Do you know where your money is right now?
Like… all of your money?
If I asked you where you deposit each paycheck, which credit cards pay which bills, which accounts back up which other accounts, or which accounts or cards have which automatic payments coming from them…
Could you answer me?
Maybe you’ve added bank accounts to collect bonus offers.
Maybe you’ve added credit cards as your score has improved, and each offers particular advantages for specific purchases — travel rewards points, credit towards your favorite store and other benefits.
It can get out of hand, and eventually you’re not sure where your money is or how you’re using each account.
Even if you have enough cash, disorganization makes money management tough. And, frankly, just thinking about it makes me anxious.
Read Jim Wang’s description from Wallet Hacks, for example:
“After a few years, I had a dozen checking accounts. I’d have ten bucks here, twenty bucks there, and it was a total mess. It was awful.
“As I started closing them, I realized that I didn’t have a good idea of how any of my accounts were connected.
“Which bank account was automatically paying my credit cards?
“Which bank account was connected to my Vanguard account?”
I’m pulling out my hair reading this, and it’s not even my money.
Thankfully, Wang had a solution: He drew a map.
How to Draw Your Money Map
For the visual thinkers among us — and I am — the map helps you find your money. You’ll plot where it’s coming from and where it’s going.
I recently spent about two hours getting all of my income, debts and bills under control. Now I can apply the money map strategy to see if I’ve missed anything.
To draw your map, start by listing these things:
- income sources
- bank accounts (checking, savings, HSA and online accounts like PayPal)
- loans, including student, auto, mortgage, and any personal loans; and other debts (e.g. credit card debt or medical bills)
- monthly/annual bill payments, including scheduled automatic payments
- investments, including retirement accounts
- active credit cards
- basic monthly expenses: groceries, gas, etc.
- miscellaneous expenses: travel, gifts, dining out, etc.
You don’t need to include the amount of money in any of these categories. Just list the categories, so you can begin to see how they’re connected.
Then draw your map to connect the dots.
How to Improve Your Money Map
Once you see how you’re moving your money around, the map is also a great way to see what needs to change and what you can trim.
Do you have lingering accounts and cards that are more trouble than they’re worth? Is money going through more steps than necessary to pay your bills or end up in savings?
I’ve also been considering opening a secured credit card to rebuild bad credit. The map helps me see where that can fit in.
After I making these changes, here’s my new, more streamlined map:
The idea is so simple and incredibly helpful. And my favorite part? No math!
Who knew you could organize your finances using colors and shapes?
Your Turn: Will you draw a money map to guide your money management?
Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).