Consumers underestimate the monthly cost of a subscription by at least $100.
Recent studies show that the amount of money you lose on subscriptions may be more than you think.
More than half of consumers (54%) underestimate how much they spend on a monthly subscription of at least $100. according to the survey commissioned by the research firm C+R Research. For 24%, the difference was $200 or more.
The study found that, on average, consumers spend $133 a month — about $1,600 a year — more than estimated.
“It’s a slippery slope with subscriptions because it happens automatically and you don’t actively make that purchase every month,” said Certified Financial Planner Douglas Bounpart, president of Bone Fide Wealth in New York.
With the explosion of subscription services over the past decade, keeping track of them can be a daunting task. For media and entertainment offerings alone, the average number of paid subscriptions per consumer in 2020 was 12. according to statistics. Millennials had the most: 17.
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Because subscriptions are often automatically charged to a debit or credit card, it’s easier for users to overlook the cost. The survey showed that the majority of people (86%) have at least some, if not all, auto-pay subscriptions.
Meanwhile, 42% said they forgot they were still being charged for a subscription they no longer use.
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“This is a rare person who doesn’t have at least one hidden charge that they forgot about,” said Katherine Hauer, chief financial officer of Wilson David Investment Advisors in Aiken, South Carolina.
For those who want to get a better idea of how much and what they are spending, consider an app like Truebill or Mint that allows you to track your subscriptions. Many banks or credit card companies also allow you to see all your recurring payments in one place through your account.
Keeping a close eye on your subscriptions can also help you optimize your budget so you don’t overspend.
“It all comes down to organization,” Bounpart said.
“The more organized you are about cash flow, the better you can determine what you want or don’t want to spend your money on,” he said.
The survey for the study was conducted in late April and early May among 1,000 consumers.