Digit: The New Way to Save

Medium-term savings goals: frankly, these should be all the rage right now for millennials. We constantly hear reporters and financial gurus harping about retirement, emergency funds and paying down student loans. All valid topics to be harping on, but the intense focus on these are to the detriment of other life milestones: buying a home, paying for a wedding, having children, traveling.

Two of my favorite personal finance blogging ladies (Stefanie and Shannon) recently started the conversation about medium-term financial goals and it got me thinking about my own goals.

In order to reach my rather lofty goals (which I’ll share at a later date), I’ve been looking for every opportunity to save money. Well, let’s rephrase that. I’ve been looking for ways to increase how I save. I still indulge in travel (I’ve been to Texas, North Carolina, and upstate New York in February alone and heading to California and Hawaii in March). I’ve gone to the movies (and actually paid full price * gasp*). You know what, I’ll just confess it all: I’ve even bought my lunch instead of brown bagging, purchased a few lattes and gone out to dinner (more than once!).

The theatrics aside, I legitimately have been figuring out ways to trim the fat in my budget and put more money towards my medium-term goals.

The easiest way to scale back how much you spend is by simply reducing the amount of accessible money. The out of sight out of mind mentality is great when it comes to saving (as long as you do check ups on your investments). I put my money in savings or investments and then put a mental block on spending it. The only money I’m allowed to spend is the money in my checking account.

Courtesy of J. Money, I recently discovered a new way to put my money out of sight: Digit.

digit-logo-branded.f49fc955Digit is your free robotic financial advisor. You link Digit to your checking account, it analyzes your spending and then begins pulling out small amounts of money to put into savings. In my experience, Digit takes small sums of money out. It’s like having a budget leak that works for you instead of against you.

Digit functions as a savings account and holds your money until you request to have it transferred back into your bank (or credit union) account. In my opinion, Digit is really is more of a checking account because you don’t earn any interest on your funds and there are unlimited transfers – savings accounts are subjected to a maximum of six transfers a month. Regardless, it’s a great way for you to be saving without really noticing you’re saving.

IMG_1492COMMUNICATING WITH DIGIT

You can access your Digit account online, but I personally love how it communicates via texts. I receive a daily update with the amount in my checking account, which will mention if Digit saved any money that day and occasionally how much I have saved total. You can also cash out, pause transfers and ask about updates all via text message.

HOW MUCH DOES DIGIT TAKE?

My largest transfer was for $6.44. Of the eight transfers Digit has performed since I opened my account in late January, only three have been above a dollar. The average amount I’ve had transferred is $2.28.

I’ve had Digit for three weeks and it’s saved $18.25 for me. This doesn’t sound like much, but even just pulling $250 a year I likely wouldn’t have saved can fund a flight, help pay for the upkeep of this blog or get me closer to my medium-savings goals.

This will obviously vary between people. I don’t keep a bunch of money in checking, so Digit’s analysis of my income and how I spend isn’t totally accurate. Digit will have a better analysis if you tend to keep more in checking and make most of your transactions with a debit card linked to the account.

Note: Digit can link to over 2,500 banks and credit unions and it’s currently only US-based.

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HOW DO I KNOW IT’S SAFE?

Digit uses the same type of encrypted security measures your bank does. It also is FDIC insured up to $250,000.

I’m completely paranoid about giving anyone or anything access to my financial life – and I trust Digit.

HOW IS DIGIT POSSIBLY FREE?

Well, they don’t offer you any interest on your savings. Digit is pocketing the interest being earned on your money.

WAIT, THEY DON’T GIVE ME INTEREST?

If that makes you made – then don’t use it. But be realistic. If you’re using any of the big four banks (Chase, Bank of America, Wells Fargo or Citi) to hold your savings – you earn a whopping 0.01% interest rate on savings. That’s $1 for $10,000 in savings. I’m willing to bet Digit would save you more than that in a year.

WHAT IF I WANT MY MONEY BACK?

You can withdraw whenever you want, as frequently as you want. This does make it different than a standard savings account, which limits you to six transactions per month.

Just text ‘Withdraw’ to Digit and your money will be in your checking account the next business day.

DIGIT MADE ME GO OVERDRAFT!

NOOO! Overdraft is the worst, especially if you bank with one of the Big Four and you get charged over $30 or $12 for overdraft “protection.” But don’t worry Digit has a no overdraft policy. If you end up going overdraft due to a transaction Digit made, it’ll pay the overdraft fee.

I CAN’T AFFORD TO SAVE THIS MONTH

Some months are tighter than others. That’s okay. You don’t have to deactivate Digit just because every penny makes a difference in your budget. You can just text ‘Pause’ or go online and hit ‘Pause Saving’ on your dashboard. Digit won’t take out money until you activate it again.

WHAT ARE YOU WAITING FOR?

