retirebyforty’s money flowchart

I have been meaning to draw up a flowchart to describe my budget, but have been putting it off.  If you’ve seen my monthly credit card bill posts, you know we allow ourselves $100 weekly allowance each to spend on discretionary items.  This flowchart below will explain where our money goes each month.

money flowchart budget

Basically, Green shapes are good and we aim to build those accounts up.  Yellow shapes are just cushion accounts and can go up and down, but we try to keep the balance somewhat stable.  Orange shapes are expenditures which we’ll need to keep trimming so I can retire by the time I’m 40.

This is the ideal picture and we don’t always adhere to the rule 100% of the time.  Sometime we put charges on the credit card that should have been paid with our allowance hence my credit card compliance rating.  See my October and September bills for how we did the last couple of months.  Yes, I know groceries are not really discretionary spending, but WinCo does not take credit card.

The one arrow that I’m not showing is from the Stock Purchase Plan to Saving account.  I try to keep company stock holding to less than 5% and sell off the stocks when the price is right. ** I updated the flowchart to make it more clear. **

What do you think?  Is this ingenious or what? 🙂  It works for us.

I made a version 2.0 of the money flowchart!

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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37 thoughts on “retirebyforty’s money flowchart”

  1. I was noticing on your income block you showed rental income. Are you into rentals and property investments? Are you self employed or do you have a regular job? Retiring early requires investments that generate the income you will need to live on, my thing is buying items cheap and selling them cheap, but for a profit. That money goes into my retirement fund which I roll into real estate as I think it is fairly secure if bought wisely. My goal is to get enough rental income to meet my goals. The sites I have been to so far seem to be strong on generalities, but weak on the specifics of how to accomplish your goals. Does yours have more specifics somewhere?

    • Hi Richard,
      I have a regular full time job. You can read a bit more about me in the About tab up above. I am working on pulling the whole picture together. If you look at my Investment Fundamental series, you will see what I’m doing to meet my goal of retiring by 40. So the answer to your question is yes I do have more specific info, but it is not complete yet.

      Here is one post I made with specific numbers.

      Thanks for stopping by.

  2. I love the chart. I don’t have the 3-6 month savings account though … That’s currently a line of credit with hard savings covering that (unfortunately). I do plan on the savings for the fixed large sum though.

    I have to say that this makes for a great teaching tool!

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  4. Very nice chart, high PF geek factor, and a good visual aid for strategic planning and plotting. Minor quibble on groceries… ya gotta eat, one way or the other. It’s only discretionary in how much or where or Italian vs. Tex-Mex.

    • Yeah, our groceries store doesn’t take credit card so we use cash. Food is such a huge part of the budget, I think it’s wise to put a bit of artificial constraint on the spending. We could spend so much more eating out, but the cash allowance constrain us to once or twice a week. It’s good.

    • I have the visio file if anybody want it just PM me from the contact page and I’ll send it in an email.
      We’ve been doing this for a while and I just made the flowchart to explain how we deal with our cash flow. I tried a budget spreadsheet and couldn’t keep it up. I’m using Mint now and that is a lot easier.
      Anyway, the only real flexible expenditure is the cash allowance since everything else are necessities.

  5. Great flowchart! It looks a lot my husband’s and mine… except for that pretty green paycheck deduction. Working from home means I have to wave at my money leaving everytime I invest it. I’ll second that cheers from Invest it Wisely: Here’s to growing that green side! 🙂

  6. Wow, if that doesn’t scream PF dork, then I don’t know what does. The chart is cool. I don’t always think about things in this way. I do like how you split up the fixed and variable costs.

    I have a mental block though where I find it hard to save for multiple things at the same time. I’d rather go gung ho on one goal and then once that’s done, check it off the list and move onto the next one. You seem to have a more balanced approach.

    • PF dork? I think I like PF nerd better. 🙂
      I cleaned up the chart a bit to make it more clear since I’ll be referencing this chart in future posts.
      We can’t really tick off one goal because we don’t have much car loan or credit card balance. I guess we could put money into paying off mortgage early, but that’s not a huge priority for me right now since the rate is pretty low.

  7. Hi, hi! … Hopefully we can be good friends! … I visit the blog, please …
    I am a beginner blogger. I hope you can give tips on how to be a good blogger.

    Nice to meet you …

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  9. I like the flowchart!

    I totally agree on the movement of money out of the stock purchase plan. We also invest in one for where my husband works, and I will be moving money out after a year so I don’t have to pay short term capital gains. I never want to have too much stock in any one company, but I love the discount on buying company stock.

    Regarding your Roth IRA, just curious why that is a one-time payment vs. dollar cost averaging?

    • That’s the same thing I do with my SPP. I do try to time the market a bit with these primarily because the CEO type keeps telling us things are going to awesome next quarter…
      Still drinking the Kool Aid a bit, I guess.
      As for Roth IRA, it’s just easier for us to do a one time transfer. Then I break up that $5,000 into two or three purchases a year. I do this because I don’t want to pay transaction fee. I can also help rebalance my asset allocation if my other accounts starts to go out of whack.

  10. I’m not sure I would ever create something like that for myself, but if it works for you, that’s awesome. I do have similar rules at the top of automatic deductions and stuff like that, but I’m a little different in that I do my Roth IRA investments every month.

  11. I am more like Aloysa, in that I am more apt to stick with a budget over the long haul if it is more simple and less cumbersome. But then I am not much of a details person. That being said, I tip my hat to you for the work and detail you have put into this.

    • It’s actually mostly self sustaining now. We’ve been doing the cash allowance for a bit over a year and it works pretty well. All the other system has been in place for a while. Auto deduction to 401k and SPP is the easiest part. The overflow to investment account takes more time, but I’m obsessive about checking bank and investment accounts so it’s not that difficult to keep track of.

  12. The chart is cool but man how long did you spend on charting it? If it works for you -great! we chose the simple roda – budget, pay off debt and save. Here… no chart neccessary! 🙂

  13. The chart is so cool. Sounds like you have a plan that is customized to fit your needs. That is where the “personal” in personal finance comes from!

    • Thanks! It took me a while to figure out the flowchart. I need to separate out real estate investing somehow because it’s a big % of our investments. I’ll make an update at some point and repost. 🙂


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