I love spreadsheets and have many different ones that are helping me stay on track financially. But spreadsheets aren’t the only option. If you are a visual person, you may want to play around with creating a “money map,” a visual representation of how money flows in and out of your life each month.
My Approach To Mapping My Money
As I am in the midst of paying off the last of my debt, I decided to create two maps, one depicting my current situation and a second one reflecting my post-debt life. After all, in another few months, I will be debt free (other than my mortgage) and be able to max out contributions to my retirement accounts which is very different than today when I am only contributing 8% of my pre-tax income. Given my salary, this isn’t exactly chump change, but it is not where I want to be at this stage of my life (my employer match helps me sleep at night!).
So, while not quite as exciting as radical weight loss before and after photos, here are my before and after money maps.
My Good Life Money Map
Income that Never Hits My Bank Account
Almost half of my income (42%) never hits my bank account. Instead it goes toward: retirement account contributions; taxes, social security, and medicare payments; and pension contribution, health and life insurance premiums, my flexible spending account (FSA) contributions, and charitable donations I make through a workplace giving program.
As noted above, I decreased my contribution to my retirement account to get out of debt faster (you can read more about my decision here). I did direct all of my contribution to the pre-tax account I have access to and not the Roth option. This decreased my tax bill and thus increased what I took home. Once my debt is gone, however, I plan on going back to contributing only to my Roth 401k.
If I had done this a few months ago, this section would have been more complicated because I would have had more types of debt: a home equity loan, a car loan and credit cards in addition to my student loans. Now, as you can see, every extra penny is directed toward my student loans only. I can’t wait for these to be gone too!
I think my expenses are fairly typical with regards to car insurance, mobile phone, etc. My mortgage makes up a smaller portion of my budget than most because I bought my condo twelve years ago when I earned quite a bit less.
For many reasons, which I discuss in My Worst (Best?) Money Decision, I didn’t buy more house as my salary increased. This is likely going to end up being a smart money decision when I go to sell but being stuck was frustrating.
I do help out my sister by contributing to my niece’s and nephew’s college funds. I also help out with the tuition costs for my niece to attend a private middle school. I know most aunts don’t (or can’t) do this but I am glad that I can. For most of their lives they haven’t had any grandparents living to spoil them so I get to be a cool aunt and a grouchy grandmother rolled into one.
The category of Cash is everything else—food, gas, clothes, etc. I usually budget this pot of money in my head. Not always perfectly but I usually make it work.
My Better Life Money Map
Income that Never Hits My Bank Account
I expect the amount of my income that never hits my bank account will increase in the future to 57%. Part of this will be increased taxes as I contribute the max to my Roth 401k, but the bulk will go to increasing my retirement account contributions. I’m getting close to the income limits for a Roth IRA so may need to do a back-door Roth.
A few of my expenses will be gone in the coming months. My nephew turns 18 next year so that expense goes away, as does tuition for my niece to go to middle school. To reward my months of cutting back on my day-to-day spending so I could get out of debt faster, I increased my budget for going out to dinner, etc. But the thing I am most excited about is the creation of a vacation/travel fund.
I really like to travel, either by myself or with others. I lived in England for a while and still have close friends there. I have also been fortunate to travel a lot for work, including spending three-months in Kenya a few years ago.
Sadly, not only is travel not cheap, it is super easy to go over budget once you get somewhere. Even if I resist the hotel spa, up pops a guided tour or an opportunity to eat a fabulous (and costly) meal. A dedicated fund will open the door to amazing vacations that don’t mean credit card debt when I get back home. Top on the list? South Africa.
Want to See Other Money Maps?
This post is part of a series of posts by other personal finance bloggers. I haven’t read all of them but have viewed enough to know that they reflect people at all stages of life and with different approaches to preparing for retirement.
If you found mine useful, I would encourage you to check out other maps from the list below. And let me know what you think in the comment section! I love to hear from my readers.
#1: The Luxe Strategist
#4: The Frugal Gene
#5: Our Financial Path
#6: Eccentric Rich Uncle
#7: The Retirement Manifesto
#8: Money Metagame
#9: I Dream of FIRE
#10: Spills Spot
#11: Making Your Money Matter
#12: Life Zemplified
#13: Her Money Moves
#14: Full Time Finance
#15: Abandoned Cubicle
#16: Millennial Money Diaries
#17: All About Balance
#18: A Journey to FI