Everyone knows it’s not just eggs that have increased in price. Persistent inflation – magnified by economic uncertainty – has us paying more in every part of our lives. Eggs, though, are a perfect symbol of what we’re collectively dealing with. Each individual egg is affordable, but adding up all the eggs in your life – for breakfast, bread, meatballs, and meringue pies – can eat big holes in your budget. All those individual expenses accumulate and eventually impact your finances. Unfortunately, we can’t control inflation. But we can adjust our cash flow to make sure everyday items don’t nibble away at our savings like a hungry school of piranhas.
A category that takes a real bite out of cash flow is recurring expenses and subscriptions. That’s why it makes sense to do an annual review so you can get a handle on what’s eating your budget. In fact, before you put away all that paperwork you assembled for your taxes, you can use it to identify ways to save money and keep more in your pocket.
Keep the piranhas at bay
There’s a reason you feel like a lot of your budget is being gobbled up by recurring expenses. It’s not just utilities like keeping the lights on, your house warm, and the trash picked up. Many companies have developed subscription strategies that have you paying monthly for something you would have previously bought as needed. This is not necessarily a bad thing, as long as you’re benefitting from added convenience or a better price. For example, I finally subscribed to cat food deliveries because I was tired of driving around to find cans of the exact salmon flavor my cat prefers. I’m saving on gas.
When you feel stuck in a subscription plan, or you’re not sure what kind of value you’re getting from it, that’s when you need to spend some time on cleanup. So here are a few ideas:
Do a subscription review. To be honest, I’ve never looked into one of those services where you pay to get rid of your subscriptions. That seems counter intuitive. A periodic check of your checking account and credit card statements should help you identify expenses that are automatically being charged. In fact, most banks and credit card companies have tools in their online apps that will help you categorize expenses by type so you can work on deleting them.
Set reminders. I recently signed up for ‘club’ discounts on an online swimsuit store (and saved a bunch on my purchase), but then I put a note in my calendar for when the annual subscription was set to renew. I do the same thing when I sign up for free trials – giving myself a reminder so I can decide if the service is worth paying for once the trial is over.
Complain if you have to. I once found a charge for a store’s frequent shopper program on my credit card statement and I didn’t even know that I’d signed up it. So I called the company and ended up getting the charge reversed. They were perfectly polite about it.
Companies don’t have feelings. Don’t be afraid to cancel a subscription if you don’t feel the value. You can always go back and renew. In fact, a lot of companies will offer you a deal to re-start your subscription because they don’t want to lose you for good.
Consider business expenses. If you work for yourself like I do, talk to your tax advisor about subscriptions that can be considered business expenses, like software, your website, or professional journals.
Save on utilities. Utility companies usually have tips available for helping you reduce the cost of your utilities – everything from ordering a smaller garbage bin to installing smart thermostats and appliances. Also keep in mind that phone and cable companies often announce new plans in order to stay competitive. They may be worth a look.
Cutting expenses can be like giving yourself a raise. Sure, you may have to do a little work to hunt them down and cancel subscriptions, but while you’re doing so, think about how you’re balancing your budget to cover other expenses or put more into savings. Creating your budget is a crucial component of financial planning. Talk to your Arrivity financial planner to find out how it works.
Things to think about when budgeting:
- If you feel inspired to decrease expenses, be realistic. Don’t make cuts you can’t live with. Eliminating recurring expenses usually pays off in savings over time.
- When you’re creating your budget, make sure you take everything into account, including potential emergencies. The whole idea is to avoid financial surprises.
- Explore different tools for budgeting to see what works for you. Most banks and brokerages have tools on their websites. Paid tools like YNAB (You Need a Budget), Pennies (Apple app), and EveryDollar are also free to try.
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Liz is a Late Boomer in the sandwich generation who started an independent writing and brand consulting practice after years as a senior marketing executive. She lives in Seattle, Washington. Her mother lives nearby and her daughter is a recent college graduate.
The foregoing content reflects the opinions or perspective of Liz Behlke and/or Arrivity financial planners and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful. Arrivity does not give tax or legal advice. Tax and/or legal strategies should be discussed with a professional before implementing.