How to Use Personal Capital Like a Pro [Tutorial]

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In a world awash with tools and websites claiming they will help get your finances in order, Personal Capital towers above as one of the most-powerful free financial tools available.

Personal Capital’s mission is to help users get a clear understanding of their financial position and chart a clear path toward a solid financial future.

They pride themselves in providing what they refer to as a “360-degree view” of your financial position, letting you see all your liabilities and assets in a simple dashboard.

Using Personal Capital [Step-by-Step Tutorial]

It’s money management tools allow you to see your true net worth, plan your savings, stick to budgeting, and see and manage your cash-flow. You can use it to understand your spending and savings habits, plan and save for retirement, and project your future net worth in multiple scenarios.

But like most software, Clarity Money does have a bit of a learning curve.

If you want to get started but have questions regarding how to use Personal Capital software, then this is the tutorial for you.

Read this Personal Capital tutorial to learn how to use the software to manage your finances and get your financial house in order now and in the future.

We’ll work through how to budget using Personal Capital, see your net worth over time, monitor your cash flow, and plan for retirement and more.

About Personal Capital

Founded in 2009 and headquartered in Redwood Shores, California, Personal Capital is one of the original “FinTech” companies and was purchased by retirement services provider Empower Retirement in June of 2020.

With more than $14 billion in assets for thousands of clients, they aim to bridge the gap between the latest in technology and the human touch.

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Personal Capital
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Free


Personal Capital is my personal favorite for managing my passive income cash flows, investments and retirement accounts. With their free net worth tracker and retirement planner, I can manage my money in less than 10 minutes per month.
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As they say, “Personal Capital continues to blend cutting edge technology with objective financial advice from real human advisors”

How to Sign up for Personal Capital

The first step to using Personal Capital is to sign up for a free account.

Simply go visit their sign up page and enter an email address, create a password, and enter your phone number.

 

Personal Capital Sign Up

They’ll text a code to your phone you’ll need to enter to get into the site. Once you’ve confirmed your phone number, you’ll have the option to answer a few questions to help tailor your dashboard to your needs. 

Personal Capital will ask you your name, when you plan to retire and how much you currently have saved for retirement.

Tell Us About Yourself - Personal Capital

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How to link accounts in Personal Capital

Once you’ve created your account, the first thing you’ll want to do is connect Personal Capital to all your financial institutions, including banks, credit cards, and retirement and investing accounts.

If you want a complete view of your finances you must enter all your accounts.

Adding accounts is straightforward, simply click on the plus sign at the top of the right-hand menu.

Add Accounts on Personal Capital

Clicking the button will open a window where you can find your financial institution.

Enter the name of your financial institution or find it in their list of popular ones.

Link Your Account Personal Capital

Next just add the credentials you use to log into that account

Add Credential on Personal Capital

Depending on your institution, you might need to enter a code the institution will text or email you.

With all your accounts in order, it’s time to learn how to use Personal Capital for budgeting or skip right to signing up for Personal Capital today.

How to use Personal Capital to budget

Using Personal Capital for Budgeting lets you set a monthly spending goal and see how you are trending against it on a monthly basis. By seeing all your spending, Personal Capital helps you stick to your monthly budget.

Because your Personal Capital budget is tied into all your accounts,  you can easily see where your money is going so that you can make specific changes.

By comparing your spending to the previous month, you can see if you are spending more or less over time.

When you click on the budgeting tab you’ll see all your spending over the past 30 days at a glace for all your accounts.

Personal Capital Budgeting

 

Using Personal Capital to budget:

  • A – If you are over or under your monthly budget. Clicking on the pencil icon lets you change your monthly budget.
  • B – Your spending compared last month.
  • C – Your top spending categories.
  • D – You can change the view to include only the accounts you want to see. You can change the time frame to this month, last month, 90 days, one year, this year, or last year.

See Related: How to do Personal Financial Budget Monitoring

Set a monthly budget on Personal Capital

Personal Capital allows you to set a monthly spending budget and see how you are doing. If you are curious about how to use Personal Capital for budgeting for maximum benefit, it starts with setting your monthly spending budget.

Just click on the pencil button to next your monthly budget.

Budgeting on Personal Capital

To help you set your monthly budget, after clicking the edit button Personal Capital provides you with your spending by month for the past year as well as your average spending by month.

When setting your monthly spending budget take into account all your spending, including mortgage or rent, bills, shopping, and any other recreational spending.

Set Monthly Budget Personal Capital

As you enter your budget, Personal Capital will tell you how much money you’d save per year if you stick to that budget.

Once you’ve set your monthly budget, when you check Personal Capital you’ll immediately see if you are above or below your goal. Do your best to stick to your budget and see if you can stay well below it.

Currently, Personal Capital doesn’t let you set specific budgeting goals in addition to your monthly spending budget.

After knowing the basics of how to use Personal Capital for budgeting, you can make changes to the default settings to better suit your needs. 

See Related: 10 Financial Statistics You Should Know

Using categories on Personal Capital

One of the useful features of the budgeting tool is that it lets you see your spending and expenses by category. Personal Capital will assign a category to the transaction for you, but it’s a good idea to check the category being assigned to make sure it aligns with your preference.

You should also check transactions in the “other expenses” category to see if there is a more specific classification.

To change the category, just click on the transaction line item and click on the category to change it.

Scroll through the list to find the appropriate category, which are grouped by income, expense, or other.

Transactions on Personal Capital

Clicking on the manage categories button will bring up a new menu.

Manage Categories Personal Capital

 

You can add your own categories too by clicking the “create category” button in the top right of the window.

Currently, there is a limit of 30 custom categories.

