There is a major downside to all those recurring monthly online and/or retail subscription services. Maybe the biggest downside is that the cost of them adds up over time, especially when multiple services are used. In fact, the average American household spends over $110 per month on the various recurring monthly subscription services – and that amount does not include the traditional ones of cell phone or cable TV (or equivalents).
The $110 is from all those other “nice to haves”. They can be subscription streaming services such as Netflix or Hulu. Or a recurring beauty box such as Birchbox. Or maybe you enjoy wine or beer and have a recurring monthly wine service like Vinebox or Craft Beer of the Month Club. Or maybe you are using Dollar Shave Club or you get Bark Box for your dog. Or maybe you have a monthly cost for a dating service such as Tinder or Match or subscribe to online streaming music or a meal delivery box.
There are probably hundreds of these recurring subscription services, and in fact there are probably new offerings daily. The total cost to the average American family is now over $110 per month and increasing rapidly. And frankly the exact data around monthly cost is hard to get and most families do not probably even know what they spend, so the $110 more than likely understates the true monthly cost to the average household. In fact, one recent study from Waterstone shows that about 84% of families do not know how much they spend on recurring monthly subscriptions and they tend to underestimate the cost to their household.
These subscription services are great for businesses. (On a side note, if you ever considering starting a business or investing in one, subscription models are generally the way to go!). Why are monthly recurring subscriptions better for corporations that sell them? A few reasons including a company can often project their revenue, some companies make it challenging to cancel the recurring monthly payment (or they count on the subscribers to the, never “noticing” the small monthly fee or being too lazy to cancel), companies often get paid before they provide the service, and other factors.
As an example, if you are paying less than $10 per month for Disney+, that may not seem like much on its own and you may not cancel your subscription as you say it is so cheap. But if you have several of those same types of services (whether beauty boxes, streaming, or something else), those “small” recurring costs can add up quickly. And they can eat away at the budget of a family, especially when considering most live paycheck to paycheck and can’t come up with a few hundred dollars for emergency expenses.
What do to control recurring subscription costs?
The $100+ per month can add up quickly. That is $1200+ per year for monthly recurring subscriptions, and that is after tax. This means it may cost you $1500 or more in pre-tax dollars. But you can get control of the situation.
Review your credit card and/or bank statements at minimum once per quarter. See what subscriptions you are signed up for, and do not hesitate to cancel them. That can stop the bleeding.
A more innovative and pro-active thing to do is just create a simple list of subscriptions to track them, then cancel the services at will. A major advantage for customers (and downside for businesses) is that subscriptions can sometimes be very easy to cancel and switch for those who take the time. For example, if you like a Netflix show or shows, sign up for a month or two to watch them then cancel Netflix as it is simple to cancel that recurring payment. Then maybe switch to Disney plus or Hulu and do the same. Or sign up for free trials of beauty boxes or other products. Then cancel.
The fact is all those streaming services, monthly recurring subscriptions, online products, etc. do add up quickly. Spending $100, $120, $150 or so per month (before cell phone or cable type services) can impact a monthly budget. As it in effect becomes a “fixed” cost that you pay month in and month out. Be mindful of the costs, cancel services when not used (or used frequently), maybe resign up later, etc. Do not let the monthly recurring bills get ahead of you and take control of the finances.