How are round-up apps different from saving change?

I get how something like Acorns can be problematic/in conflict with the YNAB method for people who are new to budgeting and aren't used to saving part of their paycheck. At the same time, I still have the question: how is using Acorns in conjunction with YNAB (aside from the extra work) is any different than saving the change when you spend cash?

I've been doing this for years: saving quarters for the meter, keeping other coins in a little bank and, when it's full, taking it to the credit union to be counted (for free!) and deposited in my account. I still think about money in terms of the YNAB method--those habits are second nature now--but I don't see the harm in saving up change until it's a little bigger and doing something more meaningful with it.

Is it different with cards? Do you *have* to invest with Acorns?

Maybe I'm missing something... But YNAB has gotten me out of debt and into saving 34% of my paycheck every month. With those things in place, is there still an issue with something like Acorns?

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    • Superbone
    • YNAB convert since 2008
    • Superbone
    • 4 mths ago
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    There's just no need for it. With YNAB, you should know exactly how much you have available to invest as every dollar has a job, right? Just invest it and be done with it. No need for any trickery.

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      • TechieM2
      • IT Professional and General Geek
      • techiem2
      • 4 mths ago
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      Superbone This.  I just budget a regular amount to go into my investments.

      The only rounding I do is when I use cash for something (which is rare, the vast majority of my spending is through my credit card).  For cash I round up to the next dollar and toss the change in a mug for our yearly change charity drive at the church and just record the rounded up transaction in YNAB.

      Like 1
  • Under the YNAB method, everything is accounted for. I invest money every month. But I plan for it by allocating $X to my investment category every month. Whereas with Acorns you don't plan for it. So if it takes $1.00 from your checking account to invest somewhere you need to now budget for that $1 by taking it from another category.

    If you put $0.75 in a parking meter and stick the other quarter in a super secret place but enter the transaction as $1 to your parking category that's fine I guess. But when you go to spend that quarter, you now have to count it as income because it is money that has already left your budget. Either that or you can't account for spending that quarter.

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    • Superbone
    • YNAB convert since 2008
    • Superbone
    • 4 mths ago
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    Also, there are much more efficient investment vehicles than Acorns. You'll pay a much smaller expense ratio at Vanguard, for example.

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  • There are a zillion transactions to record/reconcile with Acorns (in TWO accounts). You can ignore this level of fidelity in a cash account.

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    • WordTenor
    • I'm the oldest and the wittiest.
    • WordTenor
    • 4 mths ago
    • 4
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    JilesMulijin It’s about administrative inconvenience. For every transaction you make, you have to make a split transaction or two transactions. Spent $1.19 on a coffee? That’s $1.19 for dining out, then a second $0.81 in dining out that is a transfer to your off-budget investing account. $22.47 for gas? $22.47 in gas, $0.53 to investing. Twice as many transactions to record, twice as many to sort through if there’s a mistake in reconciliation. 

    The savings apps are even worse, because you aren’t sending the money out of the budget. So in addition to the spending transaction, you have to transfer a few cents from account A to account B. Then, if you actually want your budget to reflect that the jobs, and not just the location, of those cents has changed, you have to do a move in the budget of that 81 cents you rounded up from your coffee. 

    If you are saving 34%,  just give 34% of your budget savings jobs. No need for all this fiddly back and forth. 

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