Every month, we earn, we spend, we save. Preferably, you are spending less than you are earning and are building up some savings but this is not the reality for most Americans. If you plan ahead and take the time to think about your financial management, you can budget reasonable spending and prioritize savings (or debt repayment).
In our case, we are DINKS (Dual Income No Kids) and automate most of our savings and investing to (hopefully) reach financial freedom in less than 10 years and pull the plug on full-time employment before our 40s. Our money flows in a bunch of accounts and it would be hard to track without tools like Personal Capital or Mint. These amazing free tools are a lifesaver when it comes to tracking our dollars and investments!
Inspired by Apathy Ends and Budget on a Stick, we created our Money Map, which shows how and where our money flows each month.
Starting from the top, we each have our incomes from our day jobs. Mr.’s income then gets automatically allocated to different investment accounts with TD, Questrade, and his employee stock option before even touching the bank account. For Mrs., her employer does not offer stock options, so she invests in Vanguard index funds through Questrade.
We get free commissions on ETFs with Questrade, so we invest in Vanguard index funds at every paycheck. When we invest, we follow our asset allocation to buy in any fund that would be under our target. For example, if the Canadian market is raging up but the International markets are showing some resistance, we would allocate our new contributions to our International market ETF (VWO).
| Mr. Xyz Target Asset Allocation | Mrs. Xyz Target Asset Allocation |
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With past projects and this blog, Mr. gets a small additional income coming in each month but it is nothing considerable. This is certainly a nice little extra that he throws in his vacation fund. Apart from his main bank account, he has an emergency fund and vacation fund with Alterna Bank earning 1.90% interest.
We keep our bank accounts separate, even if we are married, just because it is simple, and we never got the need for a joint account. Keeping the finances separate takes away the scrutiny, we trust each other’s decisions and share common goals, so we leave the day-to-day transactions aside instead of constantly looking at each other’s purchases. Apart from our main bank accounts, we each have an emergency fund and a vacation fund with Alterna Bank earning 1.90% interest. We try to never touch our emergency funds unless we really need it.
Each month, we put all our expenses on credit cards to maximize rewards points. Practically no expenses go by the bank accounts except for the mortgage and municipal taxes which we share 50/50. We simply automated those payments and keep everything else separate. For groceries, for example, we will alternate the chore but no one is keeping tabs.
We each have a main card that we keep for daily spend and each goes through multiple cards per year for points. When using credit cards for all expenses we always spend money we actually have in our accounts and, obviously, ALWAYS pay the balance in full each month.
It can get really hard to track everything if you play the rewards game. We currently hold 6 different credit cards each and track our rewards through an excel spreadsheet but also suggest Personal Capital to see all your balances at one place and never miss a payment.
Using this money flow, we are able to save over half of our incomes by saving first, automating most of our finances, and spending only what is left afterward.
Do not over complicate things and over think your finances, your days are much better spent enjoying truly amazing things like nature, family, or traveling the world. Once you have a process for your finances, you can start thinking about more important things and enjoy life.
Tips to improve your money flow:
- Track everything
- Save first, only spend what is left
- Do not get into high-interest debt
- Hold some money in a high-interest savings account
- Create multiple income streams
- Always pay your credit card balances in full. Always
We wish you great success in your journey, Mr. and Mrs. Xyz.