The easiest way to save money, ever? That’s a bold statement. But it’s true.
Sure, you can set an automatic transfer from your checking to your savings each month, but with that you still have to set the transfer amount.
With Digit, you don’t even have to do that.
It’s an intelligent service that not only saves your money automatically, but it determines how much to save by how much you can afford. You literally just link your account and forget about it. Digit does all the work for you.
I had a few questions, so I set up an interview with the founder of Digit. Here’s what I figured out and how you can use Digit for automatic savings…
My buddy J Money, over at Budgets Are Sexy, told me about this. At first, I was a little suspicious of a service that automatically pulls different amounts out of my checking. My original thought was “what if it pulls out too much and I overdraft?”. Then I figured out that the people at Digit are so confident in the intelligence of the service that they will pay any overdraft fees or charges you incur if such an event should happen. They are confident that it won’t though. First, just watch this 60 second video explanation of Digit:
- You sign up for a free account
- You link your checking account
- Digit automatically transfers amounts that you can afford into a savings account
That’s it. Too easy, right? Digit functions through text messaging. These are the commands you can text to Digit:
- savings: view your digit savings balance
- balance: view your checking balance
- recent: view recent checking transactions
- bills: view upcoming bills
- withdraw: make a withdrawal from your digit savings
- save: move money into your digit savings balance
- pause: pause saving
- settings: adjust my programming
- commands: view all possible commands
And the newest commands are “save more” and “save less” to save more or less aggressively. So even though it’s fully automated, you have a say in how much it tends to take out. This is a screenshot of my Digit account after one week:
I have my retirement account, my emergency fund and other investment accounts, but this just seemed too fun to not do. If I can automatically save even more money than I’m already saving, why not?
Plus, it’s totally safe! Digit is just as secure as your bank’s checking account since your money is going into an FDIC-secured account. Plus, like I mentioned, if they cause you to overdraft, they pay for any charges or fees you incur.
The Downside to Digit
There are a few downsides. First off, you’re saving the money, not investing, though since they’re small amounts here and there, you would have likely just spent the money instead of saving it. Also, there is talk of bringing more automation into the mix with Digit, such as retirement and credit cards. More to come on that down the road.
Second, the money is transferred into your Digit savings account, not the savings account you already have, but I think that’s just another way to forget about it and let it build. You could always use it as a vacation account or use it to save for a large future purchase.
Digit is also US-based to if you’re not in the US, you won’t be able to use it, but they have plans of expanding internationally, so be on the lookout! Also, while they are aligned with 2,500 banks, there are still some banks that Digit can’t link to.
There are a few cons, but honestly, the service is so simple that it’s a no-brainer. I signed up for fun. You may want to sign up because you’ve lacked the discipline in the past to save. Or you may just want another savings vehicle for something special like I mentioned about vacations or other purchases. You could even use it to start working on your emergency fund or as a way to start giving. It’s all about taking out money that you would have never known you had.
My Interview With Ethan From Digit
J Money had already asked a few questions that I had, so I didn’t want to be redundant. J asked Ethan how much he has saved for far, and he said “as of this morning $7,720.05 (since January 2014)”. He also asked about the basics of how Digit works and here’s the answer:
“Every weekday Digit looks at your checking balance and asks itself a bunch of questions including: Is this a high or low balance based on how this person makes and spends money? Do they have any bills coming due in the next several days? Will they have any income in the next several days? How much money did they spend yesterday? How much did they spend over the previous several days? How much have they saved so far this month? After answering questions like these, Digit then tries to arrive at a small amount of money it knows you don’t need but more importantly might not feel is missing based on recent spending and income.”
Here are the questions I asked Ethan:
- You have an “overdraft guarantee” to make sure Digit doesn’t accidentally take too much. How does Digit know when to quit once the balance starts getting closer to zero?
It really depends on the individual and how they spend money, how low they usually let their balance get, how much their balance swings from day to day, etc.. We’re not perfect, but improving every day and this is why we’ll cover any overdrafts Digit ever causes you.
- Does Digit only work if someone has way more money than they need in their checking account? Or can it also work for those who choose to keep a lower balance?
It will also work for those who keep a lower balance.
- You’ve mentioned the possibly of going into more automation with Digit in the future, such as retirement and credit cards. Is there any talk of more commands in the future? If so, could you share the commands you’re considering?
Nothing to share here currently. However, one for the newest commands are “Save More” and “Save Less” to adjust how aggressive Digit is with saving.
- Last question – Just for fun – As a successful business owner, you’ve got to be productive; what’s the best piece of productivity advice you have to offer that has worked well for you?
There’s always 1000 things you could spend your attention on and they’re all important. You gotta prioritize, then start at the top and focus. That’s it. No glitz, glamor or special tools. 🙂
It’s So Simple
Seriously, that’s everything there is to know about Digit. Click here to go try it out today. You can even refer your friends and earn $5 every time someone you know joins.