Digit and Acorns: two services that will help with your New Year's Resolution to start building a nest egg

Was one of your New Year's Resolutions was to finally start building a nest egg? If you're anything like me, squirreling away money is tough. It's always something I plan to start doing Real Soon Now™ but that time never seems to arrive.

Today I want to share two services that are supposed to help you start stashing cash. But first, a huge disclaimer. I am not a financial wizard. In fact I am exactly the target audience for these services: a person who doesn't know a lot about money but feels like he'd better start doing something. Before using either of these services you should probably consult an accountant.

With that out of the way...

The first service I want to talk about is Digit. Digit (which you still need an invite to use) tracks your spending patterns and checking account balance and automatically transfers a few dollars to an FDIC insured Digit account when it thinks you won't miss them.

You can take money back out of your Digit account at any time; the site says it takes one business day to transfer the funds back to you. The good news is that Digit is totally free. The bad news is that you won't earn any interest or anything from the money in your Digit account. Any earnings generated by your account goes towards paying Digit.

I don't have any personal experience with Digit. I'm not sure I'd be totally comfortable with not knowing when an algorithm is going to transfer money out of my checking account, but maybe I leave less of a 'buffer' in my account than most people do?

The other service I want to talk about today is Acorns and this one I do use. Acorns works on the idea of rounding up purchases you make with your credit or debit card. If you buy something for $1.49, Acorns rounds that cost up to $2.00 and $0.51 goes into your Acorns account.

That's how it works at a high level, but in practical terms Acorns can't intercept that transaction. So what really happens is that you give Acorns access to your credit card account, it watches your purchases and keeps a running total of round-up amounts. When that figure accumulates to over $5 Acorns transfers that amount out of your checking account and into your Acorns account.

It amounts to the same thing in the end but in a perfect world the round-up amount would go straight into my Acorns account from my credit card (though I suppose if you're carrying a credit card balance that means you'd be paying interest on the money in your Acorns account).

You can also make manual or scheduled deposits into your Acorns account if you don't want to mess with the round-up stuff. Or do both. It takes a few days for a deposit to get from your checking account into your Acorns account. I haven't attempted a withdrawal yet but I assume it could take an equal amount of time.

Your Acorns account is a diversified investment account. You can set how you want your money invested in broad terms (they offer five tiers of investing from Conservative to Aggressive); I just left mine at the default of Moderate because I don't know anything about investing.

As of January 1st, 2015 Acorns charges $1/month for accounts with a balance of less than $5,000. When you get over $5K they charge .25%/year. That means $1.05/month at $5,000, $2.08 at $10,000 and $208.33/month once you get your account to a million dollars. (There's a fee calculator on this page.)

I don't have a lot in my Acorns account; I've only been using it for a couple of months. But still it feels good to know I'm doing something beyond just paying off my credit card bills every month. Being an Acorns user has also made me more interested in financial news and it may be that eventually I'll opt to take my money out of Acorns and invest it myself. But until that time I'm making slow progress towards an eventual comfortable retirement.

Of course the one big catch with both Digit and Acorns is that to get started you need to open an account, and that means handing a lot of sensitive information over to them. Acorns in particular needed my social security number, checking account number and bank routing number, and log-in credentials to my credit card accounts. I won't lie; handing all that over was extremely scary.

Both companies are quick to tell you that they use state-of-the-art security but we don't really know, do we? I have to admit that since opening my Acorns account I watch my bank and credit card accounts a lot more closely. I suppose that's not really a bad thing. So far all has been well.

Again, I'm not very educated when it comes to finance (if I was I probably wouldn't need these services), so if you think Digit or Acornds is right for you, please consult an expert before signing up. I just wanted to make you aware these options were out there. There's no time like the present for starting to build a nest egg.

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