Acorns: How This Investing App Changed My Spending Habits

Save More Money in 2020

I knew I needed to save and invest money but I was terrible at doing it. I started using Acorns just to try it out and the result was unexpected. Rather than make investing a habit it caused me to be more mindful of my spending.

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I found out about Acorns in a promotion through Paypal. I used to have Sharebuilder back before Capital One bought it out and destroyed the investment concept, so when I saw this I was curious how well it would work. The concept of Acorns is pretty simple – Everytime you buy something that purchase is rounded up to next dollar. It’s the same as what you would throw in the change jar everyday when you get home if you were still carrying cash. Hey, I’m a little older – I lived that life.

So I tried it out and almost two years later, with the size of that change jar. Here three reasons why I like it.

Number One: Acorns Makes Investing Effortless

If I had to make a conscience decision to invest my money or put it in savings I wouldn’t. I know this because historically I have not invested or saved money through most of my life no matter how much money I had. If my investing and savings is automated I don’t think about it and therefore do not miss it. I currently have my direct deposit set up to deposit 20% of my paycheck into my savings account and a small percentage of my paycheck goes to my 401K through work.

We make many of our decisions on autopilot. I don’t have to think about what I’m doing when I make coffee in the morning or when I drive to work. I don’t have to think about how to wash my clothes or brush my teeth. And most marketers know that you do most things on autopilot which is why you keep finding yourself in the drive-thru at Starbucks or McDonalds. Knowing this behavior is why automated investing works. It takes your auto-pilot and turns it into something that will benefit you.

Number Two: Acorns Made Me Think About the Way I spend Money

Because the app uses round-ups to determine how much I invest it makes me aware of my spending. Everytime I buy something I have an awareness that the $20.59 I just spent at the store is going to be $21. The $2.79 I spent on an Americano is going to be $3.00. And basically every time I swipe my card anywhere my spending is going to “force” me to save money. Of course, the things I am buying don’t cost more but my aversion to saving investing is really that powerful.

Psychologically it makes me spend less money. I make less transactions because I know every transaction results in a round-up, and once the round-ups hit $5 it going to transfer from my bank account to my investment account. This change in behavior results in Present Day Me paying Future Me for things I may want or need.

Number Three: Acorns Gives My Money a Purpose

All that “change” that sat around in a “change jar” was just wasting space. I do still have a change jar, it’s been sitting on our shelf for over three years, and I bet there isn’t even $100 in there. That jar isn’t doing much except wasting space. If you are familiar with Marie Kondo and decluttering, this fits right in there with it. My money has gone from being clutter to being useful. My money makes money and that sparks joy.

Watching Spare Change go to Work

Real time chart shows your investment grow over time through contributions and appreciation

Track your round-ups withdrawals and dividends.

Get a projection of how your investments will grow over time based on how much you save.

My Take on Acorns

There are five portfolios you can choose from ranging from “Conservative” to “Aggressive” to choose from. The app walks you through the decision but it keeps it simple. This is great for people who are just getting started investing and have no idea what to do. I do most of my investing through a Roth IRA and self directed brokerage now, but I kept the Acorns account because I like the concept so much. The app also provides a lot of good articles so that as you save money you can learn more about it.

Acorns also has an automatic investment option that can be used with or without round-ups. I started with $10 a week + roundups, but now I just do the automatic investment since I changed my spending habits. Seriously, I can go a week without swiping my debit card and I used to make 3 to 5 transactions every day!

After a few months of building up the account with small investments the dividends start to look nice. A dividend is money paid to you by the fund you are invested in. Think of it like profit sharing. Basically the more you own of a company or bond the more you get paid for being an owner. Some months my dividends are more than my automatic investments. So you can see how this is beneficial over the long term.

Some things I dislike is the marketing that comes with Acorns saying ‘Buy Flowers – wants to invest in you.” I just ignore those things. Basically, you get money back to invest from your purchase. Maybe that’s great for people who are in the market to buy flowers, but to me saving money means spending it wisely. I don’t buy things I don’t need. I don’t buy things I don’t love. And I don’t care for the Spend feature either. I have a great checking account with Charles Schwab and don’t need another way to spend money.

It’s up to you to learn more and open an account. There is plenty more information about how Acorns works when you visit the link. The purpose of this article is just to share my experience and the unexpected result that came from using Acorns. If you want to be mindful of spending and save more money in 2020, this is a great place to start!

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