Spending a portion of your money on things that bring you happiness can be a vital part of enjoying life.
Moreover, at times it can also help to keep you motivated while on the path to achieving your financial goals.
However, it’s still important to take the time to periodically track and review your spending. By doing so, you see where excessive or unnecessary spending is occurring—to the detriment of your immediate and ongoing savings, and the subsequent achievement of your financial goals.
Paid subscription services
Over the last few years, paid subscription services have seen increased growth in diversity and uptake. Despite the diverse range available, each paid subscription service often falls under one or more of the following categories:
- Access subscription (eg recurring use of a service).
- Curated box subscription (eg periodic receipt of new goods).
- Auto-ship subscription (eg replenishment of regularly-purchased goods).
Using access subscription as an example, video content streaming paid subscription services (coupled with internet use) is one that most of us would be familiar with and subscribe to. According to a recent study*:
- approximately 89% of Australian internet users watched online video content in the 6 months to June 2020 (up from 83% in 2019). Of those users, 40% had just started or increased their watching of online video content since the COVID-19 restrictions in March 2020 (1% started, 39% increased).
- approximately 77% of Australian internet users had a subscription and/or pay-per-view service in their household in 2020 (up from 70% in 2019). On average, these users had 1.8 subscription services in 2020 (up from 1.5 in 2019), however, 23% had 3 or more subscription services in 2020.
- In 2020, Netflix was the most prevalent subscription service for Australian internet users, followed by Foxtel (including Foxtel Now), Stan, Disney Plus, Amazon Prime, iTunes, Apple TV, Fetch TV (including Fetch on Optus), Telstra TV (including Box Office), Google Play, YouTube Premium, and Kayo.
Interestingly, when looking at paid subscription services more broadly, according to another recent study^, 62% of Australian households pay for subscription services that they don’t use or have forgotten about, and 44% have never cancelled a subscription service that they aren’t using. The study estimates this to be $3.9 billion per year collectively in money spent on avoidable subscription services by Australian households.
More broadly, in our article, Getting ahead financially: Household financial waste, we discussed the collective ‘financial waste’ (potentially avoidable costs) of Australian households, which totals roughly $18.9 billion per year. This amount was based on several key areas. The key areas identified were as follows:
- Food waste ($9.1 billion per year).
- Home loan waste ($4.2 billion per year).
- Credit card waste ($621 million per year).
- Unused gift cards ($332 million per year).
- Standby energy usage ($1 billion per year).
- Exception bank fees ($551 million per year).
- Unused gym memberships ($1.8 billion per year).
- Unused roadside assistance ($400 million per year),
- Unused and unreturned clothing ($930 million per year).
With the above in mind, when tracking and reviewing your spending, it’s key to view your expenses (and their impact) not just in isolation. For example, with paid subscriptions services, one ongoing expense is part of a bigger picture—it combines with other ongoing expenses, and together these can compound over time.
If an Australian household has a content streaming paid subscription service (eg Netflix), in isolation this could be $14 per month, or $168 per year. However, let’s say they also have the following paid subscription services: gym membership, Foxtel, music streaming (eg Spotify Premium), fitness app (eg Strava), and online storage (eg Dropbox Plus). These combined could amount to $235 per month, or $2,820 per year.
It’s possible to check at least some of your existing paid subscription services via your device’s app store such as iTunes or Google Play. You may also be able to gauge your existing paid subscription service usage via some Android devices by navigating to: Settings > Apps > App (eg Netflix) > Usage > Mobile data > Application data usage.
With this information in hand, take time to consider whether any of these existing paid subscription services no longer add value to your life, and if their absence would negatively impact your wellbeing and happiness—you could also apply this same approach to other expenses.
Importantly, as spending decisions can become habitual, if you do decide to end a particular paid subscription service, consider reading our article, Habit formation and change, which may help you with taking action.
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