Many factors in our lives have changed since the COVID-19 pandemic began. One of the most significant factors involves convenience in ordering groceries, exercising, or watching television/movies. It is no secret that the pandemic has accelerated the move towards subscription services, making everyday things, like cable T.V., almost obsolete.
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According to a recent Washington Post article, the subscription services economy, currently totaling over $650 billion, is likely to exceed $1.5 trillion by 2025. The business benefits of these services are vast, including more predictable cash flow streams and vital information about consumer trends. However, these services are typically not ideal for consumers looking to stick to a strict budget. When looking at the more popular subscription services (noted below) and their tendency to raise renewal prices over time, it is easy to see how budgets become stealthily stretched:
Amazon Prime: $139 annually (Up 16.78% from 2021)
Netflix: $15.49/month for standard plan (Up 10.7% from 2021)
Disney +: $8/month
Spotify: $15.99/month (Family Plan)
Apple Music: $14.99/month (Family plan)
Peloton: $39/month (All Access)
Shipt: $99/year
BarkBox: $23-35/month
If subscription services are causing pain to your budget, here are two tips to get your budget back under control:
Distinguish Between Need and Want
As consumers, there are the “nice to have” items and the “need to have” items. To determine which of your service subscriptions fall within each category, first look at each and determine their frequency of use. Then conduct an honest assessment of what value each of these subscriptions adds to your life. For example, you may only use Netflix 4 days out of the month; however, if it creates an invaluable experience for you and your family on the weekends, maybe it is worth it. On the other hand, you may use a particular service often but could do without if you had to make a cut. Thinking about those two aspects of the services will help you distinguish between the “needs” and the “wants.”
Limit the Number of Services
Next, assuming total elimination of subscription services is out of the question, I recommend setting a limit. If you feel like you are not sacrificing, you are likely not cutting enough. In this case, the saying, “No Pain, No Gain,” applies. Remember, there is a constant competition between our short-term desire to consume AND our longer-term desire for financial freedom with our finances.
So play the long game by eliminating the services not adding value to your life, and you will be on your way to striking this delicate balance and hopefully saving more along the way.
