentially real estate. Until then, it’ll remain safe. We may decide to use it to pay off a chunk of our mortgage, too.
We’ll also keep a checking account at Chase for Kristin to do have her fun money at.
Follow the Money: Dave’s Dough
There’s still a lot of boxes left on our map – that’s where my income comes in. I have an HSA through work which I max out, and I am currently putting in 8% of my income toward my 401(k). I expect to raise this over time as we become more comfortable with our cashflow, but I’m keeping it relatively low for now. My 401(k) has high fees – thanks Personal Capital for shining light on that.
The rest of my money goes into our savings account, and then our spending money flows out of that into checking each month. From there we pay all of our bills, including a bit extra at our mortgage. I have some fun money as well which I’ll keep in a separate account at Capital One 360.
This arrangement effectively lets us live off of one income, which is our goal.
Not One and Done
While creating our map was a great exercise, it isn’t really a one-and-done thing. As we change jobs, open new accounts and close existing ones, our Money Map will need to be updated. I plan on revisiting this at least once a year, if not quarterly.
Creating and updating your Money Map in something like Excel (Google Sheets) or Power Point (Google Slides) is easy and can be helpful to shed some light on how money flows in and out of your life. If you don’t know how exactly money’s flowing, going through this exercise will answer that for you.
Curious to see what other bloggers in the community did? Check out this chain gang:
- Anchors: Apathy Ends, Budget on a Stick
- Link 1: The Luxe Strategist
- Link 2: Adventure Rich
- Link 3: MinaFi
- Link 4: Othalafehu
- Link 5: The Frugal Gene
- Link 6: The Working Optional Money Map
- Link 7: Our Financial Path
- Link 8: Atypical Life
- Link 9: Eccentric Rich Uncle
- Link 10: Cantankerous Life
- Link 11: The Retirement Manifesto
- Link 12: Debts to Riches
- Link 13: Need2Save
- Link 14: Money Metagame
- Link 15: CYinnovations
- Link 16: I Dream of FIRE
- Link 17: Stupid Debt
- Link 18: Spills Spot
- Link 19: Making Your Money Matter
- Link 20: Her Money Moves
- Link 21: The Lady in the Black
- Link 22: Married with Money
There are more that aren’t in this chain gang but, honestly, finding and listing ALL of them seems excessive for this list…
Have you created your Money Map? What other tools do you use to help visualize your financial landscape?