By far, my favorite tool to manage my money is Personal Capital. It’s free, it’s easy to use, and it’s incredibly powerful.
In the past, I’ve used Mint and for a while I kept a detailed spreadsheet on Google Sheets. But Personal Capital blows those two approaches out of the water. In this post I’ll walk you through how to use Personal Capital and highlight some of the features that make it the best tool for managing your money.
A Look at the Personal Capital Dashboard
Here’s what it looks like when you log in on a web browser on a computer:
On the left is the current balance of every account you’ve connected to Personal Capital. Bank accounts, credit cards, investment accounts, mortgage balances, etc.
In the middle is a beautiful collection of visuals that show you how various aspects of your financial health are performing.
We’ll go over some of these in more detail below, but all of these graphs and charts are interactive. You can see more detail by hovering your cursor over them. And you can click on them to bring up a more detailed version.
See All Your Accounts in One Place
This is a huge benefit of using Personal Capital. Especially if you use credit cards to take advantage of miles and points like I do.
One thing that’s critical when using credit cards is to not let your balance get higher than what’s in your checking account.
Before I had Personal Capital, I would have to log in to my bank and write down my balance, then log into my credit card account and write down my balance. Unfortunately, I have multiple cards to maximize my points and cash back. So I’d have to log in to multiple credit accounts. Now I just log in to Personal Capital.
It also gives me a nice picture of the value of my home. It pulls my current balance from my mortgage, as well as the current estimate of my home’s value from Zillow. This is yet another example of where Personal Capital has replaced multiple log ins.
But how about one more example? My IRA is with a different company than handles my 401k at work. I used to have to log in to multiple accounts to see how much I have invested.
And of course, it’s so nice to be able to see my cash, credit card balances, home equity, and investments all together.
Effortlessly Track Your Net Worth
Your net worth is where you stand financially. It’s defined as your assets minus your liabilities, or what you own minus what you owe.
It’s the snapshot of your current financial health.
Everyone should know their net worth.
Before I used Personal Capital, I had to track this manually in Google Sheets. Once a month I would log in to all my accounts: banks, credit cards, investment accounts, etc. I would also consult my most recent mortgage statement and Zillow’s valuation of my house.
I would put it all into a table and generate a graph that looked like this:
Now, my net worth is calculated every day for me. It’s right there on my Personal Capital dashboard when I log in. And if I click on the dashboard, I can change the date range or look at just a portion of my financial picture like my cash balance or my mortgage.
Here’s what my net worth chart looks like when I set the date range to this year:
And here’s what it looks like when I just look at what has happened to my mortgage balance this year:
Monitor Your Spending
There are actually two great ways to tack your spending in Personal Capital:
- The Budgeting Section
- The Cash Flow Section
The budgeting area lets you set a monthly spending limit and lets you see whether you’re on pace to hit it.
When you click on the budget visual on the dashboard, it takes you to a more detailed breakdown. On this view you can change the date range and you have visibility to all the transactions you’ve made that count towards these totals:
Yes, we’re not on pace to hit budget this year and yes, I had some car trouble recently. Life’s hard isn’t it?
Okay, so maybe I’m spending more than I want to be. Am I at lest making more than I spend? That’s where the cash flow tab comes in.
On the main dashboard, it shows me how I’m doing so far this month:
You can also click on it to open up the more detailed view where you can change the date range and see the transactions:
Instead of seeing income and expenses together, you can look at just one at a time if you want:
Track Your Investments
I love this aspect of Personal Capital. When I log in, I can see my portfolio balance on my dashboard:
I can also see how much I’ve saved this year:
I love how it lets me set a goal and shows me how much I need to save per month. I also like that it gives me a recommended range based on my retirement goals. More on that later.
I can also see how well each of my funds is performing. This chart shows my total performance this year (the blue line) measured against the S&P 500 (the orange line):
If I click on one of my funds, a line gets added to the graph:
I can also compare my performance against other benchmarks, like the foreign stock market or US Bonds:
There is a very cool tab that shows me my current asset allocation:
My 96.18% allocation to stocks is pretty aggressive, but I have a long way to go in my investing journey and my regular contributions help smooth the ride.
As my balance grows or when I make the switch to retirement, I’ll definitely be transitioning to a more conservative allocation.
Plan For Retirement
Their retirement planner is outrageously easy to use. They already can see how much you have invested and how much you’re contributing, so it’s easy for them to create projections. You just enter details like when you want to retire and they’ll help walk you through other steps like estimating social security.
You can create multiple plans for comparison. Here’s a plan I created where I looked at what would happen if I retired at 55 based on my current contributions:
Yikes, that 57% chance of success isn’t great. In the median projected scenario, my portfolio would have dwindled to $200,000 if I lived to be 92. In the 10% situation (the situation worse than 90% of the projections), I would run out of money 10 years into retirement.
So I went in and created a new scenario where I retire at 55, but I increase my contributions every year between now and then:
Ah, that’s more like it. By the way, the line with the orange palm tree icons is the retirement date I set. The green icons represent where social security is projected to kick in.
Keeping an Eye on Your Investment Fees
One of the things that I always harp on is that investment costs matter. They matter far more than you think. Fortunately, Personal Capital has a whole section that shows you the fees associated with each of your funds as well as how they will impact your portfolio:
Notice how they use a 0.5% benchmark. That’s way too high in my book. For a total stock market index fund you should be able to find an expense ratio below 0.05%. Bond funds might be a little higher, but shouldn’t be anywhere near 0.5%.
Anyway, I’m doing great with fees, so that chart isn’t super interesting. But it’s interactive, so let’s see what happens if I set my fees at 1%:
Ouch! I’m telling you, fees matter.
The App is Freaking Awesome
I love the desktop version of Personal Capital, and it’s a little more powerful, but I end up using the app most often because it’s so convenient.
Here’s what a few of the features look like on the app (I always keep my phone on dark mode which is why the backgrounds are all black):
Personal Capital might be the most powerful personal finance tool I’ve come across. It’s almost unbelievable that it’s free.
Just sign up, link your accounts, and let Personal Capital do the heavy lifting of tracking your finances.