Have you ever wondered where all of your money is going every month?
Before I started budging, I felt stuck in an endless cycle of collecting a paycheck and paying bills. If you are like me, even if you do manage to clear a few hundred (or thousand) dollars after expenses each month, you may feel like it’s hard getting ahead.
The best way to assess your financial situation every month is by compiling a monthly budget. While your initial reaction to budgeting may be negative, when you realize the freedom that building and sticking to a budget provides, you will feel much relief and less guilt spending your hard-earned dollars. As you track your net worth, you will feel the reassurance that you are gaining ground and the decisions you are making today will pay off in the future.
However, who wants to spend hours thumbing through pay stubs, mortgage or rent documents, and credit card or bank statements to manually compile a spreadsheet on their computer?
Unless you love personal finance as a hobby and want to dive into this level of detail for “fun,” the ordinary process of tracking your budget, monthly cash flow, and net worth can be quite time consuming. While we all want to get ahead in our finances, many of us have other hobbies or families we’d like to spend time with after our 9-5.
With modern technology, you can seamlessly automate the budgeting and expense-tracking process in one easy-to-use application – Personal Capital.
Here are the 10 Best Reasons I Love Personal Capital.
1. Personal Capital is Completely FREE
Let’s face it – who wants to PAY money every month for their personal financial position? After all, you compile a budget to help you save money – not spend it.
Unlike other budgeting apps, software, or financial coaches that may charge hefty fees, the Personal Capital platform comes at no cost to you.
While Personal Capital does offer a premium service of financial advisers that can tailor a plan to fit your personal financial needs, the core app is completely free to download, sign up, and track all of your various accounts.
2. Personal Capital’s Set Up Simplicity is Unrivaled
Budgeting and personal finance is already difficult enough for most people. After all, 63% of Americans are considered financially illiterate.
Considering most people dread the responsibility of putting together a plan and forcing themselves to abide by it, the fact that Personal Capital is so user-friendly will help you stay committed regardless of your experience.
Set Up Your Account
Simply, go to your App Store, search for the Personal Capital app, and download. Once the app has been installed, you can begin the process of creating your account.
After completing your account, you begin linking your various accounts by selecting “Link Accounts.” In the search bar, begin looking for your bank or credit union, brokerage accounts, and any retirement account custodians. Your financial institutions will prompt you to enter you username and password as well as the answers to your security questions to ensure an authorized and verified connection.
As an added benefit, you can also manually input the value of other assets or liabilities. For instance, if you have jewelry, art, or a vehicle, you can manually input the value for your net worth calculation that Personal Capital performs.
Each time you open and refresh the app, you have the ability to instantaneously know where you stand on your budget, cash flow, and net worth at any point in time.
4. Personal Capital’s Automated Budgets Keep You in Control
While other apps such as Mint provide more granular categories to track your spending, Personal Capital offers a higher-level solution.
For those who want to give themselves a pay raise through a high level budget, Personal Capital offers a good baseline to start. While you can’t set “mini-budgets” inside your overall spending plan like with Mint.com, the app aggregates your past income and spending to help you set an overall budget.
Based on your historical spending, you can set a reasonable budget and track your goals. While you cannot set a specific category for groceries as an example, the app will automatically categorize your spending into their respective niches. You can then see what percentage of your monthly budget goes to your housing, groceries, restaurants, insurance, or utilities. This may help you spot areas you can cut back or eliminate. The budget will also compare each category to the prior month so you can identify spikes in your spending categories and adjust accordingly.
As a helpful tool, Personal Capital also allows you to see the exact date your spending occurs through helpful charts and graphs. For those that appreciate more visual feedback, they will love the graphics.
5. Easily Monitor Your Net Worth with Personal Capital
Perhaps, the net worth calculator tool is the best feature Personal Capital offers.
Most Americans have little knowledge of their overall net worth. Just like every company compiles a balance sheet that lists all of their assets and liabilities, you should run your own finances in a similar way. Each month, you can see how your spending and investment choices influence your overall net worth value.
However, logging into each account and manually tracking can be tedious and inefficient. Personal Capital automatically aggregates your accounts to determine your net worth by securely connecting to your financial institutions.
The net worth feature offers a high-level view of your accounts. By clicking on the account, the app allows you to drive into the account details and see the different stocks or funds comprising your accounts and any changes during the trading day. Helpful charts help you visually process your account activity and fluctuations in your net worth.
