Whether you’re a regular Starbucks customer or you pay for LinkedIn Premium, most Americans have at least one subscription to a service or good. Some of these subscriptions are important, as you might need unlimited access to the Wall Street Journal or Spotify Premium to help you get through your morning commute.
While many of these subscriptions have become a part of our daily lives, they also make it so easy to overspend. According to a survey done by Solitaired , Americans overspend on subscriptions by $600 a year.
This might seem like a rather large sum of money, but it’s often accumulated through multiple subscriptions purchased monthly or annually. In this article, we’ll discuss what subscription overspending is, as well as how to cut out that unnecessary spending and why it’s important for you to do so.
What is Subscription Overspending?
Pre-2000s, many subscriptions were for physical objects, like magazines or newspapers. You could also purchase a subscription for gym access or annual amusement park tickets. Nowadays, many subscriptions tend to be online. You might have a subscription for a music app that allows unlimited downloads or for a language-learning tool you need for your vacation.
The difference is that we tend to forget about our online subscriptions: we pay for them, and then we take that access for granted. Unlike the magazine we hold in our hand every month, our access to an app or an upgraded, premium version of an app is much less tangible. This forgetfulness can often contribute to overspending on subscriptions, as you may not even remember that you have the subscription in the first place.
Additionally, most subscriptions are paid for online in our digital world, whether it’s through your laptop or phone. Many of these subscriptions are automatically renewed, meaning the company will charge your credit card monthly or annually without you having to manually enter your financial details again. Not only can this cause you to forget about the subscription you purchased, but it can also cause you to lose track of how much you spend on subscriptions in total. Unfortunately, this leads to hundreds of dollars in subscription payments being racked up over a year, without any of us having a clue.
How to Cut Subscription Spending
Spending $600 a year on subscriptions can be dealing your budget a huge blow. Even if you can afford $600 a year on subscriptions, think of all the money you could save if you cut some of it back. If you think you’re unwittingly spending too much money on subscriptions or you’re ready to give your subscription consumption a large cut, you’ve come to the right place.
Clean Out Your Subscriptions
Your first step in cutting subscription spending should be to clean out subscriptions. This is your opportunity to determine which subscriptions you need and use, and which ones you can cancel. Look through your monthly bank statements and emails to find what you’ve subscribed to. You can also check what subscriptions you have to specific apps on your phone through the Google Play Store or Apple Store.
Once you’ve figured out what all you subscribe to, it’s time to decide if you should cancel or keep them. Is it a subscription to an app or service you use every day? If the answer is yes, then it might be worth keeping. If you don’t use it regularly but feel as though you might need it in the future, consider the price tag. Is it worth paying every month or year if you don’t use it all the time? For example, do you need LinkedIn Premium if you’re employed somewhere you plan on retiring?
Some apps or services will also have different payment plans. In some cases, it might be cheaper to pay an annual fee rather than a fee every month. While it might only save you a few dollars, it’s still worth considering. Additionally, if you’re a veteran, student, or government employee, you may also qualify for a cheaper payment plan for some services.
Make a Monthly Budget
A budget is a great way to help you keep track of how much you’re spending and where you’re spending it. You can easily make a budget the old-fashioned way with Excel, or you can opt for a free financial planning website or app. Just make sure you don't have to purchase a subscription!
Use your salary or monthly income to create limits on certain spending categories. For example, you might spend $200 on groceries and save $100 for eating out. Once you’ve hit your $100 on food out of the house, you’re done spending money on those kinds of services. Using a budget can also help you keep track of your subscriptions, once you’ve sorted out the ones you’ll keep and cancel.
Create Healthy Spending Habits
Cleaning out your subscriptions and making a budget can be done quickly. Taking the time to cultivate healthy spending habits won’t be as easy. However, by creating a set of “financial rules” for yourself, you’ll be able to save money for your future.
These habits don’t need to be stringent. It can be as simple as not grocery shopping when you’re hungry. That could lead you to buy food that looks good at the moment, but it isn’t something you’ll eat regularly. You can create a 24-hour rule, where you wait 24 hours before buying something that’s not a necessity. You can make as many or as few rules as you want: whatever will help keep you on track with your budget.
Why You Should Cut Subscription Spending
When cleaning out your subscriptions, it can be easy to justify your spending patterns. Maybe you do spend $600 a year on subscriptions, but what if they’re all subscriptions that you need? You’ve afforded those subscriptions before, so there’s no need to change now.
Unfortunately, this is not the reality for many Americans. Over a third of Americans live paycheck to paycheck, meaning they’re not prepared for any sort of financial emergency in the future. With the U.S. economy still suffering from high inflation, many Americans are not in a position to spend their entire paycheck in a month.
You may not have touched some subscriptions in years. Others are subscriptions that you use, but not enough to warrant the price tag. In the end, canceling some or all of your subscriptions will give you a boost financially. You’ll save some more money every year, and you might even find your monthly budget has a little more room. You’ll also be better prepared for any kind of emergency that might come up in the future. Cutting back on subscription spending can be hard, but remember that you will be rewarded for taking this step towards financial awareness.
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