Whether you suck at saving money every month or are a super saver, I’m going to tell you about the coolest savings tool I’ve ever heard of. Peeps, meet Digit. A revolutionary, genius, and dare I say delicious(?) tool that can help you save more regardless of how well you’re doing. Digit works by using an algorithm to scan your income and spending patterns in your checking account. Based on those patterns, it looks for dough you probably won’t miss. When it sees an opportunity, it snatches it up and transfers it to your very own Digit savings account. Over time, you not only get the joy of watching your balance go up, but you also get to spend time planning all the things you’ll get to do with it!
Seriously, it’s the best savings tool ever. If you don’t believe me, ask Google.
Everyone can benefit
Personally, I like to think I’m a pretty darn good saver. My wife and I are disciplined budgeters who try to live well below our means. So when I first read about Digit, I did nothing. But the more I thought about it, I realized that even with as much money as we save, in what universe is saving even more a bad thing? And the greatest part is that it’s automated to the max so I don’t even have to think about it. In the past two weeks alone, Digit has found
$40 $58.75 (it found another $18.75 while I was writing this post) in extra fat that would better serve me in a savings account rather than a spending account. For now, that money has debt payoff written all over it. After that, I’ll probably turn it into a vacation account.
Here’s how it looks online when you log in:
At the rate I’m going right now, I’ll be saving an extra $100/month beyond my current efforts. Not bad!
After I started getting my gears churning on Digit, I immediately knew I had to share it. So I went through the whole Q&A process so you don’t have to:
- How much does it cost? Nothing!
- Is my money insured? Yep! Digit’s deposits are held in an actual bank account, which is insured by the FDIC just like your regular accounts.
- Is my bank info safe? Absolutely. All personal info is anonymized, encrypted and securely stored.
- What if I want my money back? When you sign up, you’ll register your phone number to get updates and to communicate with Digit. When you want some money, just text “Withdraw” and you’ll get a text back immediately telling you how much you have and asking how much you want. It usually takes a day or two to get the money back in your account.
- What if it overdrafts my account? Digit is confident enough in its algorithm that it has a no-overdraft guarantee–meaning they’ll pay your overdraft fee if you get any from their services.
- How much interest does it pay? Sadly none right now. But considering I made a whopping $23 last year on all my savings accounts together, I’m sure I’ll benefit a lot more from using this money to pay off our debts.
- What if I need a break? Just text “Pause” and Digit will call off its algorithm until you’re ready again.
- What else can it do? Glad you asked 🙂 Because I love how easy it makes things. With different text commands from your phone, you can view your current balance on both your checking account and your Digit savings account. You can also view upcoming bills, manually transfer money into your Digit account, and review recent transactions. Easy peasy.
- Can anyone use it? Digit operates with about 2,500 banks and credit unions in the US right now. If you can’t find yours on their list, don’t worry. They’ll get there.
If you have any other questions, check out their FAQ page.
An interview with founder Ethan Bloch
In addition to falling in love with Digit’s product, I also got to cross paths with the company’s founder, Ethan Bloch, who was nice enough to answer some questions for me about his motivations.
When did the idea of Digit first come to you?
There was never an ah ha moment with Digit. I had the idea that I wanted to help people achieve financial stability while at the same time driving the amount of time it takes you manage your finances as close to 0 minutes per year as possible. Over the course of 8 months I built 6 prototypes that tried to deliver on this notion and the 6th and final one was what eventually became Digit, an app that would totally automate your personal savings.
Your previous startup, Flowtown, had nothing to do with money. Was it easy to make that transition?
Yeah it was. But only because of my life long passion for finance. Up until Flowtown everything I had done professionally was finance related. However in 2008 I got laid off from my job doing marketing and support for Cake Financial, I was broke and need to pay rent, so I started selling my marketing services to small businesses and startups. That led to founding Flowtown. Where I spent 3.5 years of my life, up and through our acquisition by Demandforce/Intuit. The day after I left Intuit I started hacking on what would become Digit.
Do you have a goal in mind with how much you want to help people save?
About 60% of people aged 18-40 saved no money in 2013. That should be 0%.
How much have you saved with Digit? What are you planning on doing with it?
I’ve saved a over $7,000 so far. No plans. It’s a a part of my emergency fund, so just letting it ride.
How does the algorithm work?
4 main factors influence how Digit saves:
- Your checking balance
- The next time you’ll get paid / have income
- Upcoming bills / recurring bills
- How much money you’ve been spending recently
From these 4 factors Digit tries to find an amount of money you won’t miss on any given day.
Why is automation so important when it comes to saving money?
Saving money is hard and stressful. By automating it you relieve a lot of the money stress associated with saving and yet still get to save.
What sort of brain food are geniuses like you eating and where can I get some? 🙂
LOL. I eat a lot of carbohydrates (mostly complex carbohydrates). Can’t get enough of them.
What other financial advice do you have for the masses?
I think of a quote that I first heard from Charlie Munger, goes something like “The vast majority of misery comes from man’s (humans) inability to sit still in a single room.” People are so frenzied in today’s world, I think figuring out how to be more present in life and in your decision making will pay handsome dividends when compounded over your lifetime.
Any other biz ideas swimming around up there to make us all wealthier?
I really like Lending Club notes. It’s not a business idea, but it’s a way to almost guarantee 7-8% annualized returns (pre-tax).
Digit is hands down the best savings tool I’ve ever seen
According to Ethan, 60% of people aged 18-40 saved no money in 2013. And I bet you those of us who are saving aren’t saving enough. I don’t typically write about specific products unless I’m in love with them, and this one is competing with my wife for Valentine’s Day. (Kidding! Nevermind, she doesn’t read my blog anyway :)) So:
- Head on over to Digit.
- Set up the connection with your checking account.
- Let it do its magic and start saving!