“Save Money Without Even Thinking About It”: This is their motto. Digit is one of the first software packages out there that will study your spending patterns and move money into your savings account for you. Almost every personal finance blogger I know absolutely loves it. I, on the other hand, pretty much hate it and think you should too.
I absolutely 100% refuse to automate my savings with digit. I refuse to automate my savings not because Digit is doing something wrong or because their algorithm is faulty. In fact, all the reviews I read have been glowing and state that their product is doing exactly what it’s supposed to be doing. Their software is enabling people to save money that have otherwise never saved a dime in their life. However, is this product really helping us live the life of our dreams? Is getting money arbitrarily moved from my checking account to my savings account really going to create shock-waves of life and rebirth in my financials? I don’t think so.
Refusing to Automate My Savings
There are basically two reasons why I refuse to automate my savings through digit or any other software package. The first is a minor reason and the second is the big kahuna reason: first, the interest in the digit savings accounts sucks, and second, automation is causing me to think less, not more.
1) Interest on Savings is Terrible
I currently earn 3% on the money in my checking account. The digit savings account earns exactly 0.00%, so why in the world would I want to move my money from a high-interest account to a super-low interest account? It just doesn’t make any sense. I have control over my money and don’t spend it on a whim, so I would much rather just leave it in my checking account to earn hundreds of dollars a year.
If you get to the end of each month and typically spend everything you earn (or more), then you have a pretty big problem, right? In this situation, do you think it would be wise for you to think less or more? Obviously, you should start thinking more.
In this scenario, you should be thinking about your earnings and your job. Perhaps you aren’t getting paid enough for what you do and should ask for a raise. Or, if that’s out of the question, then maybe you need to start entertaining the idea of working for another company that pays better. Maybe your issue isn’t your income though. It could be that you’re spending too much money when you eat out, or your car insurance costs are far above what they should be, but since you haven’t shopped around for a while you just don’t realize it.
Now, if you begin to let a software package put some money into your savings for you, what is going to happen? You’re probably going to smile in the mirror and say, “Oh good for me, I’m actually putting money in savings now. This is the first time I have seen $50 in my savings in the past five years. I am really doing great!” Your ego is lifted, your happiness level goes up, and you have a bounce in your step, but your brain is now turned off and your life really isn’t that radically different than it was just a few months ago. By automating your savings, you have done absolutely nothing to alter those bad habits or improve yourself through the good ones. Your small success is equivalent to a baby learning how to roll over. Sure, it’s a great thing, but wouldn’t you eventually want to see that baby walk?? By automating your savings, you are inadvertently keeping yourself from walking and kicking butt at personal finance. Instead, you have grown content to save $50 a year. And without changing any habits, you’ll likely blow that on one night at your favorite restaurant.
Choose to Change and Grow
This whole Digit operation gets me pretty heated if you can’t tell. Pretty much digit thinks we’re all too stupid to save money on our own, so they have proposed a way to do it for us (mostly for their benefit, and only somewhat for ours). And unfortunately, this post will probably get thrown to the wayside because they are also paying personal finance bloggers to promote their product (which almost everyone is doing). So, in a nutshell, personal finance bloggers are earning money, Digit is earning money, the consumer is saving a few bucks, but each individual is actually worse off because their brain is completely turned off to the real possibilities that are out there beyond automated savings.
I urge you to do something different! Instead of blindly signing up with a service to save money for you, why not take it upon yourself to change your habits and grow? If you actually put in a valid effort toward your personal finances, think about what you could do! You could do so much more than just save a few dollars! You could take action and:
- Cut your cable to save $100+ a month
- Call your insurance company to get a better yearly rate
- Decide to get rid of your ridiculously expensive car with payments and pick up a perfectly good used one with cash
- Start shopping at discount grocery stores instead of going out to eat two or three times a week
- Take all these savings and put them toward your credit card debt
- Take classes with the time that you used to spend watching TV
- Get a better job with a higher salary
- Set an audacious goal and pay off your house!
- Use the extra cash flow to invest 25% or more of your income
- Retire early and wealthy
- Give of your time and money to those in need
Doesn’t this sound infinitely better than letting a computer program automate $10 of savings to a digit account? Ummm, yeah, I think so. Do me a favor and share this article with your friends, because I have a hunch that most people won’t….if you catch my drift.
Will you refuse to automate your savings?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.