Using Tags in Personal Capital

In addition to categories, Personal Capital lets you assign tags to each transaction. If you want to know how to use tags in Personal Capital, they are best used to group related transactions.

Out of the box, you can choose from four tags: Business, Medical, Reimbursable, and Tax-Related, but you can add your own as well.

If you want a full picture of transactions you want to group, you should use tags for your transactions.

Using Tags on Personal Capital

 

By clicking on the manage tags button you’ll be able to create new tags and edit and delete those tags you created. You can’t delete the four default tags.

Entering Transactions

If you want to know how to use personal capital for entering transactions, I have some bad news for you – you cannot add transactions manually.

But if you need to keep track of transactions that aren’t tracked through your bank, despair not!

Personal Capital does allow you to create manual accounts for assets like your car, jewelry, art, manual banking accounts, or any other asset or liability.

You can use these manual accounts to track transactions that don’t take place in accounts Personal Capital monitors.

To create a manual account, click on the more button when adding a new account.

Link More Accounts Personal Capital

 

Select the Account Type

Select Home on Personal Capital

You’ll give it a description, an optional account number, and the current balance or value.

You won’t be able to add individual transactions, but you can edit the current balance or worth.

Net Worth Tracking

One of the most powerful ways to use Personal Capital is to see and monitor your net worth.

When you click on the net worth tab, you’ll see all your bank, credit, investments, and retirement accounts information with what you owe subtracted from what you have.

It lets you easily see your true financial picture. Once your account is set up, you’ll be able to see your net worth as it changes over time. This will let you know if you are spending more than you are saving and, hopefully, see your net worth grow over time.

When you click on the net worth tab you’ll see your net worth for the past 30 days. It will also show you how your net worth has changed over the last 30 days and for today.

 

Net Worth Tracker Personal Capital

You can change the time frame in the top right-hand corner by changing settings to this month, last month, 90 days, 1 year, this year, and last year or set a specific date range. 

You can also use the menu at the top to view specific information on cash, investment, credit, loans, mortgage, and other. 

Retirement Planner

If you want to know how to use Personal Capital to project savings then the retirement planner is the tool for you. It provides a comprehensive but simple to understand analysis of your chances of meeting your savings and retirement goals. 

The retirement planner “runs Monte Carlo simulations to deliver a robust, personalized retirement projection”  that provides the average and worst-case scenario for your savings and retirement goals.

You can create different scenarios to help you get a full view of your retirement and can help you see the impact of a recession on your retirement investments.

The Retirement Planner consists of:

Personal Capital Retirement Planner

 

  • A – The chance that your retirement goals will be met based on your current situation and projected savings. The higher the number, the better your chance is to meet your goals. You can change your goals and assumptions to account for things like a higher rate of saving.
  • B – Your retirement spending ability projects how much you’ll be able to spend per month in retirement as you draw-down your portfolio through life expectancy.
  • C – More improvements provides advice. Personal Capital will check your asset allocation to see if it aligns with their recommendations.

Based on your profile, Personal Capital will suggest how much of your portfolio should be in cash, international bonds, US bonds, international stocks, US stocks, or alternative investments and compare it to your current allocation.

The tool can also help you identify and move out of high-cost funds and lower your tax bill.

Personal Capital Target Allocation

D – Income events- Lets you add new sources of revenue to have a complete picture. Change the assumptions and you’ll get a new projection. You can see the cumulative effect of changes like increasing or decreasing your monthly contribution.

New Income Event Personal Capital

 

Making adjustments to your yearly savings rate will result in an updated simulation.

Savings for Retirement Personal Capital

E – Spending Goals – You can make changes to your spending goals or add new ones. Clicking on an existing goal will bring up a menu where you can edit spending goals, retirement age, monthly spending, and your annual spending decrease.Personal Capital Retirement Calculator

 

You can also add new spending goals for things like saving for a wedding, home repairs, etc.

Just click the plus sign to bring up the new spending goal menu.

New Spending Goal Personal Capital

F – Edit Assumptions – You can manually set the assumptions Personal Capital uses for the effective tax rate, inflation rate, and life expectancy.

Edit Assumptions Personal Capital

 

G – Edit Profile lets you change your marital status, tax filing status, annual earnings, and children’s information.

Retirement Planner Profile Personal Capital

 

Cash Flow Monitoring

The Personal Capital cash flow monitoring report lets you easily see if are spending more than you are making. It automatically tracks if your net worth is going up or down, and lets you easily compare it to last month.

At a glance, you can see how you are trending for the month and compare it to the previous month.

By changing the settings in the upper right-hand you can see only income or expenses, include only specific accounts, and adjust the time frame to this month, last month, 1 year, this year, or last year.

 

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Frequently Asked Questions (FAQ)

How does Personal Capital make money?

Personal Capital makes its money as a financial advisor, which is currently offered only for investment portfolios of $100,000 or more. Paid services include a financial road-map, a personal strategy, smart withdrawal and employer plan analysis.

What does Personal Capital cost?

The Personal Capital wealth management tool covered in this tutorial is free to use. For investment management and advice services, they charge an all-inclusive fee, which is 0.89% of assets managed for portfolios over $100,000 and 0.79% to 0.49% for over $1Million.

Is Personal Capital Safe?

Yes, Personal Capital is safe to use. It’s owned by Empower Retirement, one of the biggest financial institutions in the world. They’ve taken several steps to ensure the security of users’ personal information.

No individual at Personal Capital has access to any of your credentials or information. Login information is encrypted using standards that are at least as secure as top-tier financial service companies. It’s also important to understand that it’s only a monitoring tool, you can’t perform withdrawals or transfers with Personal Capital.

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