First, find a fabric in a pattern you like. I never ever buy anything expensive. Generally, I hit the dollar rack at Wal-Mart, but if there is a holiday during the month, I try and used themed fabric. You only need 1/8 yard for one digit. You will have leftovers.
Make sure you flip your digit BACKWARDS when tracing it onto the Heat Bond. Please do not confuse backwards with upside down!
Now, if you are planning on having your little one wear this out in public, I recommend adding a backing and then attaching the applique with thread. Heat Bond is pretty thick, so you will need to adjust your sewing machine accordingly. If you wash this without sewing it to the fabric, the number WILL COME OFF! I only have my twins wear these for the pictures, then I hang them up. I'm saving them for something, I just don't know what it is yet :) Here is the final result!
Happy Creating!