Drawing Your Financial Map

At one point, I once had over a dozen checking accounts.

I was doing reviews for my previous personal finance blog and since opening a checking account didn't hurt anything, I kept opening them and reviewing them.

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?

For the checking accounts, I didn't care. I was closing them.

But for the important accounts, I had no idea and that was a problem.

So I did what any engineer would do, I drew a map.

old-financial-network-money-mapping

You can draw your map however you like, I think it's best to go with something intuitive, but mine was relatively simple:

  • Start with a list of all of your accounts – bank accounts, brokerage accounts, credit cards, Paypal, Dwolla, etc.
  • Then add in all of your bills and services – cable TV/internet, utilities, Netflix
  • Now draw arrows between them indicating a link – The side with an arrowhead meant I had to log into that account to draw money from the other. I'd use acronym for the link type – A for ACH transfer, BP for bill pay, DD for direct deposit.
  • Remember to update this as your accounts change

Now that you have the financial network map, prune it. Chances are there are things in there that don't make any more sense and you can close down those accounts and adjust the map so it's simpler.

And if you haven't done it already, it's time to put together a money field manual to put into prose everything you know in your head.

Here's what our financial network map looks like today (with color coding!):

financial-network-money-mapping
(this post was originally written in 2016, which is why you see TradeKing in the image
despite it being acquired by Ally Bank in early 2016)

Complexity can be a source of problems and a cognitive weight you don't need, so make your life simpler.

Fortunately, you have a map to show you how! 🙂

Oh, before you go – if you are looking to simplify your finances, our handy guide can help you figure out how to best do that.

If you aren't, here are a few banks offering hundreds of dollars in bonuses for you to open an account!

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Jim Wang

About Jim Wang

Jim Wang is a thirty-something father of three who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and a farm in Illinois via AcreTrader.

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About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

    • Jim says

      I just draw in one of the tabs of Excel that I use to store/record net worth right now, but Visio would be good too. The only reason I don’t use paper is so that it’s all in one place.

      • nick says

        Using Excel makes sense.
        I tried OneNote but settled on Word because with the Drawling Canvas, you can add Text Boxes and connect them with arrows that “stick” to the boxes. It also has a number of group positioning and alignment tools. Very similar to Visio, but more portable for my needs.

        • Maryse says

          You should try the free website draw.io

          it lets you draw schema like visio but it’s online and free and you can save it as .xml so you can edit later and you can output it as image, pdf, etc… excellent tool

          • Jim says

            Great tool! Personally, I like to keep it as simple as possible and try to avoid recommending tools that might add a barrier. Pen and paper to start but this is certainly a useful tool when you’re done and want to create something digital (and editable, vs. my photos!).

  1. Dividend Growth Investor says

    Very interesting article Jim. I found this article from Paula’s recent article.

    I have actually taken the opposite route with brokerage accounts, and have more brokerage accounts than the average individual.

    Since I ask myself what could go wrong, I have decided to have some redundancy in that area. I call this process stress testing my dividend portfolio.

    The goal is to have my money protected by SIPC insurance ( plus different accounts serve different purpose – 401K for employer at one place, SEP for solo stuff, Roth at another place, taxable at a few other institutions).

    I do not want to be in a situation where I am living off my dividends, and a major brokerage at which I have most of my assets collapses and freezes access to my money. I do not want to find out how this will affect me.

    I also do not want to find out what happens when my broker fails, and I have more than $500K in it.

    For almost everyone else however, I agree that having too many accounts is confusing and results in people getting lost in details.

    • Jim says

      You make a good point on having redundancy, I didn’t consider the potential for my broker (TradeKing or Vanguard) to go under or get frozen, but I applied this principle with banks, especially during the recession. There were some large banks that went under and while the FDIC got folks their money within a couple days (usually close the bank on Friday, reopened by Monday), it can be a harrowing few days!

  2. Derrick says

    I like the simplicity behind the map and less accounts. Less is more. I am always puzzled when it comes to sub-savings accounts. IE: Investment Acct, Car Savings, Tax Savings, Emergency Fund, etc. What do you recommend on that? I use Capital One 360 Savings and I like your approach to less is more and can see just having 1 savings so less “messy”. Thanks!

    Derrick

    • Jim says

      I like multiple savings accounts for goals, just exactly as you describe, but on a map and in records, like my Net Worth Record, it’s listed as a single account.

      • Super Millennial says

        Great article Jim, once you have a map established you can automate everything so it’s much easier to keep straight which account pays which. Also agree on the multiple savings accounts, just started that with Ally Bank and find myself more motivated to push towards each goal (i.e. vacation fund, car fund) and save more than I was in the past.

        • Jim says

          I’m a huge fan of checklists and taking things out of my head and onto paper, this is another example of it.

          And before you automate anything, it’s crucial to simplify it down to the core essentials or you’re just automating a bad system!

  3. ZJ Thorne says

    This is why I like that CapitalOne360 lets you have so many subaccounts. All incoming goes to my main account and I can link any outgoing I need to to it. I can keep the complexity in the savings accounts instead.

  4. Millennial Moola says

    Makes me want to close all the accounts I have and just move everything to Vanguard. Would make my map so much simpler

  5. Lucy says

    Great article. Practical and simple. The free version of XMind can easily help the mapping.

    I have a Wealth Management firm, and I am learning many tips from you. Quite a few of my clients like your tips. Thank you very much!
    Lucy

    • Jim Wang says

      Well, to be honest, there’s never absolutely no monetary gain. Even this post, which isn’t for monetary gain, exists to build up a blog, that is for monetary gain (among other things!). Nothing is solely for monetary gain though.

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