Personal Capital and YNAB are two very powerful tools that can help you manage your money, but which app is right for you? This Personal Capital vs YNAB review aims to find out.
Managing your money can be difficult. Financial strategies differ from person to person and what works for others might not work for you.
Personal Capital and YNAB are two of the most popular financial applications in the market today, and while they both share similarities in their budgeting features and financial tools, they specialize in two different things.
If you’re looking to take control of your finances, which should you use? Personal Capital or YNAB?
Personal Capital can help you focus on your long-term financial goals, while YNAB puts a premium on short-term budgeting and month-to-month finances.
The best tool for you depends on where you are at financially, your lifestyle, personality, and what kind of money-related skills you need assistance with.
This Personal Capital vs YNAB review offers a comparison of both, with comprehensive details on how they work and which types of budgeters will benefit most in their roster of features.
Table of Contents
Personal Capital vs. YNAB: What is Personal Capital?
Founded in 2009 with over 2 million users, Personal Capital offers two distinct services: a financial software and a wealth management tool.
The platform’s financial software is free to use, but the wealth management service is a paid offering.
These two features are often interconnected: the free version allows you to sign up for general financial management which includes budgeting, while later being able to transition into wealth management if its part of your primary goal.
The platform’s free version comes with a powerful array of investment management tools, so even if you don’t sign up for the premium version, Personal Capital’s free version still offers a competitive suite of features that rivals that of Betterment, Mint, or Wealthsimple.
The paid wealth management service offers a robo-advisor service for subscribers who hold over $100,000 in assets. It has over 18,000 clients who collectively own over $8 billion in assets.
How Personal Capital works
Personal Capital offers two features: a free financial software and the paid wealth management service. This Personal Capital vs YNAB review will discuss both.
Personal Capital Financial Software
Personal Capital allows you to manage your finances directly through the Personal Capital app. Here, you can look over your investment accounts, bank accounts, retirement plans, mortgages, loans, and credit cards.
You can develop long-term goals and set strategies in order to reach them, create a budget, and manage your retirement and investment accounts.
Personal Capital also provides spending reports by spending category, income reports, and alerts of incoming bills. Here are Personal Capital’s features and tools.
There will always be fees associated with investments and some of these fees are often hidden from the investor. These hidden fees often pile up, causing you to lose thousands of dollars in investment income over the years.
Personal Capital’s fee analyzer determines these hidden fees while recommending alternative investments with lower fees.
Investment Checkup and Performance Checker
Personal Capital can make sure that your current investment portfolio is in tip-top shape by making recommendations to improve your investment performance, allowing you to easily reach your goals.
The Investment Checkup tool allows you to compare your current portfolio allocation to your ideal target allocation, helping you maximize returns and minimize risks while allowing you to reach your financial goals.
Net Worth Tracking
While a lot of numbers can give you an idea about your financial situation, the most important measure is your net worth – the difference between your assets and your liabilities. Your net worth is important in giving you an idea about your financial progress.
Personal Capital can help in tracking your net worth while allowing you to compare it to the median U.S. household net worth for your specific age bracket.
This allows you to determine how you measure up compared to your peers.
Want to use Personal Capital like a pro? Follow my step-by-step tutorial on how to use Personal Capital.
Retirement goals can be hard to reach, especially when you don’t have a solid strategy to get there. Personal Capital’s Retirement Planner allows you to track your retirement goal progress, and will automatically make adjustments to your strategy to correct the situation if it feels like you’re not getting there.
You’ll also be able to incorporate other retirement income sources in Personal Capital, including income from your pensions, projected Social Security income, or rental income you expect to receive once you retire.
Budgeting with Personal Capital is easy. Personal Capital’s Retirement Planner also allows you to develop budgets for major expenses, such as making a downpayment on a house or funding a college education.
Personal Capital Wealth Management
When it comes to pitting Personal Capital vs YNAB, the former’s Wealth Management feature is what gives it a leg up in the competition. The wealth management feature functions much like a robo-advisor – it’s an automated investment platform that mimics the help you get from traditional human investment advisors.
Personal Capital takes a good look at your whole financial situation while working to optimize it and determine weak areas. The platform offers three levels of investment management: investment services for $100k to 200k worth of assets, Wealth Management for $200k to $1M worth of assets, and Private Client for those with over $1M worth of assets.
The higher the tier, the more features you get.
Personal Capital Pricing
As mentioned, Personal Capital’s budgeting and financial management software are completely free. Its Wealth Management feature requires an annual management fee of 0.89% of assets under management but can drop as low as 0.49% for larger accounts.
