Since college, which was back in the early 2000s, I’ve been using excel spreadsheets to manage my finances. After various versions, I finally settled on what I have now and it’s available for free to everyone here. It focuses on tracking income and expenses and hopefully what’s left over.
My spreadsheet helps me to track income and expenses and ensure that I follow my budget. If not, it helps me identify where my spending may be out of control and then I can develop a plan to help bring it back into control.
Apart from this tracking mechanism, for the past couple of years, I’ve been using a personal finance tool called Personal Capital. Instantaneously, I learned it’s a lot more advanced than my excel spreadsheet and includes some nice visuals as well.
I first read about Personal Capital from one of my favorite bloggers; Financial Samurai. He had some great things to say about the tool and so I decided to give it a shot. It was love at first usage. 🙂
Things I Love About Personal Capital
Personal Capital is a tool to help people track and manage their finances from a macro and micro level. In particular, it helps manage investments which are my number one personal finance priority. Personal Capital offers the following to users:
- It can link various account types such as checking and savings, retirement, brokerages, college savings plans, IRAs, credit cards, mortgage companies, and more from many institutions.
- It’s free to use and available on a computer, smartphone, and tablet.
- Identifies all of your investment holdings.
- Identifies which sectors you’re invested in (e.g., Basic Materials, Communication, Consumer Defense, Consumer Cyclical, Energy, Financial Services, etc.).
- Identifies your allocation (e.g., International Stocks, US Stocks, Alternatives, Bonds, Cash, etc.).
- Identifies how much in dividend income you are earning and from which investments.
- Captures how much cash you have available to invest across all of your accounts.
- Includes easy to use tools under the ‘Planning’ Menu like the Retirement Planner (to project your monthly spending ability), Investment Checkup (to analyze the effectiveness of your portfolio and efficiency of your asset allocation based on your risk profile) and Retirement Fee Analyzer (compiles the fees you are paying to your funds so that you may make changes).
- I’ve personally made changes to my investment and retirement accounts based on the valuable data provided by these three tools.
- Automatically updates your balances each time you log on (e.g., bank accounts, money market accounts, 401k, IRA and other types of retirement accounts, brokerage accounts, college savings accounts, loan balances, and manual assets and liabilities you enter.
- Tracks the performance of your entire portfolio against other indexes. See below for my Portfolio comparison VS the S&P 500 for the full 2016:
Personal Capital’s Team Will Even Talk To You For Free
You may even be able to set-up a phone conversation with them to see if there are any questions you may have about your portfolio or Personal Capital’s software. This involves a detail 45 minute to an hour-long conversation. As part of this conversation, they’ll ask things like:
- when you’d like to retire,
- what type of retirement you envision,
- lots of travel
- time with friends and family
- a combination of both
- how important is a college-savings plan for your kids if you have any,
- the level of life insurance that’s appropriate for you,
I’d like to make you aware that depending on the size of your account, they may approach you for their investment advisory service. At the time I was informed that the fee would be .89% of your account value per year which includes a team of personal financial advisors. I politely declined for now as I prefer and enjoy managing my own finances.
Personal Capital Offers Your Basic Analysis As Well
You can still do the basic income and expense reconciliation things by going to Banking in the top menu and clicking on Cash Flow. You will see a transactional history of all Income or Expense from any accounts you wish to see by using the “All Accounts” tab:
It Can Become Addictive
Admittedly I log on at least a couple times a week using my smartphone. It’s really easy to just check up on your net worth, see if your dividends are being added to your investment balance and transactional history.
It’s so easy to link you accounts and the balances automatically update every time you log on. And as a result, I was finding myself logging on a few times a week and for apparently no reason. It was like hey let me just make sure that my net worth is around the same as it was a couple of days ago. Why wouldn’t it be, unless some major financial event took place?
I wouldn’t count this as a drawback for the software, but just a word of caution for the user.
If you’re investing for the long-term, it takes time to build and continually adjust your portfolio and allow your investments to grow. Personal Capital’s software is there to help you monitor your long-term growth and make these adjustments along the way.
I don’t work for Personal Capital, but I do highly recommend their free tool. If I can give you only reason, it’s that you don’t have to log onto multiple financial accounts just to see how you’ve earned, saved, invested, or spent your money.
- Do you use Personal Capital?
- What do you like and don’t like about it?
- Do you use a different Personal Finance tool? If so, how does it compare to Personal Capital?
I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!