For decades, people have subscribed to newspapers, magazines and cable services. Today, that subscription-based payment model is being used across a wide range of consumer products and services.
Monthly subscriptions for entertainment streaming services allow consumers to watch movies and TV shows anytime, anywhere. Music apps offer new songs and the ability to listen continuously without ads. Consumers pay ongoing fees to receive services, such as exclusive travel perks, having an outfits curated, or to receive fitness and health coaching. Start-ups and retailers are using the subscription plans to sell regularly purchased products including razors, toothbrushes and baby products. This trend means subscriptions are becoming a far more common expense for consumers today. Here are some tips from Arias & Partners Wealth Advisors.
A growing part of your budget
Subscriptions can offer tremendous convenience, and when the cost is limited to a small ongoing fee, the financial commitment hardly seems noticeable. But it’s important to remember that whether the monthly charge is $0.99 for an app or hundreds of dollars for membership to a golf club, the amounts can add up. If you are enrolled in multiple subscriptions, the following three questions can help you assess their impact on your spending:
Question #1 – How much am I paying in total for subscription fees every year?
Chances are that most of your subscriptions are charged to your credit or debit cards. However, some may be attached to other types of bills, such as your utility bill. Review your statements and add up your monthly subscription costs. If any services you receive are paid on an annual basis, factor them into your calculation. You want to know how much of your disposable income is devoted to subscriptions or memberships every year.
Question #2 – Am I getting my money’s worth out of my subscriptions or memberships?
This is the central question. While many subscriptions won’t break the bank, making sure you’re getting the value you expect is a key step to ensuring your money is going toward the items and goals that are most important to you.
And, it’s common for companies to entice consumers with promotions, offering a free month or other perks to gain new subscribers. If you want to give something a try, set a calendar reminder before the date you will next be charged for the service. When the date comes, take a minute to consider if the subscription is worth it while you still have time to cancel.
As for your existing subscriptions, it pays to review them from time-to-time to determine if you are truly getting your money’s worth. If, for example, you only watch one-to-two movies a month on your entertainment service, it might not be worth the expense.
Question #3 – How easy is it to cancel my subscription?
In the case of month-to-month subscription plans, you can typically cancel them online with little difficulty as long as you do so before the date of your next bill. Some companies make the process more difficult, however. You may have to call a toll-free number and request a cancellation with a customer service representative. Quite often, they’ll try to talk you into staying on board with a special promotion. If you’ve determined the service isn’t worth it, you may have to fend off their persistent offers. The ease with which you can cancel a plan is worth considering before you sign up.
Because most subscriptions run at a cost of just a few dollars a month or a modest fee for a year, it is easy to sign up for one after another. Be mindful of your total expense on subscriptions and memberships and make sure you are getting a real benefit from each of them – and that your overall spending aligns with your longer-term financial goals.
Carlos F. Arias, CRPC ® , CLTC
Private Wealth Advisor
Arias & Partners Wealth Advisors
A private wealth advisory practice of Ameriprise Financial Services, Inc.
An Ameriprise Private Wealth Advisory Practice
Carlos F. Arias, APMA, CRPC ®, CLTC, is a Private Wealth Advisor and Business Financial Advisor with Arias and Partners Wealth Advisors, a private wealth advisory practice of Ameriprise Financial Services, Inc. in Berkeley Heights, NJ.
He specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years.
To contact him,
100 Connell Dr
Ste 2300 RM 233
Berkeley Heights, NJ 07922-2737
Investment advisory products and services are made available through
Ameriprise Financial Services, Inc., a registered investment adviser.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
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