Why You Should Check Your Subscriptions
Updated: May 5, 2020
Okay, so this might not be one of the normal investing for retirement topics I usually talk about, but I think and believe the information in this post will be extremely beneficial to you in your future.
When someone thinks about subscriptions to a particular product, products such as Spotify Premium, Apple Music, or Netflix commonly comes to their mind. However, there are many more subscription services out there, ranging from magazines to website subscriptions all the way down to even your cable subscription. So, now that you know what I'm referring to as subscriptions, let's get into the subject.
Based on America’s relationship with subscription services, the average American spends $237.33 per month on subscription services. Although some of these subscription services are very important, most are non-essential.
Now, let's say that you spend half of what the average American spends on subscriptions per month or $118.67. If you did this, you would be saving $1423.98 this year from these subscription services. Considering half of these subscription services aren’t even used by the customer, think about what you could do with these savings. You could go on another small vacation next year, start saving up for a nicer car or start paying off your home sooner. However, what seems absolutely astounding is what you can do with these subscription savings by investing them.
In this example, our test subject is named Cameron. Cameron will be spending half the amount that he commonly spends on subscription services every month, which amounts to $118.67. Now, Cameron will save this money all year, planning to invest it. Cameron will then invest the $1,423.98 ($118.67 x 12 months) into the stock market. He will keep repeating this process for the next 40 years.
At the end of the 40 years, Cameron will have built an investment valued at $304,175.76. Looking at this, it almost seems odd why people wouldn’t spend less on subscriptions every month.
I am not saying that you should not spend money on subscriptions. I, too, like to watch Netflix every once in a while and currently keep a subscription. However, everyone needs to be conscientious about how much they are paying every single month on subscriptions. So, what I recommend is that every single year, go through your credit card and debit card billing statements and figure out what those recurring expenses are for you and if you still use them. If you do not use them, cancel them immediately because as seen above, they can make a huge difference in your future.
Disclaimer: I am not a financial advisor, so please review all of this advice with your CFP or financial advisor first.