Do you sometimes wonder how in the world you could possibly find a way to save money? You may be living paycheck to paycheck and don’t have a penny to spare. Perhaps you have aggressive savings goals because you are saving for a down payment on a house. Maybe you are paying off student loans or car or mortgage debt.
Whatever your financial situation, likely you will not notice a few cents here or there to put toward savings. That’s where the Acorns micro-investing app can help you. Check out my Acorns Review below.
When unemployment happens….frugal happens
In the summer of 2011 I was let go from my job without warning. It feels very much like a slap in the face, even so many years later. While I usually already leaned toward savings and frugality, that summer I learned how little I could actually live on. I received a small severance and unemployment, but I didn’t know for how long I’d need that money to last.
You learn pretty quickly the difference between needs and wants when you have no income coming in. It’s amazing how much money you think you need, vs. how much your wants are really costing you.
This time in my life really whipped me into shape as far as savings go. I realized that I had never thought or considered that I was going to lose my job. That happens to other people, that won’t happen to me. So when it did, I felt like a deer in headlights.
No real plan. No savings account for if-I-lose-my-job-someday; and in those penny-pinching weeks, I was definitely feeling like there was no way I would have any extra money to save.
But you know what? I was able to save some money. Maintaining a mostly cash budget, when I would go to the grocery store and purchase bread, milk, eggs, wine (yes sometimes unemployed people need their vices); I would check out, and pay in cash. The coin change I’d receive back, I’d put in a jar.
You’d be surprised how quickly change like that adds up. It’s not hundreds over night, but when the jar of change is full, and you take it to the bank, and there is $250…$300…$350 in that jar, it’s awesome!
You begin to think, I’d notice if $300 was taken from my checkbook today. But I didn’t notice all of those small amounts over time adding up to the $300 over the course of the last few months. This concept is exactly how Acorns works, except digitally. Check out my Acorns review below.
Acorns Review: Is it right for you?
What is the Acorns App?
Acorns is a micro-investing app that automatically puts small amounts of your own money into an investment account for you, at your discretion. The small amounts of money are from rounding-up your daily purchases to the next dollar, then moving the difference into an investing account.
The purchases tracked are ones you choose, based on accounts you link to your Acorns account. So they could be from a debit card transaction, credit card transaction, or both.
Overtime, your pennies and cents add up to dollars, and dollars add up to hundreds of dollars.
Who is most likely to use Acorns?
Young investors, millennials and college students are the primary target of Acorns, although anyone of any age or financial situation can use it.
Acorns is a great option for those who aren’t diligent about saving money on their own. Let’s face it, very few people take deliberate actions toward saving money on a daily basis. Saving and being mindful of spending is a habit that’s practiced and built over time. The Acorns app is an awesome no-brainer option to turn pennies and cents here and there into larger sums of money over time.
Plus, the savings is automated. You don’t have to think about it. It happens automatically behind the scenes so you simply spend as you normally would, and the Acorns app will do the work for you. If you’re interested in other ways to save money, check out 15 apps that make you money.
How to get started with Acorns
- Set up an Acorns account. Visit the Acorns website or app.
- You’ll be prompted to put in an email for a username and create a password.
- Next, you need to decide how you will fund the account. You can choose from hundreds of banking and credit card companies. Meaning, whoever you are banking with today is already pre-populated into the system. If you’re interested in exploring Acorns and not yet ready to link a bank account, you can skip for now.
- Finally you will be asked to include personal information including your first name, last name, birthday, social security number and confirm you are a U.S. Citizen.
- One final step is to indicate how, and how often to fund the account. An example of funding is through round-ups or regular deposits.
What are Acorns round-ups?
One of Acorns’ flagship features is the round-up. How round-ups work is, every time you purchase something using one of your identified methods of payment, for example, a debit card, Acorns will automatically round-up the change for you. This is optional and one way to fund your Acorns account.
Within your account you can specify how you want your transactions rounded up.
- Do you want to round-up your purchases? Check the circle if you want to. This feature can be turned on or off at will.
