Automation can be a great financial tool. I use it to pay all of my bills online, without having to worry about late fees. But when it comes to budgets, automation can sometimes be a bad thing. Like that monthly magazine subscription you don’t actually read. Or that annual membership fee you didn’t even realize you were paying. In this month’s Simple Saver Series we’re cutting that out.
The first step is to figure out what you’re actually paying for. I want you to go through your credit card and checking account statements and see which items are recurring throughout the year. Recurring charges might include:
- Your cable bill
- A gym membership
- Amazon Prime
- A clothing subscription like Fabletics
Then, go through each item and really think about whether you need it or could live without it. Here are a few questions you may want to ask yourself to figure that out:
Does it make my life significantly easier?
How often do I use it?
What’s my cost per use? (I.e. if you only go to the gym 2 times a month, your $50 monthly membership costs you $25 per use)
It the answers are “no,” “not often,” and “higher than I expected” you may want to consider cutting that cost, or replacing it with something cheaper. For example, you could replace your cable with Netflix and Hulu, or replace your print magazines with free online versions like Well and Good (fitness) or The Daily Mail (celebrity gossip).
I did a mini version of this exercise the other day and realized I was wasting quite a bit of money here myself. I have a Birchbox subscription, but I still haven’t used a bunch of the samples they’ve given me. And half of the samples are things I don’t want, like body lotion or shampoo. While I liked the excitement of getting the monthly package, I didn’t use it enough to justify it. So I cut off my Birchbox subscription and saved myself $120 a year in the process!
Take some time to see what you can cut out.Like I did with Birchbox, even cutting one subscription could save you decent cash over the year.
Now if you’ll excuse me, I’m off to see what else I can cancel.