I frequently find in both my financial literacy class for educators and when talking with people one-on-one that many folks don’t really have a good handle on their various financial accounts. They have a general idea of what they have, but are pretty vague on the specifics (and more often than you might expect discover accounts they didn’t know they had). As part of this they also don’t know where – and on what – they are spending their money. I often suggest that they go back through several months of bank and credit card statements and figure out where and on what they are spending, but that’s a one-time solution (and often they don’t even do that). While I think ideally everyone would have a financial inventory document, that’s unlikely to be appealing to people who don’t even know all the accounts they have. And even that just helps them keep track of all of their accounts but it isn’t particularly helpful to analyze those accounts.
So a good place for some of those folks to start is with a financial aggregator like Empower. This free tool allows you to connect all of your financial accounts and then will automatically allow you to track your spending, your credit cards and other loans, and your investments. I’m not going to do a deep dive into it, because others have already done so (this post and this video, for example). I highly recommend you at least read that post before continuing with my post.
The advantage for folks who aren’t particularly on top of things is that after just a one-time hour or two worth of work, they can easily see all of their financial information in one place. The couple of hours of work is connecting your accounts but, after that, everything comes in automatically every time you login. Instead of having to login to multiple accounts, they all come into one dashboard.
It allows you to easily track your spending. Not only does it bring in transactions from your bank accounts and credit cards, but it automatically categorizes them for you so you can see your spending by category. Occasionally it might categorize a transaction incorrectly, and transactions on Amazon are famously just identified as “Amazon”. But if you want to correct any it gets wrong, or more specifically categorize your Amazon purchases, you can take 5-10 minutes each month and do that. You can also more easily track and analyze your investments, including your asset allocation, the fees you are paying, and your investment return. It can also help you manage multiple credit cards if you want to take advantage of credit card rewards.
Two important points to keep in mind. First, while the account is free Empower will likely reach out to you to offer their services. Just politely say no and continue using the account for free. Second, Empower does what it does very well, but that doesn’t mean there aren’t other tools that do certain things better. For example, if you want a full-blown budgeting tool, then Monarch Money will be better than Empower. And if you want detailed scenario projections in retirement, then Boldin will be better. But both of those aren’t free, and the vast majority of people don’t need the added features (and added complexity) that they offer. I would recommend people start with Empower and see if it works for them. They can always switch to one of the paid products in the future if they need to. (For example, perhaps try Boldin when you get closer to retirement if you need retirement planning projections with many more variables factored in.)
This is especially true for Colorado PERA members, because if you already have a PERA 401k and or 457b, you already have an Empower account (because Empower is the record keeper for PERA’s 401k and 457b). Simply login to your existing account and connect your other accounts and you are good to go.
So if you are not really on top of all of your financial accounts, give Empower a try. You can always delete your account if you decide you don’t like it. But for some folks, I think this easy to use tool could make an incredibly positive contribution to being more intentional with your finances.
Fisch Financial 