It takes about 4 minutes to set Digit up*. Try it for a month and see how much it saves you. Maybe it’ll help kick start a fund to take a trip or pull together money to make an extra debt repayment. I know the money Digit saves me is going into my “Wedding Fund.” No – not mine. I’m 25 and averaging 4 weddings a year. Those suckers are expensive to attend – not to mention be in!

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*Yes, if you click through my link to Digit, I’ll get a $5 referral fee. But then you can refer someone and make $5! We both win.

Posted in Frugal Find Friday Tagged with: ,
28 comments on “Digit: The New Way to Save
  1. “The easiest way to scale back how much you spend is by simply reducing the amount of accessible money” – Such a simple concept, love it.
    Stefanie @ The Broke and Beautiful Life recently posted…Diversity of Income, Diversity of Happiness: Why Having a Back Up Plan Isn’t Resigning Yourself To FailureMy Profile

  2. J$ says:

    Welcome to the club!

    Here’s to more saving!! 🙂

  3. LOVE that you are focused on medium term goal savings. HATE that you are using Digit to do it. It may work to help you build emergency savings; however, medium term savings needs to be working hard and growing for you and Digit keeps the interest and bank benefits to themselves.
    Shannon @ Financially Blonde recently posted…Temping Your Way to a Full-Time JobMy Profile

    • Broke Millennial says:

      Don’t worry. I’m not using Digit to do it. It’s just a fun way to see how much extra money can be saved out of my already insane savings strategy. I look at Digit as a way to get an extra $50 – $100 for nice dinners on a trip. My real savings are all in places that earn interest.

  4. Tawcan says:

    Do you know if Digit works for Canadians? I have heard Digit from J.Money but haven’t really looked into it too much.
    Tawcan recently posted…Momentary sacrifices and financial independenceMy Profile

    • Broke Millennial says:

      When I was doing my research the Digit FAQ said it’s only applicable for US banks at the moment, but they’re looking to expand soon. You could always try and see if you’re bank works though!

  5. Ben Luthi says:

    I love that Digit is starting to get some major exposure. People need this and they need it now.
    Ben Luthi recently posted…Why You Should Save for Your Child’s Education…and Why You Shouldn’tMy Profile

  6. Ethan Bloch says:

    Thanks so much for spreading the Digit love! Stoked to have you.

    One quick note 0.01% is $0.10 for $1,000 in savings — so you’d giving up ~10 cents a year.

  7. Amos says:

    I think I love about digit though have never heard of it.Thanks for sharing…
    Amos recently posted…The Best Three Books About Warren BuffettMy Profile

  8. Jeremy says:

    No matter how indebted you are to student loans, you should be saving something … this app helps with that. Thanks!
    Jeremy recently posted…The Best Laptops for Students in 2015My Profile

  9. Kirk says:

    Take a dollar, put it in a jar. Spend it in 25 years and it is worth less than 50 cents (3% annual inflation). To say this is a good savings strategy is like saying lottery tickets are a good buy. Developing good savings habits and learning some investing skills is a mindset that will go a long ways to get away from being broke.

    Take that dollar and put it in an Ally Online Savings account, which earns almost 1%. You’ll still lose value but it will take 36 years to lose half its value.

    • Broke Millennial says:

      Hopefully you aren’t waiting 25 years to spend anything with Digit. Like I said in the review, it’s basically a checking account. Use it to save money you wouldn’t already and then every month dump that into your Ally (or GE Capital or SmartyPig or MySavingsDirect or Optimizer+Plus which are all higher than Ally) savings account.

  10. Totally loving this idea. I wonder if I can find something similar for Canadian. Our banking restrictions are pretty much insane.
    Marissa @Thirysixmonths recently posted…Buying Your First House? Think Credit UnionsMy Profile

  11. Digit is something new. I love the tutorial video, Broke Millennial. Very easy to learn! I just couldn’t wait how it really impacts my saving, considers it works automatically! Yay! It’s crazy that retail banks aren’t doing this.
    Jayson @ Monster Piggy Bank recently posted…Real Estate Investments: Comparing London to New YorkMy Profile

  12. Cool! Good thing that you mentioned something about the security feature because that’s the first warning that immediately popped up in my mind.
    How To Save Money recently posted…How to Save Money on BooksMy Profile

  13. I have never heard of Digit before this post. I will research it.

  14. Mel says:

    I’ve been using digit lately too, but it’s mostly an experiment. I’m curious about how much it will take out over a year, because it has been doing a great job taking out little withdrawals without me noticing at all. I think a lot of my readers in the arts could benefit by using it to start the emergency savings few of them have.

    The only thing that drives me nuts is the text messages. They are definitely a little excessive until you turn them off.
    Mel recently posted…Accountability: February 2015My Profile

  15. Katherine says:

    I may have to do this. I am being converted from a 1099 to a W-2 employee and before I would just round up the amount to save for taxes. It was better safe than sorry, but now, I wont have that motivation. It would bother me that its random amounts though…
    Katherine recently posted…February 2015: Passive Income and GoalsMy Profile

  16. Looks pretty cool, I’ll check it out! Thanks for sharing.

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