8 Major Purchases You Can Fund by Cutting (Unused) Subscriptions for a Year
Subscription services can take a hefty chunk out of your budget if you let them. From gym memberships and delivery services to video game or streaming services, you could be spending hundreds of dollars a month on stuff you don’t necessarily need — or even use.
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While you should still keep the ones that you actively enjoy, you might want to consider cutting out those that are eating away at your budget. By doing this, you could end up funding other things you want or need — like a vacation or even a car.
“Trimming unnecessary subscription expenses may initially seem trivial, especially if you’re grappling with significant debt or saving for a large purchase. However, even modest adjustments to your spending can accumulate into substantial savings that can be redirected toward significant financial goals,” said Andrew Latham, CFP at SuperMoney.com.
Here are the top major purchases you could make by cutting out those unused subscriptions for an entire year.
Vacation
Depending on how much money you’re spending on subscription services, you could potentially fund a vacation after one year of cutting out the ones you don’t use.
“Consider the average household, which might spend about $220 a month on various subscription services. By reducing this expense by $100, you could save $1,200 over the course of a year,” said Latham. “Allocating $100 monthly into a vacation fund results in $1,200 saved in a year, sufficient for airfare or accommodations on a memorable yet budget-friendly trip.”
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Home Appliances
Whether you need to upgrade your current home appliances, or you simply want something new, you could put that unused subscription money toward this major purchase instead.
“There are big variables here depending on your expenses here. You might have just one or two subscriptions, you might have several. But if you’re spending over $50 per month, you could make real savings to put towards important purchases,” said Erika Kullberg, an attorney, personal finance expert and founder of Erika.com.
“You may anticipate needing to replace one or more major home appliances this year — fridge, dishwasher, range, etc.,” she continued. “If you’ve got a long list of subscriptions, then cutting those out could get you at least halfway to an upgrade after 12 months of whatever you do without Netflix.”
She added, “Of course, before you spend money on replacing major home appliances, check their warranty policies, and any warranty extension benefits on your credit card! You might be able to get a replacement without spending any extra money.”
Furniture
Are you ready to get a new couch or bed? You could use the extra money you’re saving to fund these purchases, too.
“You could use the same $1,200 to upgrade your home with quality furniture or appliances–perhaps a new sofa, a dining set, or an energy-efficient washer and dryer,” said Latham. “These improvements can enhance your living space significantly.”
Car-Related Expenses
While you might not be able to purchase a car outright after just one year, you could potentially put that money toward car-related expenses like your auto payment, insurance, gas or repairs.
“If you’ve got a lower coverage car insurance, then cutting subscriptions for a year could bring you in line for savings there,” said Kullberg.
According to ValuePenguin, the average annual cost of minimum coverage car insurance is $767. The average cost of repairs is $792 a year. Depending on how much you save by eliminating those subscriptions, you could potentially cover both expenses.
“If you’re considering buying a vehicle, this $1,200 saving could impact your budget positively,” said Latham. “For instance, it could cover a substantial part of a down payment on a new or used car. Typically, down payments range from 10-20% of the purchase price, meaning your savings could comfortably fund over 10% of a $10,000 vehicle.”
Investments
“Investing the $1,200 in a retirement account like an IRA or 401(k) is another smart choice,” Latham said.
If you continue to contribute this amount of money each year, then your investments will grow more quickly over time.
“Assuming an average annual return of 7%, this investment could grow to approximately $20,410 in 10 years, nearly doubling the $12,000 initially contributed, thanks to compound interest,” Latham explained.
Further Education
Education is notoriously expensive, but you could put your subscription savings toward items like books or school administration fees to lower costs.
Or, you could put the money toward online courses, workshops, seminars and so on to help you build skills and gain knowledge that you can then use to further your professional development.
Emergency Fund
Most financial experts suggest that you aim to save at least 3 to 6 months’ worth of living expenses. That way, you’ll be covered in case of emergencies.
Say, for example, your monthly living expenses equal around $3,000. That means you should ideally have between $9,000 and $18,000 saved up for emergencies.
Everyone has to start somewhere, however. According to Dave Ramsey, it’s wise to start with a smaller fund of about $1,000. If you can save $1,200 a year on unused subscriptions, you’ll have that starter fund in less than a year.
Electronics
New electronics can be pricey. But if you’re saving around $1,000 or more a year on unused subscriptions, you could put that money toward one of these big-ticket items.
Whether that’s a cell phone, gaming console, computer or home entertainment system, saving up can help you get there.
Bottom Line
Ultimately, how much you can save — and what you can get in return — depends heavily on how much you’re currently paying for subscriptions, and how many of them you don’t use.
“You could make a car payment, buy yourself a new cell phone, or even pick up a fancy new espresso machine with that money. Or you could make your money go even farther by investing it,” said Todd Stearn, founder and CEO of TheMoneyManual. “Whatever you decide to do, it’ll be better than continuing to waste that money.”
If you’re feeling overwhelmed with all of your subscriptions, you can always use an app — like Rocket Money — to identify and help you cancel the ones you no longer need.
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This article originally appeared on GOBankingRates.com: 8 Major Purchases You Can Fund by Cutting (Unused) Subscriptions for a Year
