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Personal Capital How To and Review

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The first step to save more money and reach financial independence is to track your finances — income, expenses, and investments. In this Personal Capital how to and review, we’ll set up an account and see how to start tracking our spending and savings.

The information we gain through tracking our cash flow will help us see where we can minimize waste, decrease spending, and increase savings.

Reducing spending while increasing dollars invested is a double-whammy of good. Once you create a habit of spending less and saving more, the effects compound with increasing speed.

I’ve used Personal Capital for almost 2 years, and it has helped me get my financial life sorted in a big way. They say knowledge is power, and financial knowledge is the gift that keeps on giving.

If you sign up using links on this page, we’ll both receive $20.

If you don’t have an account, signing up for Personal Capital is easy. Personal Capital currently has over 2 million users registered who use their free financial software. They offer free tools for tracking income and expenses in detail, along with beautiful charts and graphs which makes it fun to watch your assets grow. I recommend using Personal Capital without reservation.

What is Personal Capital?

Personal Capital is a platform that offers free and an optional paid service for tracking your finances and managing your wealth.

They offer budgeting tools, income and expenses tracking, detailed tracking for your credit card and investment accounts, a retirement planner, and more.

Personal Capital offers a Net Worth tracker as well to give an idea of your overall asset value.

If you’re a homeowner, they include the ability to track the value of your house using an estimate provided by Zillow. (If you’re looking to buy or rent a home, Zillow is a real estate database that I recommend you check out.)

Personal Capital: How To Use It

Once you’ve opened your account with Personal Capital, you’ll start by linking all of your financial accounts.

I’ve linked my bank account, student loan account, mortgage loan account, and investment accounts.

If you’re worried about linking your accounts, Personal Capital provides an in-depth look at their security measures on their site. Your banking and investment account passwords are not stored with Personal Capital; they simply use integration provided by companies that verifies that you own and have access to the account.

personal capital how to link accounts

The banks listed (along with more discovered through search) provide a secure way for you to connect your accounts to Personal Capital.

You’ll just need your account login ID or email and your password to start connecting your accounts. You will be asked to verify your information with a confirmation code that will be emailed or texted to you.

After you link your accounts, Personal Capital will start loading data from your banking, loan, and investment accounts. Then your dashboard will be populated with all sorts of good information about your income, expenses, spending habits, and your net worth.

Let’s go through the information tabs provided.

personal capital how to tabs

Overview (Free)

The Overview tab provides access to your Dashboard, Net Worth, and Transactions which lists each account transaction from your linked accounts. This includes your paycheck income, investment fund dividends (and re-investment), and your itemized expenses.

The benefit of this is that you can see info for all of your accounts in one place which saves you time. At a glance, I can see all of my credit card activity,  my mortgage and student loan bills and payments, and my income — even though each of those are managed through different services.

Banking (Free)

The Banking tab shows your Cash Flow, Bills, and Budgeting. It also offers you the ability to open an FDIC-insured savings account.

The budgeting section offers great insight into your overall spending trends.

personal capital how to set a budget

Investing (Free)

The Investing tabs give you access to your investment holdings, balances, performance, and allocation.

Personal Capital occasionally offers advice on my investment allocation which provides a chance to do some research, but I stick to a pretty simple IRA and Index Fund investment strategy — though I will be making some changes by putting a percentage of my investments into bonds soon.

Planning (Free)

The Planning section provides a retirement planner, savings planner, retirement fee analyzer, and an investment checkup.

personal capital how to savings planner

The rise from October to November is because I decided to keep a little more cash on hand to avoid needing to withdraw from my index fund, just in case.

Check out how to build your own emergency fund in the 5 Steps to financial freedom.

Wealth Management (Paid)

For people with assets over $100,000, Personal Capital provides wealth management services. I have not used this service, but they offer a personalized investment strategy depending on your specific goals.

The annual fee is currently 0.89% for assets over $100,000, and the fee decreases if your assets are over 1 million dollars.

The fee is higher than the management fees for something like an index fund, but it is less than an actively managed investment fund, so it may be worth it to you if you’ll use the services included — fiduciary advising (which benefits the client over the company), tax-planning strategies, automatic account rebalancing, personalized advice, and more.

Personal Capital Review

Overall, Personal Capital has been a great asset to my personal financial planning. Having all of my account information in one place makes it very easy to see how my assets are growing. What you track and measure is more likely to get managed, so a free service like this that keeps me spending and investing in line with my long-term goals seems like a no-brainer.

personal capital how to email alert

I like the alerts I get in my email when I spend more or less than the same time last month. It’s a great reminder to be aware of how I’m using my money and time.

Pros

  • Free, high-quality tools to help you reach your specific financial goals
  • Personalized insights and advice based on your own habits
  • Options for both those who enjoy getting extremely specific and people who want a high-level overview of their asset growth
  • High-security with third-party security audits. This requires occasional account re-verification, but that is preferable to a security breach.
  • Relatively low fees for account management with their paid services if you factor in the tax strategy planning, real advisers, automatic account rebalancing, etc.

Cons

  • Expense categories sometimes need tweaking. This is probably because they import information as it comes from your primary account.
  • Some features can seem overwhelming if you’re not an extremely detail-oriented person, but you have options to just look at your overall progress
  • Paid services require a $100,000 minimum, so the barrier to entry may be high for some. However, this model keeps the free version free.

Free Services for Financial Freedom

Signing up for a free account with Personal Capital can help you reach financial freedom by giving you insight into your spending habits. While you may enjoy working and you don’t have plans to retire early, your goal should be to reach financial independence as fast as possible. This gives you the most options. I think there are a lot of reasons why you should retire early.

Financial freedom leads to freedom of time which is our most valuable asset.

Since I started tracking my finances in using Personal Capital, I have increased my savings and investments by a huge amount. Tracking my spending showed me where I was wasting money which is the same as wasting the time it takes to earn it.

Start tracking your finances, and build great habits that will greatly increase your chances to reach financial freedom.

 

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Lyle

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