America’s Hidden Spending Problem: Monthly Subscription
In August 2021, consulting firm West Monroe surveyed people to get a better sense of spending habits when it comes to subscriptions. One of the most notable findings was that 90% of respondents underestimated how much they paid for subscriptions on a monthly basis. Meanwhile, the amount spent is growing, with the average monthly outlay for subscriptions up 15% since 2018.
The expense category includes everything from cell phones to TV streaming services like Netflix (NFLX) or Disney+ (DIS). West Monroe’s findings make the case that people are becoming less aware of subscription spending, because it’s tied to things that are increasingly part of everyday life.
Consider a Subscription Audit
In general, subscription revenue is soaring and is expected to remain on a similar trajectory. The Washington Post says the so-called “subscription economy” could more than double in size by 2025. This obviously includes video streaming, music, meal kits delivered to your home, and various apps purchased on smartphones.
One suggestion many financial advisors have in response to the growth of subscription spending is an audit. This involves going through the various services you subscribe to and determining what automatically renews on a monthly or yearly basis. An honest look may result in the discovery that some services are unused and can be canceled.
How to Do It
In order to get started, you need access to an itemized statement from your various debit and credit cards used to pay for subscriptions. These can be downloaded from your bank’s website or accessed on its app. Once you’ve selected good candidates for elimination, reach out directly to those providers and cancel.
The last step is to make sure you’ve done this with every one of your statements dating back at least one year, so you can find any that renew on an annual basis. One suggestion is to then set a yearly reminder on your digital calendar of choice, in order to continually track the subscription spending. The ease of “setting and forgetting” subscription expenses is a modern trend, and this simple step could help keep your finances healthy.
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