- Do you want a multiplier? You can select to have the round-up money multiplied by 2, 3, or 4 times to increase your savings faster. So let’s say Acorns rounded up your last purchase and the round-up was $.24. If you used the 2x multiplier, Acorns would invest $.48 for you instead of $.24.
- Roundup increments. You can select at what increment you want the dollar rounded-up to. I’m currently at the $1.00 so every transaction I have is automatically rounded up to the next whole dollar.
An example of how a round-up works: let’s say you grabbed a coffee, and bacon gouda sandwich at Starbucks. The total came to $8.34 and you paid with a debit card that is linked to our Acorns account. Acorns will “round up” the amount to $9.00 and essentially invest the difference, in this case $.66. Will you miss $.66 in your daily life? Likely not.
Will I actually see the Acorns round-up amount on my statement?
I was confused by this at first so wanted to clarify what’s actually happening with round-ups. Using the Starbucks example above, I initially thought on my checking account statement I’d see a payment at Starbucks for $9.00 instead of $8.34 since I paid with my debit. That’s not actually what’s happening because you only paid Starbucks $8.34. Acorns will essentially “hold” the $0.66 round-up.
When round-ups are invested
Below you can see that I recently had $5.92 withdrawn from my checking account and put into my Acorns account. That $5.92 was created from 11 different transactions on my debit card in which the transaction was “rounded-up” and added up, until the total of the round-ups reached at least $5.
Acorns will essentially keep a running total of all round-ups recently made. Once the round-up total reaches at least $5, the total amount is automatically withdrawn from my checking and placed into Acorns. Every so often sporadically I see a $5+ being withdraw from my checking account. In the case above, $5.92 was moved from my checking to my Acorns account.
Below is a specific example of my account at the time. I’m sitting at $1.70 in cumulative round-ups toward the $5 investment mark. My last purchase was from DSW (go figure), and from that transaction, $0.96 was added to the round-up total because I’m electing to round-up to the nearest dollar.
In the grand scheme of things you’re likely still not going to miss $5 here or there, but I want you to know this up front because the $5+ total surprised me initially.
Investing with a recurring dollar amount
Another option to fund your Acorns account in addition to round-ups is a recurring investment. You can choose, on a timeline of your choice, to fund your account with a recurring amount.
I choose to have $20 invested once per month on the 22nd of the month. I honestly can’t tell you why I chose the 22nd of the month. My guess is that was the date I started investing and chose it because I wanted to start immediately. You can choose any dollar amount you want, and if you want it invested daily, weekly or monthly.
This is another easy way to use Acorns as a savings account and invest what you can, when you can. Remember, small amounts add up over time. It’s really not how much you save to begin with; it’s establishing the habit of saving.
All of your settings and investment amounts can be adjusted up or down as your financial situation changes. So it really is a great app to test the waters with investing.
Investing on a one-off basis
One more option of funding your Acorns account is a one-time investment. You can choose a predefined amount or make an investment dollar of your choice.
If you happen to come into some money and on a one-off basis want to get it out of your checking and into a secure location where you can’t spend it, try a one-time investment to get the money working for you.
It doesn’t have to be hundreds or thousands here. Did you receive $20 from grandma for your birthday? Throw it in your Acorns investment account!
Looking for other ways to save money, discover 12 ways to trick yourself into saving here.
The Acorns app allows you to select from 5 different investment portfolios, comprised of various percentages of stocks and bonds. Acorns will give you a recommendation when you sign up for the account based on answers to a few questions about which portfolio to choose. However, you can choose any portfolio you want, and can change at anytime.
Within the portfolio though, you aren’t offered any additional customizations. So if you wanted to choose the conservative portfolio but make tweaks to percentages, you are unable to do so. (Portfolio percentages taken Feb, 2019). Check out Acorns’ investments page for more info on portfolios.
What does Acorns cost to use?
