Automate Your Savings with Acorns
I’m going to put this on a t-shirt. Your future self is a lazy bitch.
So, why not help her out and automate your savings? You already saw how I save for large goals with my SmartyPigs. And I’ve talked about automating Retirement Planning by setting your contributions to increase 1% each year.
But you can also automate your non-retirement investment savings.
I use Acorns to do that.
Acorns uses micro-investing and robo-advisors to empower people who would not normally open an investment account to start saving for the future.
I’ll be honest. I signed up for it on a whim back in February of 2017. The low cost entry fee of $5 was pretty easy to digest and I figured, “Why not?”
Since then, I’ve saved nearly $800 and I’ve earned a modest 2% return on that investment.
Acorns works by investing round-ups for you automatically. So if you make a purchase for $4.27. It will invest the other $.73 for you automatically. These small micro-transactions make it super easy for you to save without really feeling a hit to your wallet.
Now, one caveat here – if you budget to zero in your monthly budget this is NOT the app for you. It will throw you all off! Money will disappear and you won’t know where it went!
I get around this because
- a) I don’t budget to zero
- b) I code all my Acorns round-ups as a “savings” category I have set up in Mint.
I know that my “savings” category should equal approximately $XX each month and I don’t mind if it goes over because it’s a “savings” category and it’s better to put more away than less.
However, because these micro-transactions are dependent upon you using your debit or credit card they’ll fluctuate month to month. During months when I’m shopping a lot or out on travel and charging to my credit card a lot, I’ll get a lot of little round-ups contributed to my account.
When I’m on a spending freeze or in super-saver mode, I’ll have less round-ups and therefore less money moved into Acorns.
This doesn’t bother me.
But I can see where someone a little more OCD than me could be annoyed by the flexible nature of these micro transactions.
I’ve had to play around with the settings, too. For a while I had double round-ups on and I was adding in a weekly contribution as well. My husband came to me to have a very after-school-special kind of talk, “I’m not mad, but….why is there no money in our checking account? Do you have something you need to tell me?”
LOL I bumped my weekly contribution back a tiny bit and put round-ups on only 1x instead of 2x and that seems to put us at a nice even keel where we don’t notice the extra money coming out each week, but it certainly does add up each month!
Acorns also allows you to change the risk factor of your portfolio – I was using the most middle of the road track until just recently when I decided I’d be okay with a moderately aggressive tack.
I’m viewing this as a long-term investment and, if I change NOTHING ELSE with Acorns and never touch the settings again, I’m on pace to have access to an extra $30,000 at my retirement age of 55.
$30K just for setting and forgetting an app to round-up my transactions to the nearest dollar.
This is a no-brainer.
If you want to sign up, give it a shot!
Do you use Acorns or another micro-transaction app? Tell me all about it in the comments!