Is There One Money Habit We Should All Adopt?


In our Ask an Advisor series, members of Grow’s Financial Advisor Panel answer your money questions each week. Today, CFP Michael Kitces, co-founder of XY Planning Network, partner and director of wealth management for Pinnacle Advisory Group and publisher of Nerd’s Eye View, explains how automatic budgeting tools can up your financial game.

Q: What money habit do you recommend most to your clients, and why?

The financial habit I recommend most is to sign up for a digital tool, like Mint.com or YNAB, to automatically track your spending.

The virtue of using these tools is that, simply put, you’ll finally know where all your money is going. Some even do a pretty good job of categorizing your spending—though they wouldn’t know how you use your cash—which gives you a better understanding of not just how much you’re spending, but also exactly what you’re spending money on.

Often, it’s difficult to identify our worst spending habits until technology makes it easy to add up, whether it’s dining out a bit more than we should, a hobby that needs to be reined in or some old subscriptions you never use. But once it’s right in front of you, most people are able to recognize quickly what needs to change—and then actually make those changes.

In fact, one ULCA study of Personal Capital users found that the average person was able to cut their spending by 15 percent in the first six months after using the company’s software to track their spending. And that wasn’t even with the intervention of a financial advisor or coach. It’s just the power of having software that easily aggregates the information and reflects it back to you in a useful way, allowing you to make your own financial decisions.

Grow Financial Advisor Panel participants are responsible for the content expressed and do not necessarily represent the views or opinions of Acorns Grow, Inc., Acorns Securities, LLC or Acorns Advisers, LLC. Content is provided on an informational basis and should not be construed as investment advice. Individual circumstances will vary. Please consult a financial advisor before acting on any opinions expressed. Participation in the panel is voluntary. Editing of advisor responses is for brevity and clarity; no editorial privilege is exercised.