How to Break Up with Your Subscriptions
February 8, 2018
Meagan C., Financial Expert
As we enter the season of heart-shaped chocolates and Mylar balloons, an unavoidable anxiety sinks in the stomachs of those who realize their relationships are coming to an end. With sweaty palms and shaky hands, I whisper, “I love you, I’m just not in love with you,” as I click the Cancel Subscription button. Yes, the time has come. I’m breaking up with my subscriptions. Ending a subscription service isn’t easy. Nevertheless, these services can often chip away at budgets and detract from long-term savings goals. To take a step toward a more positive financial future, consider following this three-step breakup process.
Step One: Organize your thoughts about your subscription services and their costs.
Begin by reviewing your monthly credit card or debit card statement. Highlight all the subscription charges to identify the monthly charges and frequency. Next, list the subscription name, monthly charge, and annual cost on this printable or in an Excel worksheet. While listing these figures, what captures your attention? Are there charges for services you forgot you subscribed to?
I find that quantifying the annual cost of a movie or music subscription service is eye-opening.
For example, routinely paying $8.00 a month for a streaming service seems like a reasonable expense. However, the annual cost, $96.00 a year, is a much less friendly figure. In the following steps we will examine ways to turn a trivial expense into a meaningful investment.
Step Two: Evaluate if maintaining the subscription services is in your best interest.
Further analyze your list by asking yourself three important questions. First, how often do you use the service? Evaluating this will help you make a more informed and realistic decision. Canceling a movie streaming service when you occasionally watch shows on the weekend is more sensible compared to canceling a music streaming service that you use daily.
Second, does the subscription distract or prevent you from completing other tasks? Allowing yourself to procrastinate by listening to podcasts or trying new makeup looks, comes with external costs. Remember that your time is just as valuable as your money. Spending $10.00 a month on sample-sized products might be affordable, but if it results in the loss of productivity, it is not worthwhile.
Third, is there a less expensive alternative? Some subscriptions will allow you to access music, movies, and free shipping for one flat rate. By fully utilizing a single subscription with robust services, you can easily part with more specialized subscriptions. Approaching each subscription with this three-part mindset will help differentiate subscriptions you enjoy and those you rationalize paying for.
Step Three: Cancel subscriptions that are inhibiting you from finding financial freedom.
After organizing your subscription charges and evaluating their true costs, it is time to decide to keep or cancel your services. Consider preliminarily canceling subscriptions that are rarely used or used as a distraction. Next, compare the annual costs to your financial goals. Does keeping your subscriptions keep you from reaching your goals? How could you better allocate these funds?
Let’s say you are thinking of canceling that monthly makeup subscription, which costs $10.00 a month, totaling $120.00 a year. How could you reallocate these savings? Let’s hypothetically reinvest these costs in a 1-Year Add-On Certificate. Depositing funds into a certificate will reduce the temptation to spend, while also earning a higher interest rate than a traditional savings account. Not to mention, an add-on certificate allows you to deposit funds at your convenience.
Begin by opening a 1-Year Add-On Certificate with five months of savings, $50.00. Next, contribute the remaining seven months of savings to the account, by depositing $10.00 a month for seven months. At the end of the twelve-month period, with a 1.50% APY, you would earn $121.80 in savings. With that amount you could open a higher-earning certificate contribute to a retirement account, or pay down debt.
Breaking up isn’t easy. I understand that making a new meal from a kit each week makes you feel like the reigning champion on Iron Chef America. However, subscribing to a stream of services might be more hindering than you think. Try printing and filling out our Break Up with Your Subscriptions Worksheet. Comment with what changes you might make!