Acorns Early is all about planning ahead.

By Lauren Phillips
June 30, 2020

When you consider the big costs in life—paying for college, buying a house, retiring—the numbers seem impossible. How, you may think, can any one person expect to save $1 million or more for retirement? How can anyone hope to put away enough money to pay for college without taking on student debt?

For some privileged families with large incomes or inheritances, paying for these huge costs is doable, even if it calls for a little budget-trimming. For most, though, saving enough money within a few years to buy a house or retire isn’t realistic. That’s why financial advisors and money experts emphasize the important of time: Investing or saving money over a long, long period of time is the key to building true wealth and being able to afford these huge expenses.

In the interest of helping more families save and invest over time, Acorns—the financial service company that helps people save and invest small dollar amounts over time—launched Acorns Early, a new service to help families give their children a running start at overcoming life’s biggest financial hurtles.

Acorns encourages its millions of users to save leftover change by rounding up purchases and putting the extra money into savings or investments; it gives users the option of setting up automatic transfers from their accounts, so they can save a few dollars or cents a day that eventually add up to substantial savings or retirement funds. Acorns Early has the same approach: It encourages families to establish an account for their children when they’re born, and then save a few dollars every day to set those children up for success later on.

Acorns Early recommends that expecting and new parents invest $5 per day for their child, starting from birth. With average investment returns, that money can grow into more than $4 million by the time that baby reaches retirement age, making retirement—or the other financial milestones that come before it—more accessible.

These accounts are types of custodial accounts, which means the money added to them legally belong to the child and may even have some tax benefits. Funds can be used for anything that helps the child and can be transferred to them when they reach adulthood; if they maintain even small investments every day, they can keep their money growing all the way to retirement.

One of the great benefits of 529 plans is that they encourage parents to start saving for their children’s futures early; Acorns Early does the same, with the added benefit that the money saved, invested, and earned can be used for more than educational expenses. Parents or grandparents can create an account in just a few minutes and begin funding it when the baby is born. With smart investment projections and recurring investment features, the account helps the saver plan how much to tuck away to save enough for college, for example.

Acorns is offering Acorns Early free to babies born in 2020. Parents of older babies looking to start saving now—because now is better than never—can access Acorns Early for $5 per month as part of the Acorns Family subscription tier, which includes Early accounts for children (families can establish a new account for each child) plus Acorns investment, retirement, and checking accounts for the parents.

Acorns Early: Potential Projection Screenshot
Credit: Courtesy of Acorns

The power of investment growth and compounding means that a smaller amount invested can grow into a huge amount over time. In one Early projection (pictured above), investing $25 every week from birth could add up to $150,000 by the time a child turns 21. Planning far ahead, even more than the amount invested, is the key to finding that kind of growth.