I wanted to take a break from the extensive talk-talk-talk about how money works in theory and show you how it works in my actual life. And by show you, I mean show you.
Personal finance talk doesn’t always lend itself well to pictures. That’s probably part of why so many people get frustrated with it. Many of us are visual learners.
It’s hard to explain concepts like tax optimization and exchange traded funds in a picture. But some things you can easily explain via graphics. Things like money flow…income vs expenses…progress towards a goal.
So that’s what I’m going to show you today. All of the graphics you’ll see below were built from data sets I’ve been tracking for years. Two have always been tracked in a visual manner, while one is new. And instead of talking to you about money, I’m (mostly) going to talk to you about how I built these tools to visualize my money.
If you’ve ever been frustrated with trying to understand exactly what’s happening with your money, try building something like these. Or, if you just want some motivation, these work for me!
Without further ado, here is how I visualize my money.
#1: The FIRE Tracker
I first built this tracker in 2013, when I read Your Money Or Your Life. You may recall that this book made a big impact on my life. In the book, they talk about tracking various financial indicators on a wall chart that you build. Now, I never built a wall chart. Not my style. But one aspect of the wall chart was really appealing to me. So I created something just for that.
I started tracking my monthly investment income potential. That is, how much money could my investments realistically provide me in monthly income? I tracked those against my planned expenses in retirement. The book says to track monthly investment income against current monthly expenses. That probably makes sense for a lot of people. But I don’t live the same life now that I will in retirement.
For one, as a military member I don’t get to choose where I live. In retirement, that choice – one that has huge financial implications – is all mine.
Also, my day to day life right now is largely dictated by work. In retirement – I’ll have different opportunities. Maybe I’ll eat out less because I have more time to cook. I certainly plan to travel more.
So my planned retirement expenses was a better way, for me, to go.
How I Created The FIRE Tracker
All I did to create this chart was open a PowerPoint presentation and insert a line chart. I specifically choose the “Line With Markers” chart. You can use a different type if you like another one better.
Occasionally, I will check my net worth. This is sometimes my annual check, where I record every account balance to the penny. Sometimes it’s just a quick glance at my major investment account balances – usually just for the purpose of filling out this chart or answering a specific question.
When I remember, I fill out my FIRE Tracker spreadsheet. You just select your chart in PowerPoint, select “Edit Data” in the toolbar, and start filling it out or updating. My FIRE Tracker has three columns – the month/year I’m recording the data, that year’s planned retirement expenses (I create a sample budget every year which is how I know it’s possible to retire on a military officer’s pension), and how much potential income I have.
I derive the potential income using the following formula:
((investment account totals) times .035 divided by 12) plus my monthly rental profit plus my monthly dividend average
For example, it might look like this:
((25,000+57,000+2,000) * .035 / 12 + $270 + $130 = $645 potential investment income
The .035 comes from my personal preference of using a 3.5% Safe Withdrawal Rate. Different people use different rates – that’s what I’m comfortable with right now. If you want to make a tracker like this, I suggest using a Safe Withdrawal Rate between 3.5% and 4.5% (.035-.045). Dividing by 12 gets you the monthly amount.
And yes, I still owe y’all a post on Safe Withdrawal Rates. That, along with everything else, is in the queue. The very long queue.
What It Means
As you can see, my planned retirement expenses haven’t gone up much since April 2013. That’s because I closely watch my lifestyle inflation.
Meanwhile, my potential investment income has gone up significantly. This is thanks to a few things – a strong stock market, a house sale in 2015 (notice the sharper-than-average rise), and a promotion accompanied by a larger paycheck. Larger paychecks + controlled lifestyle inflation = more money for savings and investments.
It’s all laid out in the chart – once that blue line reaches the Crossover Point, where my potential investment income regularly exceeds my expenses, I’m financially independent! Woohoo! I’m halfway there!
#2: The House Tracker
Motivated by my kickass and motivating FIRE Tracker, I decided I wanted to start tracking how much of my houses I actually owned. Like the physical space in my house that was paid off. It was mine, not the bank’s. So I came up with this visualization.
Now, I went to probably too much effort when I built this. I actually tried to closely match the exact layout of my houses (I owned two at the time). That was dumb. It took sooooo long to draw the house in such a way that the final result actually matched my houses’ square footage. But, it’s also cool because I can literally see exactly how much square footage of my house belongs to me. So weigh how much effort you want to put into this against the joy of seeing an exact representation of your progress.
