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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. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 37 comments… add one }
  • Richard F. Ryan January 19, 2011, 9:27 am

    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?

    • retirebyforty January 19, 2011, 12:21 pm

      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.

  • Jim January 3, 2011, 11:46 pm

    Cool chart – how did you make it? What software package did you use?

    • retirebyforty January 4, 2011, 8:43 am

      I used Visio from Microsoft. I got a good deal on it from work.

  • The Passive Income Earner December 14, 2010, 5:26 pm

    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!

    • retirebyforty December 14, 2010, 10:48 pm

      Thanks for loving the chart. 🙂
      I want to make a 2.0 version and add more cash flow information, but now I’m thinking it’ll make it too complicated. Right now, it’s pretty simple.

  • Mark November 27, 2010, 10:17 pm

    I like the chart a lot better than the typical spreadsheet.

    • retirebyforty November 28, 2010, 8:31 am

      Thanks! I’m a visual person and this is much easier to figure out than a spreadsheet. 🙂

  • Andrew @ 101 Centavos November 27, 2010, 6:32 pm

    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.

    • retirebyforty November 28, 2010, 8:30 am

      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.

  • Financial Samurai November 26, 2010, 3:53 pm

    Nice looking chart! Do you find this is more helpful than a simple spreadsheet? Do you have a template for us to DL?

    • retirebyforty November 26, 2010, 10:59 pm

      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.

  • Jessica07 November 26, 2010, 11:49 am

    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! 🙂

  • Invest It Wisely November 26, 2010, 8:55 am

    Nice flowchart! I don’t think I could ever be bothered to create one, but what a great way of visualizing things! Here’s to growing the green side of that chart.

    • David @ VapeHabitat August 14, 2018, 9:44 am

      Wow! I should have had a flowchart like this years ago. Now the situation in my family would be much better!

  • First Gen American November 26, 2010, 4:38 am

    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.

    • retirebyforty November 26, 2010, 7:10 am

      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.

  • Crazy Owl November 26, 2010, 4:37 am

    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 …

  • Everyday Tips November 24, 2010, 5:38 pm

    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?

    • retirebyforty November 24, 2010, 6:31 pm

      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.

  • Kevin @ Thousandaire.com November 24, 2010, 4:00 pm

    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.

    • retirebyforty November 24, 2010, 6:37 pm

      Is this flowchart too complicated? I need other engineers to look at this thing. 😀

  • Joe Plemon November 24, 2010, 10:58 am

    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.

    • retirebyforty November 24, 2010, 12:38 pm

      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.

  • Aloysa November 24, 2010, 9:50 am

    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! 🙂

    • retirebyforty November 24, 2010, 12:35 pm

      I spent about half an hour making it on the back of an envelop and then about 90 minutes total to create the flowchart in Visio. It was fun, easier than writing a long blog for me. 🙂
      Heh heh, I’m sure your finance will get more complicated later.

      • Aloysa November 25, 2010, 9:28 am

        Hopefully, it will get more complicated! Then I might need your help with charts. 🙂

      • Darwin's Money November 30, 2010, 8:14 pm

        I like that – more fun than writing a post. I think you’re on to something. Now, if I can just find a useful chart to dream up…

  • Barb Friedberg November 24, 2010, 5:03 am

    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!

    • retirebyforty November 24, 2010, 9:47 am

      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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