As an added feature, you can also track how your portfolio holdings perform compared to other benchmarks. The “You Index” shows your daily performance over a 3-month span. Simply select the S&P 500 or other benchmark and the app shows your performance versus the benchmark on a chart.
6. Personal Capital Offers Automated Portfolio Analysis
As technology steadily develops, our finance apps continually become more beneficial and go beyond simply tracking to offering insights and suggestions.
With the “Investment Checkup,” Personal Capital provides extremely helpful information and suggestions. As an example in my own portfolio, my checkup mentions that I have sector concentration risk. This is because Personal Capital categorized each of my investments and the percentage of my total portfolio, noting that nearly 37% of my holdings are in the technology space.
The App Helps You Identify High-Fees
Another aspect Personal Capital brought to my attention related to fund fees. The checkup identified that I pay around .12% each year in fund fees and even specified the dollar amount I would pay over 20 years. While I generally buy low cost index funds, the mutual funds in my employer-sponsored 401(k) tend to be slightly higher at ~.5% to .85% expense ratios. Because these funds are the best performing options and have outperformed the overall stock market by an average of more than 5% per year over the last decade, I do not mind paying slightly higher fees.
However, for those that may not know the expense ratio they are being charged by their money manager or mutual funds, this tool is extremely beneficial to help you identify high-cost investments and shift to lower-fee alternatives.
7. The Daily Capital Blog Offers Helpful Insights and Learnings
Whether you are looking for information on retirement or entertaining posts on financial planning, Personal Capital’s blog section offers well-written information on all of your financial needs.
If you are new to investing and budgeting, you should consider investing in your own knowledge first. Since knowledge will help you allocate your resources most efficiently, learning about different investments and personal finance strategies can keep you out of the troubles many novice investors face.
For instance, some of the posts discuss tips for recent college grads, whether to rent or buy a home, and offer insights on new trends and lifestyles such as the “FIRE” (Financial Independence, Retire Early) movement.
Maybe, you have never thought of your purpose for investing. With their helpful readings, you can mold your investment strategy and make the sacrifices today to live your best life tomorrow.
8. Personal Capital Offers High-Yield Savings Accounts
While you probably won’t get rich keeping money in cash, you should always have ample cash reserves in a rainy-day fund.
However, inflation generally erodes the value of your cash balances at a rate of ~2% per year. Therefore, you can protect your cash balance and securely keep up with inflation through Personal Capital’s high-yield savings account.
Instead of receiving the nominal interest you probably receive from your traditional, brick-and-mortar bank, Personal Capital Cash is a program that offers you a much higher interest rate at 2.3% as of June 2019.
As an added benefit, the Personal Capital Cash program offers an aggregate of FDIC Insurance coverage of $1,250,000 which is much higher than the standard $250,000 most banks offer. While certificates of deposits lock up your money for more than a year and many high-yield savings accounts or money market funds limit the amount of withdrawals you can make per year, Personal Capital Cash offers unlimited transactions (subject to a daily $250,000 deposit limit and $100,000 withdrawal limits for security reasons).
Overall, Personal Capital Cash offers a competitive yield, no-fee savings account to help you protect your cash balances.
9. Portfolio Management Through Personal Capital
As of June 30, 2019, Personal Capital manages over $9 billion in assets for thousands of clients.
Through their fee-only financial advisers, you can connect to qualified investment experts to help take your portfolio to the next level. Your fiduciary financial adviser can help you set your goals and customize your investing strategy to achieve your objectives. Whether you seek advice on a 401(k), 529 college savings plan, or tax advice, you have access to Personal Capital’s network of advisers for a relatively small fee.
Currently, Personal Capital’s advisers’ annual fee is about .89% with no other hidden fees, no trailing fees, and no trading commissions. For those with over $1 million in investable assets, the fee is reduced to ~.49% to .79% depending upon your balance.
If you are looking for an all-inclusive, easy-to-use technology platform to monitor your budget, spending, and investments, look no further than Personal Capital. Through their intuitive platform, you can easily set up an account and begin tracking all of your financial accounts. If you are looking for financial advise or even just wanting to learn more about investing and personal finance, connect with a fiduciary adviser or read through their daily blog. Personal Capital will help you become more financially savvy and help you achieve your financial goals.