Last week, our blog post was about How Much Is Enough and not falling into the trap of the “keeping up with the Joneses” mentality while being grateful for the resources you do have. Mary posed some questions:

  • Am I paid enough?
  • Am I saving enough?
  • Can we/I afford (fill in the blank)?

Let’s talk this week about how to really know if you are on track financially or not and the resources we recommend that can help you.

Talk with a Financial Professional

Engaging with a financial planner or counselor can be a powerful way to get clarity around your financial goals, particularly regarding retirement or significant life transitions. These financial professionals are able to not only help you understand what your goals are but also make a plan so that you can meet your goals on time. Individualized professional financial advice is the best choice for making sure you are on track. See our guide Questions to Ask a Financial Professional for tips on how to find the right financial planner for you and your family.

Utilize Financial Planning Resources

If you are unable to meet with a financial planner or want to do some pre-planning yourself before engaging with a financial professional, there are a plethora of budgeting and financial tool tracking options when it comes to managing your money. But, my personal favorite is Personal Capital1. This money management and financial planning software differentiates itself by not only allowing cash flow & savings planning but also by using sophisticated financial planning analysis software to really hone in on the likelihood of reaching your financial goals.

As with other financial software, it links directly to your banking and investment accounts and helps you determine how much you need to save in order to meet your goals. In addition, it also projects your future assets using your annual savings rate and investment assumptions, which is something more sophisticated financial planning software does. The best part is that it is free! It’s a great way to make sure you are on target with your financial goals.screenshot of Personal Capital software

How to Use Personal Capital

To get started, go to PersonalCapital.com and create an account. You’ll be prompted to enter your age, goal retirement age, annual savings, and risk tolerance i.e., risk-averse, risk-seeking, or somewhere in between. Don’t worry if you don’t know what this all means; they do a great job of explaining it to you step by step in normal English (instead of financial speak). Next, it will prompt you to aggregate your online accounts (i.e., banking, savings, loans, and investments) which will help to provide an accurate picture of your financial net worth (assets minus liabilities). Once these steps are complete, you now have access to the following financial planning tools at no cost:

  • Cash Flow & Budgeting – View inflows and outflows from all of your accounts in one place to more accurately track your overall spending. Establish a budget and see how your spending aligns with the guidelines you set. The Savings Planner tool allows you to see how much you should be saving or have saved to meet your financial goals such as retirement savings, emergency fund, and debt repayment.
  • Investments – Aggregates your investment accounts to show your overall portfolio holdings and performance. The Investment Checkup tool will tell you if your investments align with the risk level you set.
  • Retirement Planner – Uses your savings rate and investments to project your assets at retirement. It will also forecast the possibility of you meeting your financial goals. If you get a low number, don’t fret! It doesn’t mean that you won’t meet your goals. It just means you’ll need to make some changes like spending less or saving more to get there.

This tool is a cut above the competition in terms of not only providing cash flow and financial net worth information but also, providing fairly sophisticated financial planning tools to anyone with a free account…no strings attached.

Recently, a friend shared that she and her husband are working on paying off their student loans, saving for their emergency fund, and saving in their 401(k) accounts. She feels like they are on the right track but was unclear and felt uneasy since she didn’t actually know if they were making the right decisions. This tool is perfect for your financial planning needs and can help you as you prepare to discuss your goals and financial future with a financial professional. It can help you feel confident that you are heading in the right direction with your financial goals. I hope these resources help you determine a clear path forward toward your financial goals!

1 Note: Chief Financial Mom is not currently compensated for recommending Personal Capital. We simply believe it is a good financial planning resource that we want to share with you.