I first noticed a tweet by Mrs. Adventure Rich about their money map and was blown away by the idea. It’s so easy for us to have a smörgåsbord of accounts as we change jobs and relocate for various reasons. The idea for this originated with personal finance bloggers Budget on a Stick, Apathy Ends, and then by The Luxe Strategist. Each created their personal “money map” to show the flow of their money and they’re all a work of art!
So What’s This Money Map You Speak Of, Eh?
In the words of Budget On A Stick:
A money map is simply a chart that shows you where all your money is coming in and going out. The more boxes you have the more complicated you are making your life.
The map you see below show you exactly what happens to the money once it enters our bank account and all the places it ends up. I didn’t break out all the expenses in detail as I wanted to present a picture of the accounts that are in play.
- Blue – Checking accounts (or treated as such)
- Light Green – Savings Accounts
- Green – Investment accounts
- Red – Expenses
Business Checking Accounts
You’ll notice right off the bat that both Mrs. WO and myself have business checking accounts. Yes, we are among the few crazy couples to both be self-employed. Smart couples generally take the approach that one of the two is gainfully employed at a corporate job. This provides a guaranteed monthly paycheck and employer-provided health insurance. Of course, we had to do everything the hard way, so here we are with two separate small business checking accounts.
We get paid by our clients, and the money is deposited into our business checking accounts. Every month, we either take a salary or a distribution or in some months, both. The advantage of the distribution is that it saves us self-employment taxes vs. the salary. In short, we split the income between these two based on suggestions by our CPA so as not to run afoul of any IRS rules.
You’ll also notice that we have a single shared checking account. The reasons are a topic for another post, but suffice it to say that this works for us. What is mine is hers and vice versa. This account is where all our bills are paid from, and it’s also where the 2% from the cashback credit card is automatically deposited each month.
As is apparent, we have multiple savings accounts for different goals. You’ll notice that the arrow from checking to our emergency fund is bi-directional. This is essentially to show that we occasionally use the emergency fund as a ‘line of credit’. Our income fluctuates from month to month since we’re self-employed. In times of a cash flow crunch, we pull some savings from the emergency fund and then replenish it the next month. Of course, the CD and credit cards exist in case of a true emergency.
Having Individual 401(k)s allows us to contribute more than the $18,000 limit/year. This is a great vehicle to increase our 401(k) balances while also reducing our tax bill every year. Downsides are that there is no “free money” via an employer match.
We like to keep our business and personal finances separate so we do have a few business credit cards but they’re not shown here. In our personal cards, there’s the cashback card that’s primary as nothing beats a 2% guaranteed cash back on every purchase everywhere. Yes, there are other cards that offer quarterly bonuses for certain categories but the older I get, the more I simplify my financial life.
We also sign up for the occasional travel rewards card and use it for all expenses until we satisfy the bonus requirements. Then, we promptly switch back to the Fidelity rewards. All cards – business or personal – are promptly paid off every month.
Other Investment Accounts
The flow of money into the other types of investment is pretty straightforward:
Health Savings Account
We have an account at HSA Bank and leave the minimum in there to cover the year’s fees. The rest is all transferred into a linked investment account to invest in zero-commission ETFs as per our asset allocation.
Brokerage Accounts, Roth IRAs and Kids 529s
Most of our investments are at Vanguard and Fidelity. The reason for that was simple: we needed 50,000 American Airlines miles. Transferring a few holdings in kind from Vanguard to Fidelity got us those miles, and I didn’t even need to open a credit card!
If you’d asked me to draw up a money map a few years ago, the end result would have been much more complex. We’ve consolidated a lot of the accounts and simplified our lives since then. No need to keep accounts at multiple brokerages, banks and credit unions.
Ideally, I’d like to simplify this even further but it’s either not possible (“Family 401(k)” anyone?) or not practical. It would have made rebalancing much easier for sure!
Join the Chain Gang
I hope you join us and create your own Money Map:
- Write a post in which you create your own map, explain how you did it, and talk about anything you discovered about your finances using the map
- At the bottom of your post link back to the other bloggers before you in The Chain
- When you tweet out your post tag all the other bloggers who came before you
- Try to keep your list of chain members up to date. This helps encourage others to keep their back-links up to date and in turn, helps you.
The Official Money Map 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: Life Zemplified
- Link 21: Trail to FI
- Link 22: The Lady in the Black
- Link 23: Smile & Conquer
- Link 24: Her Money Moves
- Link 25: Full Time Finance
- Link 26: Abandoned Cubicle