How I Created The House Tracker
In Excel, I drew out the layout of my house using borders. I made each row and column the same number of pixels so they formed squares. This was a “square foot” in my house. Then I divided the purchase cost of the house by the square footage to determine the value of each square foot. For instance, a 2,000 square foot house that cost $300,000 would have a $150 per-square-foot value.
Then, each box was filled with a dot. Literally a period dot. I make them all light grey font so they don’t stick out but are still visible. You can make them whatever color you want. I do this to make tracking easier. Make sure you only fill in the boxes within the “walls” of your house. That will help with the tracking.
Every few months, I’ll check my outstanding balance on my mortgage. However much the balance has gone down since I last checked is the progress I’ve made. I then fill in that progress in my tracker with a date. One square gets colored in for each price per-square-foot I’ve paid off. This is why you want to wait a few months in between doing this. If you check every month, the progress will be agonizingly slow. Trust me. Just do it 1-3 times per year.
When you color in the boxes that are paid off, make sure you also delete the dots. Why? Because that’s how you are going to check your math!
After you have deleted the dots, select the entire graphic starting from outside as shown. This will give you a count (circled in red on the picture) of how many “square feet” still have to be paid. Multiply that number by your price per-square-foot, and you should have about the same amount as your mortgage’s outstanding balance.
What It Means
It means I get to see exactly how much of my rental property belongs to ME! Every time I color in another chunk, I can say “cool, I now own the downstairs bathroom” or “awesome, putting off checking this for a year means I get to fill in the whole office space!”
This is really motivating to me. In fact, notice that big chunk in darker blue in the middle? That shows when I decided to pay off a large amount of principal because I loved coloring in more boxes. And the huge blue section on the left? How did I pay off so much of the house in two years? Well, that’s called a down payment. Love it.
#3: The Money Flow
Finally, my newest chart. I’ve been tracking my money for years. In fact, I used to be so obsessed with tracking it that I would record my spending at least three times a week.
That got old. It was necessary when I was bad with my money, but…no more.
Now I record my spending one or twice a month. Honestly, because I’ve gotten so used to spending a certain amount each month, it’s more to make sure nothing is wrong with the account rather than to check my spending.
But I do still follow a budget. I draw it up every year around the beginning of December, when all of my pay increases (base pay, BAH, and BAS) are determined. Then I make tweaks throughout the year if needed.
This is what it looks like in a much more appealing format than a spreadsheet. You see where my money comes in, and where I send it.
How I Created The Money Flow
While I’ve been tracking my budget and spending for years, I just developed this piece of art in the past week. I’ve known about these kinds of charts for awhile, but had no idea what to call them. And they certainly weren’t an option on Excel!
Luckily, KvD at gokinfo.com happened to mention the name in a forum recently. It’s a Sankey diagram! I used SankeyMATIC to build mine, but you can find other Sankey generators on the web if you Google “Sankey diagram generator.”
Thank you KvD!
Once you get the hang of it, the SankeyMATIC Build feature is easy to use. In the “Inputs” box on the left, you just need to type in your flows. Any stopping points you want to include in the flow (such as “Military Income” in mine) will be both a source and a target. Here’s what my list looks like (the list used to build the graphic used my actual numbers but the numbers below are fictional):
- Base Pay  Military Income
- Housing Allowance  Military Income
- Subsistence Allowance  Military Income
- Rental Property  Other Income
- Dividends  Other Income
- Interest  Other Income
- Military Income Taxes
- Military Income Savings and Investments
- Military Income Housing and Utilities
- Military Income Insurance
- Military Income Transportation
- Military Income Travel
- Military Income Everything Else
- Other Income  Rental Property PITI
- Other Income  Property Management
- Other Income  Home Owners Association
- Other Income  Savings and Investments
From there, you can adjust the colors, labels, spacing, etc to get the look you want.
What It Means
This is a great way to visualize your income and expenses! Like I said, I’ve been tracking this data for years but it was always in a boring spreadsheet. I mean, I’m a personal finance nerd so I love spreadsheets. But look at this awesome graphic!
Right off the bat, you can see how I prioritize my money, as well as where I spend too much or too little. No surprise – savings and investments are huge for this FIREe. I do wish my Housing and Utilities costs were much lower, but I’m stationed in a high cost of living area right now and I like to live alone, in convenient and safe locations, in moderately fancy digs. That costs money.
Meanwhile…geez, getting rid of that car really is saving me money. I knew it intellectually, but look at that razor thin line. Crazy! Overall, I’m pretty happy with how this looks.