How to Save Money When You're Terrible With Finances
If you've ever struggled to save money or find yourself wishing there was an easier way to do it, then today's post is for you!
I want to tell you all about a little saving and investment app I discovered about a year ago called Acorns. This is one of my favorite ways to save extra money without feeling obligated - it's a completely set it and forget it system.
So what is Acorns?
Acorns is one of the best ways to automatically take your spare change and invest it in the stock market.
It runs as an app for your phone that links to your debit card and bank account and rounds up all of your purchases to the next dollar. When it does that, any spare change from your debit transactions are swept into your Acorns account and invested in ETFs.
You get to choose how aggressive or conservative you want your account to be managed, and the app does the rest!
The best part is that it is completely automatic. Once you set it up, you can forget about it and it will continue to do its thing in the background month after month.
- Management fee: $1-2 per month
- Account minimum: $0
- Difficulty level: Beginner
Things I love about the Acorns investing app:
- Basic Acorns accounts are free for college students!
- It's a great way to save money without having to think about it
- You can withdraw the money at any time and use it for anything you want
- You can add a base amount of money you would like it to pull each month in addition to the roundups
- No fees to withdraw money to your bank account
- The Found Money feature can add cash to your account every month
The Downsides of using Acorns:
- Some people feel that the $1-$2 per month fee is too high (I’m fine with it.)
- There are steep fees for transferring your money directly to a linked brokerage account. I recommend withdrawing to your bank account instead (which is free!)
- The app isn't great as a long-term investment vehicle.
Acorns is best for:
- People who struggle to save
- Those who don't yet have the $500-$3000 minimum to open a brokerage account
- Those just getting started with saving and investing
- Those who want no-hassle automation of their savings
- Those who want to save for other things like vacations, cars, or an emergency fund
Overall grade: 7/10
How I use Acorns to Build My Net Worth
As I've said before, Acorns really isn't a great long-term investment vehicle. The returns are much lower than investing in an index fund account with Vanguard or Fidelity and your money is only spread across seven ETF's.
The Vanguard Total Stock Market Index Fund, for example, invests your money in every single publicly traded US company. The stability and growth with a Vanguard account is much better overall.
Here's where Acorns excels. Instead of being a long-term investment account, Acorns is great for grabbing up those extra quarters and dimes from every transaction you make and bringing them into one place for you.
With my account, I let Acorns run for several months until I accumulate a few hundred dollars. As you can see, it took me about 10 months to reach $619.12 in my account.
After reaching a decent sum I withdraw the money into my bank account and then quickly send it to my Vanguard account. This is a great way to invest an extra $1,000-$2,000 per year without feeling the pinch at all.
And, you don't have to invest the money like I do. Many people use Acorns as a vacation fund, a new car fun, or just as a fun money fund for a special treat.
How to Save Money and Invest Easily with Acorns
When used as a simple savings app, Acorns is a really fun and painless way to watch your savings grow.
When I first set up my account, I wasn't sure what to expect so I set it to add an extra $5 per month to the account in addition to my roundups. Now that I've gotten a good feel for how it works, I will be upping that number significantly.
The biggest draw to Acorns lies in automation. Because it only takes the leftover change from each of your transactions, you never know the money is gone and you never have to think about it.
While seasoned investors probably won't get much out of Acorns, it's a fantastic option for those who are struggling to meet their savings goals.
It's also an easy way to create a "fun money" slush fund or an easy vacation fund.
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