It is all too good to be true, right? Such a minimal cost each month to have your favourite television shows in front of your eyes. But, it all adds up!
While you may be able to afford the monthly cost, you have to ask yourself, can you afford the bigger picture?
This blog post will outline some of the ins and outs about subscription services, whether it is television, music or other subscription services.
Remember, if you are in need of financial assistance, Pretty Penny offers same-day loans up to $500.
Continue reading to learn more about budgeting for Netflix and other subscription services.
There are so many compelling subscription services out there these days, all with fairly reasonable monthly price tags.
You have your choice between meal delivery services, book or audiobook services, computer software, game subscriptions, music streaming services, clothing delivery, and the list goes on.
Subscription services are everywhere you look, and they usually advertise something of convenience.
You don’t need to go grocery shopping — just get a meal delivery service! You don’t need to go to the library — just subscribe to a monthly unlimited ebook service! All for an affordable price each month…right?
Unfortunately, as compelling as these offers might sound, subscription services can wreck serious havoc on your budget if you’re not careful.
“Subscription Creep” Happens Easily
The double-edged sword with subscription services is that they’re convenient. Almost too convenient. Most automatically renew every month, so if you’re not regularly tracking your expenses, you probably don’t realise the impact they’re having on your budget.
Subscription Services Aren’t the Great Deal They’re Made Out to Be
Which would you rather do: pay $120 upfront to have a year’s worth of access to streaming music, or pay $10 each month for a year?
Most people would choose the $10 per month option because it seems cheaper. It’s not as overwhelming. Maybe you don’t have $120 to spend right now, but $10 is perfectly doable.
Recurring monthly payments can be the worst way to pay for things.
Unfortunately, monthly services are banking on this short-term thinking, and short-term thinking is never good for your finances.
So you keep signing up for these services — $10 a month here, $15 a month there, $50 a month here — because separately, it doesn’t seem like a lot. But sooner or later, you find yourself paying way more than you thought.
Subscription Services Can Cost You More Than You Think
Let’s forget there’s a yearly payment option for a second. Some services, like Netflix, don’t even offer one — they simply offer a monthly recurring charge on your card. If that’s the case, you might not have even calculated how much money a service is costing you per year since it’s not framed that way on your statements.
Say you stay subscribed to Netflix for 5 years at the standard $10/month price.
That’s $120/year, and in 5 years, you’ll have paid $600!
What to Do Instead
After reading those examples, you should realise how horrible subscription services can be to both your current budget and spending, and to your future growth.
The good news is that most services don’t have contracts, which means you’re free to cancel at any time you wish. Yes, you might have spent hundreds of dollars already, but don’t let a sunk cost get in the way of improving your financial future.
Cancel any and all subscriptions that don’t fit into your budget or that you don’t use often, and critically examine the ones you enjoy.
Additionally, if you have the option, paying upfront is usually cheaper because discounts are offered for paying in full as it’s more favourable to the service provider. They’d rather receive a full payment than a smaller monthly payment. This is common in the case of auto insurance.
So if you happen to see a service you’re interested in, or if you can change over to a one-time payment, strongly consider budgeting for it and paying the larger amount, especially if it will save you money in the long run.
Lastly, it’s a good idea to make sure you can’t get the same or similar service for free elsewhere. If you’ve been struggling to save money or pay off debt and need the extra wiggle room in your budget, it may be worth making a temporary cut by unsubscribing and going for a free option.
For example, maybe you have Netflix, Spotify, or a gym membership. Free alternatives would be renting seasons of TV shows and movies at your library, borrowing books from the library, listening to the radio online or subscribing to music podcasts, and walking, running, or doing body weight exercises that don’t require equipment.
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