I Sucked at Saving Money Until This Tool Helped Me Bank $1,774 in 10 Months
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Saving money is really freaking hard.
Even though I’m naturally frugal, I’ve never been great at putting aside money for anything other than travel.
As of a year ago, I didn’t have an emergency fund, and was barely saving for retirement.
I knew that wasn’t smart, so I finally set up automatic contributions to my Roth IRA.
But I still didn’t have an emergency fund.
To remedy that, I needed savings to A) be automatic, otherwise I’d never do it, and B) live in a separate account, otherwise I’d probably blow it (in the best way possible) on traveling.
I procrastinated and procrastinated…
Until I heard about a new tool that monitors how much money you have in your checking account, and automatically sets aside an amount you can afford every few days.
I signed up 10 months ago, and haven’t looked back. Here’s how it works.
The Mindless Way I Saved Nearly $2K
So how did I finally start my emergency fund?
This magical tool analyzes your income and spending to “analyze your income and spending, and find money it can safely set aside for you”
Unlike automatic transfers from your bank account, Digit doesn’t take out the same amount every week or month.
Instead, it monitors your account and spending patterns, and “tries to move some money from your checking account to your Digit account” each day.
The amounts generally vary between $5 and $50, according to Digit, but I’ve seen them go as high as $61 and as low as 70 cents.
Once the money is transferred to your FDIC-insured Digit savings account, it stays there until you need it.
When that day comes, send Digit a text or submit a request via the website or app, and it will send the money back to your checking account the next business day. You can transfer money as frequently as you like.
The platform is free for the first 100 days, then $2.99 per month thereafter.
Access Digit on its web platform, or via its iPhone or Android apps. You can use it in conjunction with more than 2,500 banks and credit unions nationwide, but isn’t yet available internationally.
What I’ve Saved With This Automatic Savings App
I joined Digit in May 2015. By March 2016, I had saved $1,774.88.
If I stopped being lazy and referred five friends to the tool, I could earn an additional $25, which would push me over the two grand mark.
It might be obvious, but worth noting: The more you have in your checking account, the more you’ll save.
After I increased my income by accepting a full-time writing job here at The Penny Hoarder, my checking account balance was consistently higher. Digit calculated it could remove more money — and my savings quickly ballooned.
That’s the beauty of Digit’s system; it constantly adjusts to your cashflow. If it’s low, your savings will increase more slowly — but every little bit adds up!
Is Digit Right for You?
What works for me won’t work for everyone.
So, is Digit right for you?
If you want precise control of your money at all times, no.
Because I use Digit, my checking account’s balance is constantly changing, which is OK with me. But if you want more control, this might not be the tool for you.
That being said, Digit makes it easy to stay on top of things: You can get your savings or checking balances with a simple text and receive alerts whenever money is transferred.
I opted out of the frequent notifications because I thought they were annoying, but they might provide peace of mind for some.
If your checking account balance is frequently near zero, no.
Digit does have a no-overdraft guarantee, but it’s probably not a good fit if your checking account is always on the verge of empty.
Plus, Digit won’t be able to save you much if your balance is really low.
If you’re nervous about giving a website access to your bank account, no.
For Digit to work, you need to connect your checking account.
I trust Digit because it uses 128-bit bank-level security. And it doesn't store your bank login. Also, funds are FDIC-insured up to $250,000.
If you want to earn interest, no.
This is probably Digit’s biggest drawback.
Because it doesn’t charge any fees, Digit earns its money by investing your money and keeping the interest for itself.
For me, the interest I’d earn in a savings account is already so minimal, I’m happy to let Digit keep the change. It’s worth it to not have to consciously save money (because it’s pretty much impossible for me).
Plus, Digit gives you quarterly “Savings Bonuses.”
If you want to save money without thinking about it, YES.
I couldn’t be happier with my Digit experience so far.
I mean, how could I not be? I have nearly $2,000 in my account. My emergency fund still isn’t where I want it to be, but it’s eons better than nothing.
I’m going to let it keep growing, and I’ll eventually transfer it into an interest-bearing account.
For the moment, though, I like having it separate and out of sight — it means I won’t spend it on a plane ticket.
Susan Shain is a freelance writer and digital nomad. She covers travel, food and personal finance (basically, how to save money so you can travel more and eat more). Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.