What The Rise Of Free Financial Tools Mean For Consumers

Not too long ago consumers had to put aside several days, mental strength and patience to figure out their personal finances. They had to go through their savings accounts, dig out faded receipts from their wallet, calculate the projected growth of your retirement savings by hand - the list goes on. Or they’d take that whole mess over to a professional, who would do it for them—but charge a hefty fee, which not everyone can afford.

But thanks to a little something called the internet, this process has become a lot less scary and a lot more accessible to consumers regardless of their net worth. While the internet has brought us its fair share of unpleasantries, it’s also been an undeniable democratizing force in some aspects, with personal finance being a great example. There are close to 3 billion results on Google for the term "personal finance” alone. Today the internet is filled with articles and tools for just about every aspect of consumer finances.

Here are some of the types of popular free online tools that every person, from the 20-something just starting to build up savings to the 70-year old retiree thinking of changing wealth management providers, can access, understand, and use.

Retirement Calculators

Just plug in your age, your average income, your savings, and how much of your savings are in investments, and you’re off to the races. Many retirement calculators like take into account your annual returns, investment fees, income tax, and inflation to compute their estimates.

Budgeting Apps

Most of us probably still struggle with budgeting in some form or another, even if it’s been a practice that’s basically been around as long as money has been around. But thanks to a wide variety of budgeting apps that have cropped up recently, budgeting has never been easier. A lot of these tools are free, and they range from very basic setups where you simply add up your expenses and income to more refined operations that link up to your investment accounts, credit card, and checking accounts to actively help you get a grip on your finances.

Account Specific Tools

Most likely, your money will be spread across various accounts (or at least that’s the plan, eventually). We’re talking about savings accounts and 401(k)s, IRAs or TFSAs and RRSPs in Canada. For a lot of people, the strategy on those has been: Occasionally throw money at it and hope for the best. But now, plenty of online calculators related to government sponsored accounts have popped up. For example, 401k calculators, TFSA calculators and RRSP calculators.

These tools help you determine how much will be in your accounts after a certain number of years, given the assets they contain and how much you contribute. Most of them are entirely free of charge. They help consumers adjust your contribution rates and amounts to reach your goals more efficiently.

A Wider Access To Financial Knowledge

What does that mean, broadly speaking? It means that more and more people are able to manage their finances, which is a huge step toward leveling the playing field for people who don’t have the privilege of starting their financial journey with several thousand dollars already sitting in an account. Gone are the days where people might take the ostrich approach to your savings and their financial health: give up due to the costs, stick their head in the sand, and just hope for the best. Obviously this is not a great strategy, but it’s understandable. Managing your finances can be a scary and costly endeavour, especially if you haven’t done it before and are suddenly confronted with some pretty anxiety-inducing concepts, like “retirement,” “savings,” and “budgets.”

By making financial tools available online at a low-to-no cost, financial planning has become more accessible for the average person. While getting a financial planner was only something really available to those with significant funds to save, invest, and spend on wealth management, most people are now able to get a pretty good grip on their finances thanks to a bevvy of free online tools.

Financial Advisors

A run-of-the-mill financial advisor will usually charge a yearly fee of about 1% to 2% of your assets under management (basically the total amount of money you have). But many advisors won’t even consider taking you on unless you have several hundred thousand dollars ready to invest and manage. Plus, some financial advisors also charge a retainer fee, which can range anywhere from $2,000 to $7,500 a year. So depending on how much money you have sitting around, a significant chunk of that would immediately be eaten up by fees. And for some people, these kinds of costs are simply not manageable at all. Online tools, on the other hand, are free and often very easy to use, and that’s a much nicer number to look at when it’s your spending money that’s on the line, isn’t it?

The Tools Are Out There

It’s clear that people are catching on, demand is rising, and developers and financial institutions are working in overdrive to meet that demand. What does this mean for the average consumer: Want help creating a budget? You’re covered. Need help figuring out how much to save for retirement? You’re covered. Twenty years ago, if you wanted to learn about financial planning, you’d most likely have to slog through some pretty dense books and try to not succumb to guilt as your unread copies of the Wall Street Journal piled up in a corner of your living room. Now, there’s a wide abundance of credible—and legible—online articles and tutorials on basically anything you’d want to know, from the basics of investing to the rundown on the best low-risk mutual funds.

Whatever your particular needs and goals are, there are likely a number of free financial tools online that’ll help you reach those. And while the concept of getting a grip on your finances and your financial future might seem scary at first, the availability of tools you can find online will soon make it clear that it’s never been easier to take control of your finances.

Photo by Kelly Sikkema on Unsplash