As you probably know, there’s generally two ways for you to save money and increase your savings rate.
The first is to increase your income (this one is oftest the hardest), and the second is to decrease your spending (this is often the easiest).
Decreasing your spending has been one of my main focuses in the past year, and for me, it has had a much bigger impact on my savings rate than the income increases I have had.
I have found that one of the best items to save money on are subscriptions.
What do I mean with ‘subscriptions’?
Subscriptions can be everything from TV (e.g. cable, Netflix), music (e.g. Spotify, Apple Music, Google Play Music, Tidal), fitness center, communications (e.g. phone, internet), beauty (e.g. monthly make-up, razors), newspapers, membership clubs (e.g. Amazon Prime), and so on. You get the point.
I would generally say that subscriptions are not recurring expenses such as food, shelter, etc., and are mostly in the ‘nice-to-have’ category such as the subscriptions mentioned above.
I define subscriptions as recurring expenses that can be removed without destroying my quality of life or putting myself/my finances in danger (e.g. I would not live on the streets or cancel my insurances). However, you decide where to draw the line.
Subscriptions are extremely convenient – and that is the big danger of them. You become used to consuming whatever they offer and they automatically renew every month hassle-free.
Because subscriptions are so convenient, you never realize the impact they actually have on your budget.
Why is reducing subscriptions a good way to save money?
- It is an easy way to save money, since you can often live without subscriptions compared to other expenses such as food or shelter
- It is a simple way to save money, since you can often cut them out quickly (in 30 days or less) and with just an e-mail or a phone call
- It is an effective way to save money, since you often have many subscriptions and that adds up to a significant part of your budget
How you can save money on subscriptions
As a first step, I would recommend you to look at the past month and identify all your own subscriptions. Some subscriptions only bill quarterly, bi-yearly, or yearly, so to be sure to get all of them, you could go a year back, but that is of course more time consuming.
Once you have identified your subscriptions, there’s three ways you can save money on them:
1. Save money by cancelling your subscriptions
Of course, the most effective way to save money on your subscriptions is to cancel them.
Figure out which subscriptions you really cannot live without – and I mean, really CANNOT live without. After you have identified your ‘need-to-have’ subscriptions, you should call or write to all the other subscription providers and cancel the remaining subscriptions.
Personally, I have cancelled nearly all of my media subscriptions (cable TV, Netflix and HBO), although I simply could not get myself to cancel Spotify. As a result, I know spend more time reading books and listening to free podcasts. I also cancelled my fitness subscription and do sports outside now instead.
The key to canceling subscriptions is to find equally good or better, free substitutes. I would argue that this is possible for nearly all subscriptions. As an example, I quit my media subscriptions and started using free, online alternatives instead.
Ok, ok, so you are like me, and there’s some subscriptions you really cannot live without? Fine, I get it. I can’t live without phone or internet either.
Luckily, there’s still another way to save money…
2. Save money by negotiating your subscriptions
If you have found one or two subscriptions that you cannot live without, you should try to negotiate the price on them.
Many companies will do a lot to keep their customers, so make sure to contact them and simply ask for a discount.
A good old trick is to call the cancellation department of the subscription provider (internally, usually called the ‘retention’ department). They have all sorts of good discounts and options at their hands to make you stay as a customer.
Before I got phone and internet paid by my employer, I used to call the providers every six months and told them that I thought my subscription was too expensive. I usually got three months for free or a cheaper subscription. Although at some point, you simply can’t get it cheaper.
Do never just settle for the first offer they give you. Try to go all the way to cancelling your subscription. Once you have done that, you know you have the best discount (and you can call back and cancel your cancellation).
3. Save money by sharing your subscriptions
If you have found a subscription that you need to have and you are not able to negotiate the price (further), there’s one option left to save your hard-earned dollars:
Share your subscriptions.
Many subscription providers offer the opportunity to share a subscription, e.g. between family members on a family plan, so make sure to check whether this is possible (maybe while you give them a call asking for a discount!).
But you can be even more creative than that! How about sharing a newspaper subscription with your neighbor or share your Netflix account with a friend?
Sharing your subscriptions is a great way to lower the costs with at least 50%!
I hope that these three ways of saving money on subscriptions will help you increase your savings rate even further.
Your turn: Do you know any other ways to save money on subscriptions? Have you cancelled or re-negotiated any subscriptions lately?