Saving and investing can be difficult if you're living on a tight budget and a small paycheck. The Acorns app can take some of the pressure off by helping you squirrel away extra pennies while learning some of the basics of sound investing.

How Does Acorns Work?

Acorns is micro-investing made easy. As part of the process of setting up an Acorns account, the user connects one or more debit and credit cards to the new account. From then on, Acorns will round each purchase to the next dollar and save the change in the Acorns account.

For example, if you buy lunch for $8.75, a coffee later for $3.25 and a sweater for $30.02 after work, Acorns rounds up all of those purchases and credits the user for $1.98 for the day.

The change can then be invested in the user's choice of Acorns portfolios. There are five portfolio choices, each a mix of exchange-traded funds (ETFs) and bonds, and each representing a standard advisor-speak category of investor preference from "conservative" to "aggressive."

Making Changes to Your Account

Users can set up automatic daily, weekly, or monthly deposits into their Acorns accounts.

Acorns invests the user's money based on portfolio settings. Investments can take one to three days to process. (The timing depends on ETF market hours.)

In addition, Acorns offers a cash-back program called Found Money. Users shop through the Acorns' platform, and instead of receiving a percentage of the purchase back they get a percentage of the money spent at partner stores. Acorns deposits Found Money 30 days after the purchase.

According to the company, "When users shop with one of our 350+ partners, from Nike to Chevron, they automatically invest in their Acorns Core account. Customers can also shop by adding the Acorns Found Money Chrome extension to their browser and monitor their cash back in the Acorns app."

How Much Does Acorns Cost?

As of February 2019, Acorns has three price levels and, simply enough, they are set at $1, $2, or $3:

  • Acorns Core, for $1, is the original service that rounds your purchases to the nearest dollar and invests the proceeds in your choice of portfolios. This version is free to college students.
  • Acorns Core + Acorns Later, for $2, adds access to a tax-deductible IRA plan.
  • Acorns Core + Acorns Later + Acorns Spend, for $3, is all of the above plus a branded checking account and debit card. Acorns promises zero fees on that account.

The above prices are good, the Acorns site says, on accounts "up to $1 million." This is not likely to happen to a user who is not bulk-buying for Walmart.

According to the company, "Acorns Spend is a Visa debit card that saves, invests and earns for the customer in real-time. The investment and retirement accounts (Acorns Core and Acorns Later) are integrated into the card and with Acorns Found Money, the customer will receive up to 10% invested in their accounts when they shop at top retailers. Acorns Core and Acorns Later are SIPC-protected and the Acorns Spend checking account is FDIC-insured up to $250,000 with fraud protection and an all-digital card lock. Acorns Spend offers free bank-to-bank transfers, unlimited free or fee-reimbursed ATMs nationwide, no overdraft fees, and no minimum balance fees."

"Acorns Core allows customers to automatically invest in a low-cost, diversified portfolio of exchange-traded funds offered by asset managers like Vanguard and BlackRock. It is the only micro-investing account that allows the user to invest spare change. There are five different portfolio investment plans including: conservative, moderately conservative, moderate, moderately aggressive, and aggressive."

"Acorns Later is an easy way to save for retirement with tax advantages for only two dollars a month. We recommend an IRA that's right for the user, then we update it regularly to match their goals. It includes an automatic recurring contributions feature so that customer savings can continuously grow."

How Does Acorns Make Money?

Started by a father-and-son entrepreneurial team in 2014, Acorns now boasts more than four million users. Acorns is a private company and makes its money through member fees and, in its early years, through venture capital investors.

In May 2015, just eight months after it launched, Acorns earned $23 million in its third round of funding, bringing its funding total to $32 million. In April 2016, Acorns raised another $30 million in funding to expand its micro-investing products and services.