Acorns is inexpensive to use. It will cost anywhere from $1 to $3 per month depending on how you use it. You can check out the specific of pricing here. I pay $1 per month as using it for the investing of small change. $2 and $3 per month are for using additional services such as their new retirement accounts and checking accounts.
Also the $1 per month level is free for college students per their website. So if you are in college or know someone in college, it’s a great benefit to starting an Acorns account now where that $1 fee could actually be put toward an investment!
Earn Found Money
Another easy way to invest money with Acorns is to use their Found Money feature. Using Found Money, you shop online vendors as you normally would, and Acorns will invest additional dollars or a percentage of your purchase into your Acorns account for purchasing through the Found Money feature. Think of it kinda like Ebates.
Go to Found Money first, shop as you normally would, and qualifying purchases will earn additional money. That money can be invested into your Acorns account. So yet another way to mindlessly save on purchases you were going to make anyway.
Below is an example of some Found Money options. Make a purchase with 1-800-Flowers and $10 will be invested into your account. Make a purchase with H&R Block, and 7% will be invested.
How do I withdraw money from Acorns?
Withdrawals from Acorns will go directly back to the checking account you have linked up as your funding source. The company states that there are no penalties and fees for withdrawing your money at any time. Also you do not have a limit to the amount of money you can withdraw at one time.
What should I use my Acorns savings for?
The investment account is yours, and it’s money you likely aren’t missing – so use it for what you want! Maybe it’s considered another savings account for a rainy day. Use it as your Christmas/holiday budget annually. Save it for longer term, or that dream vacation you want to take in 5 years.
Those pennies add up over the course of a year. If your car is getting older or prone to repair, save these pennies as your car repair budget. Maybe you want to treat yourself to the spa or that over-priced purse you’ve been eyeing up.
I’m a few years away from my 40th birthday. While a modest $641 in my account today, that’s money I haven’t missed! I’d like to head to the beach for my 40th birthday, which is about 3 years from now.
Acorns has a past, present, and potential look at your account. The potential tab projects the value of your account at some point in the future based on how your investment have been trending.
If I keep on pace with $20 per month and round ups, I’m projected to have $2805 by the time I’m 40. Market conditions could change, my financial situation could change.
I may not be going to Bali, but I’m sure I can book a nice beach vacation for $2800. Knowing why you’re saving and reminding yourself of why will help keep you motivated to continue saving, and may even inspire you to add more to the account!
Is the Acorns app safe to use?
The short answer? Yes. Acorns accounts are SIPC Protected Investment Accounts, meaning they are protected up to $500,000. Acorns dedicates a full page on their website to address any safety concerns, check it out here.
- Easy for anyone to start investing and saving for the future
- You can control how much money you put into your account each month through automatic round-ups or a pre-set amount at a pre-set schedule
- Low fees to get started, specifically for college students who get the $1 fee waived.
- You can choose your level of risk for your portfolio. Anywhere from conservative to moderate to aggressive
- The app can also be used as a retirement account if you choose to go that route.
- The app will project, if you keep with your typical pace, how much money you will have in the future. Also could be considered a con as it’s not 100% accurate. But looking forward, as I’m doing for my 40th birthday, keeps me motivated to save.
- The round ups are not rounded up in cents but rather in increments of $5. So it may feel like a larger amount when you see $5+ coming out of your checking account periodically than the actual rounded up change.
- Depending on how much you plan to invest, the monthly investment fee of $1-$3 might be expensive relative to how much money you have in your account. For example when you’re first starting out and have less than $25 in your account and get a $1 fee, from a percentage standpoint that fee is pretty high.
- Acorns doesn’t offer any advanced customization of the type of specific investments you can choose. So for a savvy investor, this may be a turn off.
Micro-investing apps, like the Acorns app, make it so easy to save for the future. Whether you’re saving for a down payment on a house, that dream vacation, or your child’s education, Acorns makes it easy to put small amounts of money aside and watch them grow over time. Even on a tight budget you can find small dollar amounts to invest cost-effectively.
The only question is, what are you waiting for?
Do you use a micro-investing app? What are you saving for?