If you’re like me, you love reading stories about how other people do money. But have you ever wondered about the actual mechanics of money? How all the nuts and bolts work together to make the savings magic happen?

Let’s back up. There are a million articles that show you how to spend less. You get inspired to start changing your behavior: making coffee at home, or cutting down on eating out, or riding your bike instead of driving. But changing your spending habits is just the first step to being good with money. Because spending less does not equal saving money.

To save money and then make the money work for you, you need to have this thing called a system. Money needs to be told where to go and when. There are countless banks and accounts to mix and match to build your overall strategy. Ever been curious how other people set up their money? Then today is your day, because I’m going to share with you my money system: exactly what happens to my paycheck, how much goes into each bucket, and the many financial institutions I use. Because nobody turns into A Rich Person by just leaving their money in a savings account.

Because I’m super visual, I was inspired by Apathy Ends and Budget on a Stick and created a money map, which shows how and where my money goes each month. I then went on to clutter the map with a bunch of emojis, because that’s an appropriate thing to do when you’re past 30.

My Money Map

Summary of Accounts

• 5 investment accounts
• 1 checking account
• 1 savings accounts (with 2 sub-accounts)
• 6 credit cards

Initial Thoughts

• I only see about HALF of my salary when it lands in my checking account. The other half gets divvied up across taxes, pre-tax contributions and deductions.
• I don’t use financial advisers or robo advisers for investing. I’m pretty hardcore about DIY in real life, so that applies to my finances, too.
• I don’t have a house, car, student loans (anymore), or kids, so that’s why my map is pretty simple (well, except for the credit cards).
• I have 6-8 credit cards at any given time, but always pay my bills in full.
• When I do more math, here’s how my take-home pay gets split, with the categories ranked by percentage:
  • Savings – 49.5% (1)
    Needs – 21.9% (3)
    Wants – 28.6% (2)
• Compare that to the popular 50/30/20 rule of thumb:
  • Savings – 20% (3)
    Needs – 50% (1)
    Wants – 30% (2)

As you can see, according to the generally accepted wisdom, savings comes dead last. For me, savings comes first. Another key point is how I’ve minimized my needs, or fixed expenses, by almost 30%. Lots of people accept fixed expenses as they are, but for me, searching for cheaper options is worth it.

*Affiliate links below*

My Financial Accounts

401K: Fidelity

I contribute the maximum ($18,000) to my 401k. Part of how I’m able to do that is because I make a decent salary now. But just because you make a lot of money doesn’t mean you’re any good at saving it. A high salary makes saving easier, but you still have three additional steps that many overlook: make the decision to save, plan, and then execute. A big part of my success is that I’ve had a lot of practice saving, even when I was making 33k a year. And whenever I got a raise, I wouldn’t increase my lifestyle, but I’d bank the extra money instead.

Taxes + Deductions

By contributing to my 401k as a single person, last year I saved about $3,000. Check out this chart:

For example, see how wide that income range is for the 25% tax bracket? If your income is close to the lower end of the range, you’re gonna want to pay attention. Let’s say you make $40,000, and you don’t make any pre-tax contributions. That means you’re on the hook for the taxes in the Taxes Owed column. But let’s say you contribute $5,000 to your 401k. All of a sudden this makes your taxable income $35,000, bumping you down into the 15% tax bracket, and saving you a little over $200 dollars. If you contributed $10,000 to your 401k, you’d save about $700. This means you’d have more money to invest in other ways. Note that the taxes you skip save now will need to be paid later when you withdraw the money.

Health Savings Account (HSA): BenefitWallet

I contribute $3,100 a year to my Health Savings Account (HSA), with a little kickback from my job. 2015 was the first year this account was an option for me through work, so I was excited to sign up. An HSA is basically a pre-tax savings account for medical expenses, and requires you to choose a high-deductible plan. That means my monthly premiums are low, but I also have to pay $1,300 out of pocket before insurance takes care of the rest. So wait, why would someone want to pay MORE for healthcare again? Because I think the benefits outweigh the costs: The beauty is that you can INVEST your contributions, the account is still mine after I leave my job, and after I turn 65 I can use the money for whatever I want (not just medical expenses). It’s another way to diversify my investments.

Transportation

I opt into my company’s transportation program, so my subway pass deductions are pre-tax. A subway pass costs $121.50, so I’m actually paying a little over $91.

Checking Account: Charles Schwab

ATM fees don’t have to be a fact of life. After constantly getting hit with fees when I banked with Chase, I switched to Charles Schwab, (referral: Get a $100 bonus to open an account) because they reimburse your ATM fees. They don’t have any physical locations, so if I need to deposit a check all I do is take a picture of it and upload it to the app. Easy peasy. And not gonna lie, I get a little thrill every time I see an ATM fee reimbursed.

Savings Account: Capital One ING

This was my first online savings account since forever ago. I liked segmenting my savings goals into sub-accounts, because they made feel more in control of my finances and like I actually had a plan. Capital One ING (referral: Get a $25 bonus to open an account) was one of the first to offer this simple, yet nifty little feature. I know there are other banks now that offer higher interest rates, but I don’t bother chasing after them for a couple hundred bucks a year. I actually keep very little cash and invest most of my savings. I’ve had more sub-accounts in the past (like, wedding, etc.), but for now, I keep two holding accounts:

• Savings – You could call this my “Emergency Fund”, but I actually use it as a “holding pen” to transfer money into my brokerage account. I don’t have a set threshold for how much I leave in this account, but usually it’s a few thousand and that’s it. #keepitlean
• Travel/IRA – Another weirdly frankensteined category. I used to have a separate account for travel, and a separate one for my IRA, but then one day I decided to just combine these two unrelated accounts into one. So I save up for travel in this account and also use it as a holding pen to transfer money to my IRA account. If I made a big travel purchase, I’ll manually transfer that same amount from the ‘Travel/IRA’ account back to my checking account. I ‘ve also scheduled weekly auto-transfers to my IRA from this account.

