We all have them. We know they cost a small fortune. Yet, instead of canceling subscriptions, we find ourselves subscribing to even more. Businesses across all industries have found creative ways to cash in on this profitable business model – and consumers can’t resist clicking “subscribe.”
While you and your wallet know it’s time to break up with some of your subscriptions, it’s not always as easy as it sounds. The following guide will shed light on the financial toll these monthly fees take on your budget – and walk you through how to regain your hard-earned money. But first, let’s look at how subscriptions took over our lives and wallets.
The Lucrative Business Model
A little over a decade ago, most of your “subscriptions” consisted of utilities like your phone, cable, electric, and water bills. Perhaps you had a monthly lawn service or pest control company. Then, mobile phones and apps took over. Businesses began noticing how small-scale apps were raking in money from nominal monthly fees. Soon, organizations of every kind were moving into the subscription model.
Businesses realized they could earn more money through recurring revenue by offering their goods and services at a lower monthly cost.
- The Free Trial: Lure in customers with a limited-time free trial (that most will forget to cancel).
- Low Monthly Cost: Keep the price minimal so it doesn’t attract too much financial attention.
- Auto Renew: Ensure revenues continue to come in by conveniently auto-billing customers.
- Social Proof: Hype a new series or product heavily on social media so people subscribe or renew for fear of missing out.
- Hard to Cancel: Limit unsubscribes by making it a hassle to drop the service.
Realizing how controlling subscriptions can be, the Federal Trade Commission (FTC) proposed a “click to cancel” rule in early 2023.1 Its goal is to make it much easier for consumers to cancel their subscriptions.
Most people today couldn’t tell you how many subscriptions they’re enrolled in. While the obvious streaming services come to mind first, when you start looking at your monthly expenses, the count can be jaw-dropping. Let’s look at how far the subscription business model has spread in recent years.
- Streaming Services: Netflix, Hulu, Prime Video, Disney+, MAX, ESPN+, Paramount+, YouTube TV, Apple TV+, Starz, Showtime, and on and on…
- Audio: Spotify, Apple Music, Amazon Music, Pandora, SiriusXM, Audible…
- Services: Food delivery, grocery delivery, car wash plans, lawn care, pest control, software like Adobe Creative Cloud, Microsoft Office, and Canva, shopping experiences, such as Walmart+ and Amazon Prime…
- Goods: Prepared meals like Blue Apron and HelloFresh, pet supplies such as BarkBox, clothing through Stitch Fix, Dollar Shave Club – even toothbrush subscriptions via Quip…
Subscriptions have taken over our financial lives – and it’s time to reclaim control over your wallet.
Breaking Free from Subscriptions
Not all subscriptions are bad. There are many that you’ll find well worth the money. However, too often, we find ourselves subscribed to services we didn’t even realize – or no longer find valuable.
The following steps will help you identify where your money is going and set goals to reclaim your hard-earned money.
Identify All Your Subscriptions:
After listing some popular subscriptions above, you might wonder how you’ll ever track everything down. Two of the best sources are your phone and financial account statements.
Begin by opening the Apple AppStore or Google Play on your phone. Head over to your subscriptions and find everything linked to your account. Next, pull several months of statements from your checking account and all your credit cards.
Go through and find all your subscriptions. As you create your list, look up the price of each. Then, annualize the cost by multiplying it by 12. Seeing the yearly fee can be eye-opening – especially when you add up all your subscriptions for the year.
Determine the Value of Each:
Immediately off the bat, you may find subscriptions you’re comfortable canceling. For all the others, determine how often you use the service. Do you find it valuable? Is there an option where you can pay as needed versus monthly?
Set a Goal to Reduce Your Subscriptions:
Next, set a goal to reduce how many services you’re enrolled in. Maybe you want to start small and reduce your total monthly expense by 15% or 25%. Or you might want to be more ambitious and cut your costs by 50% or more. Remember, if you miss a service, you can always resubscribe later.
Take a Break:
Not sure if you can live without a particular service? Test it out. Most subscriptions today allow you to pause your service for a month or two. While you’re on a break, decide whether you miss the service or if you can live without it.
Cancel, Cancel, Cancel:
Once you start canceling subscriptions, you’ll find it’s much easier to keep going. So many services you couldn’t live without before now seem trivial and a waste of money.
If you’re having trouble clicking “unsubscribe,” keep the total of all your annual subscriptions from step one by your side. Glance at that figure and know that each canceled service puts more money back in your wallet for other things and experiences. And you can always enroll again if you miss it too much.
We’re Here to Help!
It’s much easier to spend money than it is to save it. However, building wealth and gaining financial freedom come from your ability to save. While canceling subscriptions might seem a small step toward financial independence, it strengthens your ability to avoid frivolous spending and regain control over your budget.
If you have questions about budgeting or would like to learn more about higher-earning savings accounts, we’re ready to help. Please stop by any of our convenient branch locations or call 888-777-9982 to speak with a team member today.