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Are Monthly Subscriptions Ruining Your Budget?

February 25, 2020 · 4 minute read

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Are Monthly Subscriptions Ruining Your Budget?

Monthly services are a great way to automate how you experience (and spend money on) your favorite things. But learning when and how to cancel subscriptions could help you save a significant chunk of change.

One survey of 2,500 US consumers showed that 46% of US consumers subscribe to at least one online streaming media service (like Netflix, Amazon’s Prime Video, Hulu, or Spotify), while 15% are subscribed to a box service (like Dollar Shave Club, Birchbox, Blue Apron or Ipsy).

On top of that, many of us use a monthly payment to pay for our favorite apps, Patreons, or recurring top-ups for household needs, like groceries or cleaning products.

Some of us might not even be able to name all the services that automatically charge us every month, and we often forget to cancel things we signed up for with the intention to just try them out.

All of this can add up to create a sort of budgetary black box: one survey found that Americans underestimate their spending on subscription services by a whopping 84% .

The allure of an easy signup is changing the advertising landscape as we know it: in the third quarter of 2019, Facebook generated 17.65 billion dollars in revenue.

By serving you with ads on popular platforms and making the signup process simple — and often incentivising you with free first month, referral code, or ‘happiness guaranteed’ deals — subscription-based companies make it easy for consumers to go overboard on trying out seemingly affordable services.

In an increasingly automated world, learning how to cancel subscriptions—and manage the money you spend on your favorite ones—is just as important as being discerning about hitting ‘subscribe’ in the first place.

Let’s walk through how you can learn to get control and make subscriptions work for your budget, not against it.

Staying on Top of Your Subscription Spending

The first helpful step you can take, if you haven’t already, is to make yourself a budget that you’ll actually follow. When tracking subscriptions, be sure to take a comprehensive look at the past couple months of your spending from all your accounts.

Simply making a list of all the subscriptions you can think of is a good idea, but you could miss something—on a rarely-used credit card, for example—if you’re not careful.

If you’re rolling your eyes at the thought of pouring over all your account statements and entering them into an excel sheet, worry not: there are a few different tools available to help you track your spending and cut down on monthly expenses, with special attention to recurring subscriptions.

Trim , Clarity , TrueBill , and Hiatus are all free to use—some offer other services you can pay for, but they all make it free to sign up, connect your checking and credit card accounts, and see your recurring subscription spending laid out in a simple way.

Each of these services also purports to make cancelling your subscriptions easy, so let’s talk through the process.

Starting the Cancellation Process

Next it’s time to decide which subscriptions don’t make sense for your budget. Are there services you haven’t actually used in a month or two?

Much like the often-unused gym membership, subscription services can have a way of being rationalized as something you could get around to using. Consider the different metrics you could use to assess what’s unnecessary:

Frequency

Is this subscription adding value to your life on an hourly, daily, weekly, or monthly basis? It could be helpful to track your usage for a month, noting which services you use on a day-to-day basis. If something only appears used once or twice, it could be time to cancel.

Cost per use

Based on usage, how much does this service actually cost you every time? You might find it effective to divide the recurring cost of the subscription by the times you’ve actually used it.

For example, if it’s a weekly box of ingredients for preparing meals, you might consider how much each meal costs per person based on your actual usage. It can be helpful to use this as an honest exercise to understand what you might be wasting (and if the actual cost is worth the return).

Net impact on your quality of life

How does this subscription actually make you feel when you use it? Some people find that popular, seemingly ‘must-have’ subscriptions actually don’t make sense for them on a personal level when they consider their own wants and needs: do you love Netflix and Hulu, or do you just feel like you’re missing out if you don’t have them?

Of course, this gauge differs for everyone, but it can be helpful to take stock of your recurring expenditures from an emotional standpoint to really gain clarity on what’s valuable to you.

Considering Consolidating

Putting all your monthly subscriptions on one card can simplify the way you keep track of your spending. If it makes sense for you, you can opt to always use the same account for recurring subscriptions.

Of course, if you use a credit card with a rewards system for which you pay off the balance each month, you could stand to earn a few miles or kickbacks on your subscription spending.

Moreover, though, limiting your subscription-based spending to one account can help you understand exactly how much money you can afford to burn on subscriptions every month: one payment of $150 every month vs. $30 here, $10 and $110 there.

This way, you could make the mental math of deciding if a new subscription is worth it when the time comes around: if you can only spend a certain amount on one card, you could limit yourself to a certain number of subscriptions at a time. This can help you make cancellation a good habit, instead of having the bad habit of being sign-up-happy.

Making Your Spending Make Sense for You

All in all, canceling subscriptions is pretty easy with the help of free apps, but being discerning about signing up in the first place could stand to help your budget the most in the long term.

Once you’re being realistic and mindful of your subscription-based expenses, you can make a habit of finding ways to avoid overspending and embrace savings across the board.

If you’re working on being more conscious about your spending — and how it impacts your ability to save — it might be time to consider opening a cash management account that might help you better track your habits. SoFi Money® allows you to track your spending online and via our SoFi app.

Learn more about SoFi Money today.


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