Here’s What Unused Subscription Costs Could Be Doing for You

One of the best ways to save money and get your budget back on track is to review what you’re currently spending money on. It is a lot easier to spend less money than it is to make more money — so that’s where I like to start. When you start looking into your budget, if you’re like me, you might find that you’re spending money on things you forgot about, like old subscriptions.

It’s never been easier to get hooked on subscriptions and eventually forget about them. Everywhere you turn companies are offering free trials for their products and services, and it’s up to you to cancel them before your first billing period. It’s a great marketing strategy, and I would bet companies make a lot of money from people who simply forget to cancel, or forget they even subscribed still.

A $10 monthly bill isn’t a lot of money, but over time it can add up. And if we were to put that money to work instead of spending it, then it really adds up, and can become a really impressive number. Let’s take a look at what I mean.

Let’s Look At The Numbers

Most subscriptions cost around $10 (CAD) per month, and right now the most expensive plan for Netflix is currently $18.99 per month (until they increase prices yet again). Subscriptions aren’t cheap, and I imagine the trend will continue and they will only get more expensive in the future. Month to month, it might not seem like a ton of money but it adds up.

If you’re paying $10 per month, that’s $120 per year or $1,200 per decade. If you’re going to live another 60 years, that’s a total of $7,200. Now it seems like more and more money when we think long term or look at the big picture.

If you were to instead invest that $10 monthly subscription charge, for that same 60 years, and let’s say you earn 8% a year on average. You’d end up with $177,885 after 60 years. By investing, rather than spending, you’re able to turn $7,200 into $177,885. And the craziest part is, there is no extra work on your part. The only thing you have to do is change where your payment is going. Instead of going to an unused subscription, it’s going to an investment account. Simple.

If we look at the top Netflix plan of $18.99 per month, that would be a total of $13,672.80 over a 60 year period. If you invested that again earning 8% per year, after 60 years you would have $337,804. Just a mind-blowing amount of money for a charge we would often overlook and completely disregard. You might think that there’s no way your spend that much money for that long, but if you’re paying for unused subscriptions already, what’s going to stop you?

Small Changes Add Up

Most people have the belief that you need a lot of money to make a difference in your life. But that really isn’t the case. Investing can work for any amount of money, it’s just a matter of getting started.

With even only $10 per month, we can make a very substantial investment over a long period of time. A small investment like that, that adds up over a lifetime can be extremely beneficial when it comes to end of life expenses, or passing onto the next generation. In either of those cases, $10 per month seems really insignificant, but to the next generation, passing on almost $178,000 could be life-changing. And no matter what you envision for your future, I think taking care of loved ones is something on everyone’s list.

If you’re able to cancel subscriptions or go in on them with someone, both are good ideas. Wherever you’re able to save money, make sure you’re able to put it to work. It doesn’t make sense to save money on subscriptions and then use those savings to spend more money on something else. Make sure you’re able to save and invest what you save, otherwise you’re not going to be improving your situation. You’re just kind of running on a hamster wheel.

Even if you don’t have unused subscriptions, it’s all about just getting started. Build a good habit of making regular contributions, and being budget conscious, and then over time you can change your contribution amounts, and really start to make a positive change in your financial situation. Whatever you can do today, your future self will be thankful for.

About the Author

Derek Condon, CFP®

Derek Condon is a Certified Financial Planner and Mortgage Advisor specializing in financial planning, investments, wealth-preserving insurance, mortgages, and others. I help my clients with a variety of goals. From someone who is just starting their investing journey to a retiree managing their wealth. From a first-time home buyer to someone refinancing to get their very best mortgage. And, of course, everywhere in between.