And I’m not buying it. It is not a smart way to save money. Here is the quote from yahoo “The way it works is simple. Once you connect your checking account to Digit, it will automatically transfer a small portion of your money that it knows you won’t be needing immediately to a separate Digit savings account. These are FDIC-insured, custodial accounts held by Digit at two of its partner banks, Wells Fargo and BofI Federal Bank, meaning that even if Digit or both those banks go bankrupt, you will be insured up to $250,000.
The secret sauce is in Digit’s algorithm, which monitors your income and spending patterns and calculates the exact amount of money you won’t be missing.
It mainly looks at four things: the level of money in your checking account, upcoming salary, upcoming bills, and how you’ve been spending lately (with some banks, Digit can pull three years of transaction data). So if you get fired one day and your paycheck stops, Digit will see that and readjust the transfer amount. Users can always manually set their savings amount, and, if needed, withdraw their savings anytime they want, too.
But there’s a catch: Users do not earn any interest on their savings.”
1. Harder to keep track of money: It takes money a way almost in a secretive fashion. It’s your money, you control it. You need to know where money should go.
I put money in 401K in an automatically, even though I don’t see it, but I know exactly how much I put in each month.
2. No interest. OMG, why would you even go there? If anything automatic, it should be invested in some funds, or some bonds, money market, you name it, every pennies counts.
3. Lose money by the form of inflation. Inflation is average 3% per year. Money doesn’t create more money if it sit in idle.
4. Technology is cool, but this thing doesn’t create money out of no where, so don’t have the illusion that it “finds” money for you.
Don’t do it. It cracks me up reading about it.
Instead of doing that. Do this:
1. Learn to budget: Learn to get by with everything on one paycheck. Save the other check.
2. Pay yourself first: Before taken any money out put money toward 401K or Roth IRA first.
3. Save the other check or the left over – all you need to do is create an investment account or a saving account/money market account. Link the account if you go for a higher interest rate on an online bank, so you can get the money back easily.
4. Keep a cool head and take charge of your accounts, your money!