I needed to come up with a Savings Plan. I was like everyone else that had a Spending Plan but not a consistent Savings Plan. Every time I tried to put some money away Life came along and derailed my plans. I needed a system or something to put my Savings Plan on auto-pilot. Well, my answer came in the from of an article that I read on The Motley Fool about apps that help kids with managing their money. If an app can help kids then it could work wonders for me!
The app that I am referring to is called Digit. It’s an online savings account that puts money into your online Digit savings account automatically. It does this without any effort on my part. You interact with your Digit savings account via text messages and the available smartphone app. The text messages allow you to perform all your regular banking transactions, such as viewing your balance, initiating withdrawals, saving extra money or even viewing upcoming bills, all without using a computer. For example, if you want to pause your savings, simply text “PAUSE” to Digit’s number.
The Motley Fool did a write-up on Digit where it included it with 7 other apps that they recommended for managing finances (I’m already using Mint.com). I don’t take things that I read in The Motley Fool lightly, so I did a bit more research. How safe is Digit? What kind of reviews has it been getting?
The key questions is if Digit Savings is safe? “Digit uses state-of-the-art security measures. Your personal information is anonymized, encrypted and securely stored. All funds held within Digit are FDIC insured up to a balance of $250,000.”
And “Digit studies day-to-day spending and income history looking for daily savings opportunities consumers won’t notice. Every 2 or 3 days, Digit transfers some money from a checking account to a secure Digit account. The four main signals that influence Digit’s savings include checking balance, upcoming income, upcoming bills and recent spending patterns. From these variables, Digit derives a nonessential amount you won’t notice based on how you’ve been spending. There is never a transfer of more than you can afford, and there is a no-overdraft guarantee.”
Another question I had was whether Digit currently charged or planned to charge a fee for its service. To the best of my knowledge, Digit does not have plans to charge a fee for their service, so I expect it will remain free in the future. It’s not a service that’s going to make you rich, but it does help you stash away the extra money you won’t even miss. The way Digit makes money is they earn interest on the money you save, and pay out only a small portion (0.05%) of interest to you. This is not major concern for me because my focus is to save money and not make money. So, I feel this is a small price to pay for the convenience of my Savings Plan being on auto-pilot with Digit.
Finally, be sure to read the FAQ’s included on the Digit website and conduct your own due diligence.