Buzz
A lot of financial advice gets focused on small expenses—the morning coffee that costs $3. Or the $9.99 monthly fee for your music subscription. Cutting out these minor costs and saving those dollars could add up to thousands of dollars saved over the year. But, naturally, it's not that simple.
Even if you reduce your expenses, it requires a lot of mental discipline to set aside that saved money in a secure place where it won’t be spent on other things. At times, you might need extra support in managing your finances. Savings apps can assist by automating your savings and transferring small amounts from your checking account without requiring you to actively think about (or resist) the urge to spend it.
These apps often come with a fee. But before you tsk-tsk about the ones that charge, let me explain why paying to save could be worth the investment.
In December, I decided to try out a free trial of Digit. The app looks at your income, bills, and spending patterns to figure out how much money you can save daily. It then makes withdrawals from your checking account, storing the funds and allowing your savings to grow until you decide to transfer them back to one of your accounts.
By the middle of 2019, I couldn’t imagine life without it—$2.99 per month is nothing to complain about.
Why paying for a savings app is sometimes worth it
Isn’t it strange to pay to save money? Some of you may be wondering. You’re not alone: That’s exactly why Digit’s transition from a free app to a paid one in 2017 had many users searching for alternatives.
But the important thing is that you see value in what you’re paying for. You Need a Budget costs $6.99 per month. Why do people choose it when they could just create their own spreadsheet or use a free budget tool like Mint? Because the value it provides is worth the investment toward achieving their financial goals.
If you're struggling with limited cash flow and barely managing to cover your monthly expenses, paying for a savings app probably isn’t the best choice for you. It’s more effective to save any extra $3 or $5 you can find until you’re in a better financial position. However, if you’re comfortable with your budget and want to boost your savings—beyond the usual ‘pay yourself first’ strategy you use to automate savings—investing in an app to assist with that could offer more value than the monthly fee.
For me, the goal is to save as much as I can from my checking account. I have the problem of having too much left over after paying my bills and executing automated savings transfers—my checking balance becomes a bit too tempting. Digit doesn’t send me notifications about how much it’s saving daily, which usually results in a pleasant surprise when I check the app. It’s an added layer of savings that’s completely out of sight and out of mind, but without the feeling that I need to live on cereal to make it work.
I had no idea I was saving this much
One of the most appealing things about Digit is that I have no idea how it actually works. All I know is that since December, I’ve withdrawn $3,524. That’s $3,524 of my own money, in addition to my monthly automated savings, that I’ve been able to take from this algorithmic system and use however I wish.
If I saw an extra $500 floating in my checking account each month, do you think I’d be eager to put it into savings? Probably not. I’d be tempted to spend it on a hotel for a weekend getaway at the beach. With Digit, all I need to do is set a low-balance protection level so it doesn’t save when my checking account dips below a certain amount. Beyond that, Digit makes better decisions with my money than I ever could.
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