Friends! I have a badass tool I want to share with you.

I’ve been using it for about four years now and it allows me, anytime I want, to see the 30,000 ft view of exactly where I’m at financially: how much cash is in the bank (yay!), investments are in the market (yay!) and credit card debt I’m carrying (boo!). It can also track your mortgage, car payments, student loans, personal loans, etc. Honestly, I don’t know why it’s taken me this long to share it with you. Let’s just put this under the “better late than never” category and move on!

What is this badass (and free!) tool of which I speak? It’s called Personal Capital. 

To really understand why Personal Capital is so helpful, let’s look into why having a 30,000 ft view of your finances is important in the first place.


Dat Macro View Doe


I say this to my clients all the time (so much so they’re probably sick of it) but you can’t make an informed decision if you don’t have information in the first place. Therefore, in order to make smart decisions, you have to know where you’re at. Here’s a dieting analogy to bring the point home…

Let’s pretend I wanted to lose 20lbs. Before putting together a workout routine or changing my diet, what’s the first thing I should do?

Weigh myself.

Why? Because if I don’t know where I’m starting from, I won’t know if I’m making any progress toward my goal. And more importantly, without knowing my initial weight, I don’t know if my goal to lose 20lbs is even the right goal in the first place!

For example, if I weighed 210lbs and wanted to lose 20lbs, that’s probably not a bad goal to strive for. But if I stepped on the scale today (at my currently dainty weight of 148lbs), then losing 20lbs would most absolutely be a terrible goal.

To bring it back to finances, you may want to save $2,000 for a trip this winter. But if you currently have $6,500 in credit card debt, then the trip shouldn’t be your goal – paying off that debt probably should be.

Think of Personal Capital as the scale for your personal finances. It may be scary at first to step on it and see your numbers staring back at you. But remember – the devil you know is better than the devil you don’t. Without this information you’ll have no sense of your progress, or whether you’re even moving toward the right goal.


Cherries On Top


In addition to providing a great 30,000 foot view, there are two other features Personal Capital has that are worth highlighting.

Budgeting (to build awareness)
What’s nice about their budgeting tool is it isn’t as thorough (and therefore complicated) as Mint’s. While I wouldn’t recommend it as a long term budgeting approach because it’s a bit too simplified, for people who have no idea how much they’re spending and want to begin to understand where it’s all going, it’s a fantastic tool.

In order to use it most effectively, make sure you spend most of your money on credit/debit cards so that spending will show up in Personal Capital. From there, categorize your transactions every few days to start building up a picture of how much you’re spending and where it’s going. After 3-4 weeks you should have a much clearer picture of where your money is actually going vs. where you thought it was going. Again, I don’t recommend it as a long-term tool, but as an easy way to start building awareness I give it a 10/10.

Reducing investment fees
Although “reducing investment fees” doesn’t sound exciting, this is probably the single biggest thing that has an impact on how much you’ll earn on your long term investments. Below are two great articles to introduce you to this concept and highlight what fees really cost you:

• How a 1% Fee Could Cost Millennials $590,000 in Retirement Savings
• Think Your Retirement Plan Is Bad? Talk to a Teacher

The way Personal Capital helps with this is their feature called the Retirement Fee Analyzer, which shows how much you’re paying in fees on your retirement accounts. It shows you that number not just in aggregate (total % in fees across all accounts), but breaks it down by each individual mutual fund or investment too.

If you discover that you’re getting gouged with fees, unfortunately they won’t automagically move your investments from high fee investments to low fee ones. You’ll have to do that on your own. But knowledge is power (see weight analogy earlier), so knowing if you have any investments with excessive fees gives you the ability to decide if and how you want to take action.

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I’m always on the lookout for tools that will help myself, my clients, and the readers of this newsletter, so if you currently use a badass app or service that you want me to check out, shoot me an email and let me know!

Love,
Garefield Connecticut