The Best Way to Build a Personal Money System (It’s Not Spreadsheets)

A personal money system isn’t actually that complicated: It’s basically just how money comes into and moves out of your account, AKA cash flow.

And yes, cash flow sounds like a business term, but when you think about it, understanding your personal cash flow is most of personal finance. Here’s an example.

Simple, right? And you could make a (very compelling) case that this graphic is the foundation of your entire financial life. That’s why drawing your own version of this graphic is the best way to get a high-level view of your personal money system—and how you want to build it in the future.

To start, think about those three big buckets.

  • Money: The money coming in could be any form of income—maybe it’s your paycheque, or a side hustle, or investment income, or rent, or all of the above. 
  • Account: This account is the one where money shows up on a regular basis, and is probably the simplest part of the process. You might have more than one if you have multiple streams of income.
  • ???: The last step is where the money goes every month. This is where things vary (greatly!) based on your life and how you want to spend and save your money. AKA, the fun part.

There’s a reason the last step is a question mark—it’s the part that can be the hardest to figure out and manage. I should know, because I’ve spent the better part of five years figuring it out for myself and writing about it.

And now we’re going to cover everything I’ve learned (and examples based on my current personal systems!) in like… ten minutes or less. 

Let’s do this.

Map your personal system

Grab a pen and paper (so analog, I know) and draw out what you know about your money right now. You probably know where your income comes from, and the account it goes into—if not, start there—but then the third step is much more personal and specific to you.

Some questions to help you figure it out:

  • Do you have any separate accounts you put money into, like a savings or investment account? Add them!
  • Do you contribute to joint expenses with a partner? 
  • Do you have any major expenses each month that take up a major chunk of your income? (If it costs more than 10-20% of your income, like rent or loan payments, you can list it separately if it helps!)

The reason it’s best to start with pen and paper at this stage is because your first try won’t be pretty, and it doesn’t have to be. The point is to get all your thoughts out, so you can start to identify groupings and where money actually goes.

To give you an example, here’s my current money system.

Anything in green is an Actual Account that money ends up in, and anything in grey is a label I use to help me understand why the money is going there, or what I use the money in that account for. If you’re wondering, here are the tools that power each part of the system (yes, affiliate links, because I use and love them!):

I also use two credit cards: The Tangerine World Mastercard for my personal expenses, and a joint RBC Westjet Mastercard for joint expenses. 

I’ve been working on this system and evolving it for five years, and it still took me multiple drafts to map it out well. Don’t worry if you’re still at the question-mark stage, or you’re not quite able to map it perfectly on your first try. 

PS. Yes, separate your business finances! (PPS. Yes, your side hustle is a business.) You’ll notice there are two sources of income in my personal system—my job and my side hustle. There’s a whole separate system for my money before it gets to the “side hustle income” stage here, to make sure I know how money flows through my business. Keeping them separate is key to help you understand what’s happening!

Use your map to figure out your next step

Now, I know you definitely already grabbed a piece of paper and a pen to draw your system, right? Excellent, because this next part is going to be a lot more helpful if you’ve started working on it. 

As you’re drawing, you’ll notice one or both of the two ways you can learn from mapping out where your money goes.

You can see what you need to learn next

Getting stuck while drawing this out is, surprisingly, a great outcome. Where you get stuck shows you the most important next thing to learn or do. If your system still ends with question marks at the end of any path, you can dig in more to understand what you don’t know, and change it if you don’t like what you learn. 

Even if you’ve got a full system mapped out, with accounts in all the places you want them, you might not be happy with the amounts that go into each bucket every month. Changing those amounts is another great place to start making your money fit your life, whether it’s wanting to earn more, create new streams of income, or shift the balance between spending and saving your money.

You can see gaps between your current system and your ideal system

Maybe you love your savings set-up, but you haven’t opened any investing accounts, even though you want to. Why is that? There are plenty of valid reasons, like not knowing how to start, or being stuck on choosing between an RRSP and a TFSA. Only you can answer that question.

But before you can fix a gap—you know you want to invest, but you aren’t yet—you need to know it exists.

This can happen on the other side of your drawing, too. Maybe you’ve been wanting to start a side hustle to earn a bit more income, but you currently only have your paycheque. That’s another gap you could work on building towards in your ideal system.

Pro tip: Choice-proof as much as you can

One of the most helpful things that I do is limit the amount of choices I make about my money every month. If I’m being totally honest, I almost never think about my money anymore. (Other than, of course, all of this thinking I do about money.)

My systems are set up to largely put money into the right places on their own. All of my savings and investments are automated, and I load a set amount of money onto my KOHO card each month. That way, any time I want to buy something for fun, like a stack of books or a new pair of leggings, the only thing I need to think about is whether there’s money on the card or not (it’s a prepaid Mastercard, and you can check out more about how it works here).

Not “Will this impact the mortgage payment? When does that come out of my account again? Is that before or after my next paycheque?” Which honestly takes all the fun out of impulse buying books! Impulse buying books should be a joy.

(And yes, just last week I was talking about how personal choice is only part of personal finance. That’s true! I stand by it! But consistently relying on willpower to make choices that you don’t have to make is mentally exhausting. In this case, setting yourself up to make fewer choices is a great move.)

Evolve it as you go

The system I have today isn’t the same one I had five months ago, and it’s certainly not the one I had five years ago. What you map out today doesn’t have to be your system forever. Instead, it can help you see what your next steps will be.

Mapping your money out visually adds structure to something that can easily seem nebulous and overwhelming. Money! It goes everywhere! Who even knows what happens with it!

Well, you do. You can see the system now, which makes it easier to understand where you can find your next big money win—and you didn’t have to open a spreadsheet to do it. 

Spreadsheets are great, but they’re not the only way to understand your money. And they’ll never be able to give you the kind of big-picture view you can get with a simple pen and paper.