You can also include your employer-sponsored retirement plan on the platform and get comprehensive investment recommendations for free. Here’s the Wealth Management fee structure:
Personal Capital Customer Service
Personal Capital offers 24-hour contact through email or phone, with a comprehensive FAQ page should you run through any issues.
You’ll also find a detailed support portal that offers more education about the financial software.
If you want to learn how to budget, follow this guide on how to use Personal Capital.
Personal Capital vs YNAB: What is YNAB?
Established in 2003 by Certified Public Accountant Jesse Mecham, YNAB is an American personal budgeting program that bases its technique on the envelope method, a popular method for maintaining and visualizing a flexible budget.
YNAB is an acronym for “You Need a Budget” – a nod to the platform’s origins.
Mecham designed YNAB so he and his wife could maintain a workable budget.
The platform worked effectively for the couple that Mecham released it to the public. Years later, YNAB became one of the most successful financial budgeting platforms available in the market.
YNAB claims that users can save an average of $600 in the first two months and more than $6,000 in their first year of using the system. With services that go beyond the usual mechanics of budgeting, YNAB offers tutorials and support as well to help anyone overcome financial problems.
The platform also allows users to reconcile accounts and transactions – a step-up against Personal Capital.
How YNAB works
YNAB’s claims its ‘Four Rules’ to be the key for budgeting success. The platform claims that anyone can apply these four rules when budgeting even without the YNAB software, though the software does make things easier.
The platform’s four rules include:
Give Every Dollar a Job
This step reminds budgeters that each dollar they have should be assigned for something, prompting you to decide in advance how exactly you want your money to be spent.
Embrace Your True Expenses
This rule encourages budgeters to look forward in the future and size up their expected expenses, especially large expenses. YNAB allows you to budget for that expense, whether it be a medical expense, holiday expense, or an insurance payment.
Roll with the Punches
This rule allows for more flexibility in your budget. If you spent too much in one category in a specific month, you need to go through other categories in your budget to find an expense you can cut.
You’re then pressed to move that amount into the category where you overspent. This rule allows you to stay on budget even if you go overboard with your expenses. In the long run, you get to maintain your budget even if you overspent.
Age Your Money
One of YNAB’s most brilliant features, the platform allows you to build your budget in a way that you’re spending money today that you earned at least a month ago. This means that you’re always a month ahead of your expenses.
The platform believes that through this method, you’ll be living through your savings rather than living from paycheck to paycheck.
Budgeting with YNAB is easy through several tools and tracking systems that give you more control over how you spend and save. Here’s what you get with YNAB.
YNAB offers you a plethora of tools and information about how to get out of debt and never run into it again. You can set budgets to pay off a credit card by a certain date – or you can even pay a particular amount each month until your debt has been paid off.
With YNAB, you can set goals and use tools to reach them. The platform offers three ways for you to reach goals, which includes monthly funding goals. This allows you to divide your long-term goals into management monthly saving increments.
Education is essential for you to take better care of your finances. YNAB offers daily online classes on topics that include setting up your budget, creating a debt paydown plan, credit card overspending, reaching your savings goals, breaking the paycheck-to-paycheck cycle, and so much more.
YNAB offers two pricing structures, a monthly plan that costs #11.99, and an annual plan that costs $84. Both can be canceled anytime with a no-risk 100% money-back guarantee if at any time you don’t feel like having more control of your money during the span of your subscription.
YNAB Customer Service
YNAB’s customer service can only be described as lackluster. The platform doesn’t have email or phone capabilities, and only a live chat feature that comes with a promise that they respond within 24-hours.
When you’re troubleshooting something that involves your budget, waiting for more than a few hours can be painful, so this is one of the few issues to consider before signing up for YNAB.
The website does come with Help Docs, a community forum, and FAQ pages that display general questions.
Personal Capital vs YNAB: Which is better?
What is better between Personal Capital and YNAB? While both have overlapping services, we found Personal Capital to be the better choice. First, Personal Capital’s free features already rival that of YNAB’s paid features.
It does the greatest all-around job of managing your budget and personal finances – all of this without having to spend a single penny.
If you’re looking for guidance with your investments, then Personal Capital’s Wealth Management feature is a massive advantage that YNAB doesn’t have.
Apart from managing your investments, Personal Capital also offers a plethora of financial planning services that cost considerably less than what traditional investment managers offer.
Customer service is also one of YNAB’s biggest weaknesses.
Without email and phone communication, troubleshooting can be difficult. While the platform’s FAQs and help tools may help you bust through roadblocks, there’s nothing quite like being able to deal with your problems with a live customer service representative.
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