I’ve never been good at saving money.
The idea of it sounds great — and simple. But in practice, I seem to have trouble squeezing anything extra out of my budget, especially just to set aside without a specific goal.
But this simple savings trick helped me kick off the new year with a $100 bonus in my bank account! I think I’ve found a way that even I can save money.
Back in mid-October, I took my fellow Penny Hoarders’ advice and downloaded an app called Acorns onto my phone.
I connected my bank account, selected a few settings and set the whole thing aside after about 10 minutes. Then I forgot about it.
On January 8, I checked back in, and my Acorns account balance was $116.
Nice surprise, right? Here’s how it works.
Automate Your Savings With Acorns
What I loved about this $116 balance was it felt like free money — but that’s not really what it is.
Instead, it’s just insanely simple saving and investing.
The balance on my Acorns account came from my digital change, what Acorns calls “Round-Ups.”
The app rounds up purchases from a connected card to the next dollar and saves the difference in my Acorns account.
How Much Can You Save?
Over the four months I’ve been using it, I’ve put aside an average of $35 a month using Acorns.
Because the money comes out in increments less than $1, I haven’t felt an impact in my bank account.
If I withdraw my Round-Ups each month, I’ll save $420 a year — without thinking twice.
That’s a round-trip flight.
It’s Christmas presents for my whole family.
It’s groceries for two and a half months.
It’s probably the cost of the next thing that stops working on my car.
I was excited to see the surprise balance in my account in January, but I wanted to take a closer look at the app to see what I could really save over time.
What Does Acorns Do With My Money?
When my account hits $5, Acorns withdraws the money from my bank account and invests into a fund.
I didn’t choose exactly where to invest my money. Instead, I answered a few questions to create a financial profile and state my goals.
Acorns uses this to build my investment portfolio options — which range from conservative to aggressive. If I really wanted to know the details, the app breaks down what types of funds comprise my portfolio.
Because the amounts are so small, the gains with this kind of investing won’t blow your mind.
During these past four months, my account total has actually dropped $6.06, or 4.11%. But that’s a small window for investment.
Let’s look at the long term.
With my conservative portfolio and an average monthly investment of $35, my account is projected to gain $1,126 over 10 years, for a balance of $5,327.
If I choose the most aggressive option (more on that below), the gain is projected to be $2,376, for a balance of $6,577.
You can also deposit money directly into your Acorns account, in addition to the automatic Round-Ups.
For example, if I supplemented my Round-Ups with additional monthly deposits to invest $100 total each month, my portfolio is projected to be worth $16,370 (a gain of $3,796) in 10 years.
Why I Use Acorns
Aside from my workplace 401(k), I don’t have other investments.
I’m a bit risk-averse, and I don’t have major chunks of spare cash to invest with services like Etrade.
Acorns lets me enjoy the spoils of saving and investing with almost no barriers to entry. There’s no minimum deposit or balance and no restrictions or fees on withdrawals.
You only need a bank account and an Internet connection to get started.
How Much Does It Cost to Use Acorns?
For an account with a balance below $5,000, the monthly fee is $1 plus 0.5% (there’s no fee for a zero-balance account).
Even if I don’t gain anything, or my investments lose a couple dollars over time, the cost is totally worth it for me.
I’m not using Acorns as a serious investment strategy. There are plenty of better (higher-priced) tools if you want to invest a lot of money and learn more about the stock market.
But I’m using Acorns to make saving easy.
The price is totally worth this service to help me save a few hundred dollars this year, and several thousand over the next few. It’s something I know I wouldn’t achieve on my own.
Want to start using Acorns yourself? Here are a few details to note:
Connecting a Bank Account
You can connect as many bank accounts (including a PayPal account) as you want for Round-Ups on purchases.
But the money for all of your Round-Ups will come from one connected checking account.
When you withdraw funds from your Acorns account, the money will be deposited into that checking account.
Add Your Digital Change to Your Acorns Account
Your Round-Ups don’t have to be automatic — it’s a setting you choose.
You can also add Round-Ups to your Acorns account manually by going through a list of transactions in the app.
Note that Acorns does not cover overdraft fees for its withdrawals. So if you tend to maintain a low bank account balance (less than $5-15), you probably don’t want to use automatic Round-Ups.
What Am I Going to Do With The Money?
Now that I’ve taken a closer look and understand just how much I stand to save over the next year, five or 10 years, I have to decide what to do with it!
If I want to withdraw money every year, I think it’ll make the perfect holiday shopping fund.
Or maybe it’s the perfect amount to get started with more serious investing.
If I want to keep those savings in my Acorns account and let the investments and compound interest do their magic, I have to look further ahead.
What will I do with $10,000 in seven years?
That’s what I’ll have if I top up my Round-Ups to invest $100 each month, and it could buy me a new (used) car. A down payment on a house. An investment in a business that lets me work from home.
What about $16,000 in 10 years?
That could be a new — new! — car. A year of rent. A college fund for my niece — how’s that for a Christmas present?
And I could get all this just from using my debit card as usual? I’m pretty glad I took that advice from my co-workers.
Your Turn: How much would you save this year if you rounded up your digital change?
Disclosure: This post includes affiliate links. We’re letting you know because it’s what Honest Abe would do. After all, he is on our favorite coin.
Dana Sitar (@danasitar) is a staff writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more. To be clear, she knows investments earn money through math, not magic… but also kind of magic, right?