Since my college days of living hand to mouth, I’ve tracked every penny I’ve earned and spent. It was a bit necessary if I wanted to have more month than money. At first I used pencil & paper, then a spreadsheet, and eventually Quicken.
Years later, after reading Your Money or Your Life, I began tracking passive / investment income with focus and determination. I added more calculations and pages and charts to my spreadsheet, and eventually started using Mint.com.
I credit this practice of tracking all income, expenses, and investment activity with our ability to optimize our spending and grow net worth. It is hard to overspend or buy frivolous things when the numbers are staring you in the face. There is no pretending and no hoping for the best.
It really doesn’t matter which method of tracking you use, as long as you do so…
After 20+ years of practice and experience, I now rely primarily on Personal Capital to do it all for me. It does everything that my old spreadsheet did in a fraction of the time. It’s great… plus, you know… free.
Disclosure: GCC is a Personal Capital affiliate. If you start using Personal Capital from a link on this page, we may receive compensation. Opinions are my own, and also free. For all of our International readers, sorry, PC is currently US only.
Personal Capital, Free Financial Management Tools
We have 20+ bank, investment, and credit card accounts across 13+ different companies. The Personal Capital Dashboard provides a high level overview of the last 90 days of income, expenses, account balances, and net worth across all of these accounts with a single login.
Everything is color coded and easy to read, with intuitive graphs and timelines. It is a simple and easy way to grasp our current financial status with a single glance. As a lazy and busy person, this is a dream. And more detailed information across all areas of interest and timeframes are just a single click away.
Cash flow is pretty important. Just ask Floyd Mayweather. Or me.
Personal Capital‘s cash flow page provides a snapshot of every income and expense transaction across all accounts, and the timing thereof. And each transaction is automatically assigned to standard budget categories (with great accuracy.) Zero effort Budgeting and Cash Flow Management are nice features.
Easy to read charts highlight incoming and outgoing dollars, making it clear how much is spent on avocado toast and other essentials.
Ideally, tracking cash flow leads to investible cash which leads to an increasing net worth. Good behavior is rewarded. The net worth page automatically tracks and updates all account values (including housing, if that’s your thing) so we can make sure net worth is trending in the right direction.
For those of us who own stocks and other liquid investments, Personal Capital has a nice suite of tools to optimize asset allocation and minimize fees.
Through a simple series of questions Personal Capital makes an educated guess on how well you might sleep at night and proposes an appropriate target asset allocation. (Ours is set to the most aggressive.)
Any time the target allocation is out of whack we’ll be notified. For example, due to the recent run-up in US stock prices, our total allocation has become more US stock heavy than our target.
Finally, and very importantly, the retirement fee analyzer looks at your investments and compares to alternatives. If your fees are high, this tool lets you know. Shockingly, there are still too many funds charging 1%+ per year when we could be paying less than 0.05%.
About a year or so ago, Personal Capital added a retirement planner feature. This projects portfolio longevity based on statistics of historical returns and target spending aka a Monte Carlo type analysis. It’s pretty slick. (However, I think rolling windows based on historical data provides a more realistic outcome. See cFIREsim for this.)
This tool reports a 99% chance that our portfolio will support our goals, which is nice to know. It never hurts to get another perspective, especially if that perspective says you have some work to do.
I strongly advocate a DIY approach to investments with low-cost index funds. But there are people who prefer to have a person or team managing their portfolios. For this, Personal Capital offers investment and wealth management services.
Fees are lower than traditional financial advisors, but are about 6x the cost of a robovisor and 15x the cost of our portfolio. Therefore I feel 6-15x stronger about using these services as I do about robovisors.
On occasion PC will call users and ask if they are interested in using their investment or wealth services. I haven’t answered a single one of these calls as I’m always in another time zone. Others have, and just said they prefer to manage their own investments.
Common Questions & Room For Improvement
Over the past few years I’ve heard 3 common questions from readers about using Personal Capital
1 – Isn’t PC a startup? What if they go out of business?
I used Amazon.com and Netflix long before they were profitable. I’m not aware of PCs financial status, but I like their tools so I use them. Hopefully their business grows, I like to see quality stuff succeed.
2 – Is this secure?
Usually this question is asked in regards to having a single login to access multiple accounts at different companies.
Yes, it is secure. There is no option to buy/sell/transfer funds from any accounts through PC, and all account access is managed by Yodlee which all of the big banks are using anyway. (No passwords are actually stored on PC servers.)
Additionally, each device that you use is individually authorized. Only my personal laptop/phone have access.
And since we now have easy and regular access to all accounts, it is easy to see if anything looks out of place. I see that as a security improvement.
3 – is there anything I don’t like?
Yes. PC works best when all transactions are in electronic form such as credit cards, debit cards, online bill pay, and transfers. For cash transactions, I would like to be able to split transactions across multiple budget areas. Example: I withdraw $500 from the ATM and spend half on avocado toast and half on toys for Jr. Currently I can only categorize this $500 withdrawal as ATM/Cash, Child/Dependent, or Restaurants. It’s a minor thing, but it is what it is.
Over the years, I’ve tried many different methods of tracking income and expenses and optimizing investments. Personal Capital is a great option that is quick and easy to use. We are able to see our 20+ accounts across 13 different companies with a single login and a single Dashboard, with incredible detail just a click away. Plus the price is right.
Nowadays Personal Capital is my primary way of staying on top of our financial status. Maybe you will like it too. Click here to try it for free.