Roth IRA: Vanguard

A Roth IRA was the first investment account I ever set up by myself, and I maxed it out every year ($5,500). So I got sad when I found out I couldn’t contribute anymore post-marriage.  As a married couple, our combined income is too high to be eligible, so this year I had to change my strategy…

Traditional IRA: Vanguard

I started this account so that I could roll over my 401ks after I changed jobs. I’ve started contributing the max amount ($5,500) this year since traditional IRAs don’t have income limits. Since I can’t contribute to my Roth IRA anymore, as of this year, I’ve re-routed my money to this account instead, although due to income limits, I get zero tax savings. I need to investigate other ways I could invest this money instead.

Brokerage Account: Charles Schwab

Since I was maxing my 401k, HSA and IRA, the next step for me was finding more ways to grow my money. This brokerage account was included with my Charles Schwab checking account, so I use this to invest in index funds. I’ll manually move money to this account from my savings when I see a buying opportunity.

Rent + Utilities

I pay my share of rent (pro-rated since I make less than my husband), gas and electricity. My husband pays the cable bill and his share of the rent. The gas and electricity bills are on auto-pay.

Credit card #1: Chase Sapphire Reserve

I am a maximizer and I couldn’t let 100,000 reward points slip through my fingers. I know plenty of people who are kicking themselves for not applying for this card. I was initially rejected because I had signed up for too many cards in the past 2 years (over 5), but I tracked when I’d be eligible again and signed up in a local branch. Since the fee is $450, I’ll wait to get my $300 travel credit again, then cancel before the annual fee kicks in.

Credit card #2: Chase Sapphire Preferred

This is a card I’ve held onto for years. Right before I cancel the Reserve card above I’ll transfer the leftover points I have onto this card. I usually use this for eating out since I can earn 2 points per dollar.

Credit card #3: Chase Freedom

Years ago when I had credit card debt, I transferred the balance to this Chase Freedom card for a 0% APR. I’ve had it ever since. I mostly use it for the rotating 5% categories, but not much else.

Credit card #4: American Express Starwood Preferred Guest Personal

I’m a loyal American Express fan. In my experience they have the best customer service. I use this card for points and I hold onto them for dear life. When deployed, you can get a ton of value from them.

Credit card #5: American Express Starwood Preferred Guest Business

I also got the business card earlier this year. They were having promo where you could earn 35,000 points after a 3k spend instead of the usual 25,000 points. Increased bonuses almost never happens, so I pounced. I signed up for it right before all my wedding expenses started to pile up so I could maximize on spending that was going to happen anyway.

Credit card #6: Discover It

One of my favorite hidden gem credit cards. I use this for two reasons:

• They have the best cashback rewards at stores I shop at anyway. By clicking on affiliate links through their shopping portal I’ve earned up to 20% cash back!
• This is the credit card I use the least, so to prevent the bank from closing my account (which has happened before!) I’ve linked this card to automatically pay my cell phone bill every month.

Takeaways

• I definitely have some inefficiencies with the savings account and the transfers to my investment accounts. I could transfer money directly from my checking account and into the investment accounts. I think it’s a mental hitch where it feels safer to put the money in a “holding pen” first just in case my checking account gets too low.
• It’s really nice to see the overall flow of your money, and the percentages help me confirm my priorities.

How to Make Your Own Money Map

1. Note you salary and your take-home pay (look at your latest paycheck).
2. Gather your total expenses and savings for each category.
3. Calculate the percentages: Divide each amount by your salary.
4. Now for the fun part! Create your map in Google Drawings using the Shapes and Lines tools. If you have Gmail, here’s how you get there: Google Drive → NEW → More → Google Drawings

Want to see more money maps? Check out how other bloggers manage their finances:

Anchors: Apathy Ends, Budget on a Stick
Link 1: Adventure Rich
Link 2: MinaFi
Link 3: OthalaFehu
Link 4: The Frugal Gene
Link 5: Working Optional
Link 6: Our Financial Path
Link 7: Atypical Life
Link 8: Eccentric Rich Uncle
Link 9: Cantankerous Life
Link 10: The Retirement Manifesto
Link 11: Debts to Riches
Link 12: Need2Save
Link 13: Money Metagame
Link 14: CYinnovations
Link 15: I Dream of FIRE
Link 16: Stupid Debt
Link 17: Spills Spot
Link 18: Making Your Money Matter
Link 19: Life Zemplified
Link 20: Trail to FI
Link 21: The Lady in the Black
Link 22: Smile & Conquer
Link 23: Her Money Moves
Link 24: Full Time Finance
Link 25: Abandoned Cubicle
Link 26: Freedom is Groovy
Link 27: Millennial Money Diaries
Link 28: All About Balance
Link 29: A Journey to FI
Link 30: Present Value Finance
Link 31: [HaltCatchFire]

What about do think? Any ways I could simplify or optimize? What are your favorite financial accounts?

Image: The Luxe Strategist