From meal kits, to beauty boxes, to unlimited music streaming – there’s a subscription for just about everything. Yet, while paying for subscriptions via automatic billing is convenient, this can also do serious damage to your budget.
In fact, 37% of people reported in 2019 that subscription services harmed their budgets. Yikes.
But, before you pull the plug on your subscriptions, here are 5 steps to take to reduce your costs. Take a look.
1. Get Organized
Your first step should be to list out all of your subscription services, as well as how much you spend on each one and your billing dates. Then, tally up the total amount you spend for all of your subscription services combined. From there, you can use that figure to determine whether you’re overspending. 2. Make Cuts
If you are overspending and it’s negatively affecting your budget, figure out if you can cancel or temporarily pause any of your subscriptions. For example, you may not need four different streaming platforms. Perhaps you can cut back to two entertainment subscriptions and swap them out in a few months when you’re ready for a change. Ideally, there will be some subscriptions that you can cut for good.
3. Mark Your Calendar
Even though you are typically billed automatically for subscription services, it is worth marking down your monthly payment due dates using a digital calendar or even a spreadsheet. This will force you to check in on your subscription services each month to make sure you can afford the payments. And, if you decide you don’t need a subscription or you’re not using it, make sure you cancel it. It’s easy to forget to cancel a subscription and this can cost you big bucks.
In fact, a 2020 survey from PurePoint Financial uncovered that one out of every four Gen Zers and millennials go over their monthly budget because they forgot to cancel subscription services. This means that 25% of those surveyed are automatically spending instead of automatically saving.
Not only that but almost 15% of respondents reported they used savings to cover the costs of a forgotten subscription service. Not good.
The takeaway: Don’t forget to monitor and cancel subscriptions.
4. Watch Out for Price Changes
While maybe you set and forget about your subscription payments, the companies you subscribe to certainly do not forget to change and raise prices. In fact, over time you should expect the prices on your subscriptions to go up. So, make sure you keep tabs on your subscription accounts and pricing, especially as a price increase can derail your budget.
5. Change Your Thinking
Is canceling your subscription a bad thing?
You may discover that you really don’t miss your subscription at all. And, if you do miss your canceled subscription service, you can always sign up again. In the meantime, the company might even send you a discount code or coupon to entice you to come back.
The bottom line: Subscription services don’t have to be a budget destroyer. Sometimes you just need to take a good hard look at how they are really impacting your budget.
The Final Word – Your Mindset is Key
While your perceptions may be the cause of your overspending, it also helps to recognize how much you spend.
A 2018 survey from the Waterstone Management Group survey found that 84% of Americans underestimate their monthly technology subscription spending (which included digital services, devices, and subscription boxes), with only 10% overestimating what they spend.
When asked to provide an estimate of their spending, participants guessed wrong twice. There was a 197% increase between the first guess given by participants and their actual monthly spending amount.
So, use the 5 steps in this article to help you evaluate your spending, and make changes to your budget and mindset. If you can commit to this, you can enjoy your subscriptions while saving money. Are you ready to figure out which subscriptions can stay and which can go?