Are Subscription Services Siphoning Your Savings Account?
It’s easy to forget how much something costs when you only see the product and never the transaction. That’s part of what make subscription services like Netflix enjoyable: You go through the purchasing process once and then your only interaction is as a recipient of the product or service. In the Netflix example, you’re watching all the shows and likely not watching that monthly transaction come across your credit card.
Subscription services are among the most popular ways for people to get more of what they’re into without having to think about it. Whether it’s your favorite shows or music, clothes or books, fitness or food, you can get what you want personalized just for you (and thousands of others like you). While all age groups “subscribe” to this way of life, the audience that does it the most right now are people 18-34. According to a recent study published by Instamotor, nearly 10% of 18-34-year-olds say they spend $200 or more on subscription services.
Subscriptions, if left unchecked, can siphon money from your bank account for months or even years. The relatively small, sporadic deductions may not be enough to throw up a red flag, so they go on. And whether that’s $2 or $20, it adds up fast.
This is why, every few months, it’s important to take inventory of any and all subscriptions that are paid automatically and think about which ones still have value that outweigh the cost. Then, consider taking the difference and applying it to financial initiatives like monthly savings or saving up for a home. Examples of monthly subscriptions you might have today are:
Gym Memberships ($45 average cost per month)
It’s OK. Admit that your New Year’s resolution to go to the gym five days a week hasn’t exactly worked out and focus on being financially fit. Gyms thrive on a certain percentage of their membership not participating. Whether it’s a cheap $10-per-month membership or closer to the $45 average, you’ll lose money on this relationship much faster than you realize. There are other ways to stay fit—running outside, taking free yoga classes—without a costly monthly commitment.
Streaming Services ($12-$35)
For relatively small amounts, it’s easy to sign up for multiple streaming services that have obvious overlap. Each does offer something a little different, which gives each some value. If you’re signed up for multiple, you probably have a good idea of which is more important to you. If you’re not watching all of them, it’s time to let one or two go.
Personal Styling Services ($15-$25)
Offerings like StitchFix and Birchbox can be fun monthly surprise additions to your wardrobe, but pay attention to your excitement level each time. If you find yourself feeling more “meh” about it, don’t let it drag on for months on end. Just think of the clothes you could buy if you stopped buying clothes you didn’t care about.
Magazine Subscriptions ($2)
Per month, most magazine subscriptions are pretty cheap. Plus, they often come with access to the content online. At such a low price, these can go on unchecked for a very long time. How often do you actually sit and read a magazine? Or check out its articles online? One more question: Is it worth it?
Mobile Apps ($1-$2)
Another low-cost, highly forgettable purchase that doesn’t raise a red flag each month because it’s such a small amount.
So take some time to take inventory of what you are committing to every month. Simply reducing your monthly subscription costs by $25 per month leads to $300 in savings per year.