Adopting a minimalist approach to spending: Embrace the concept of canceling unnecessary expenses
Saving Money by Auditing Hidden Subscription Fees and Unnecessary Expenses
In the pursuit of financial well-being, it's essential to keep a close eye on your bank statements to uncover hidden subscription fees and unnecessary expenses. One individual, inspired by George Bailey's advice in Frank Capra's "It's a Wonderful Life," embarked on a mission to save money by auditing their bank statements.
The first step in this financial audit was to review 3-6 months of bank and credit card statements, focusing on recurring charges. By listing all recurring charges and verifying their necessity, the individual was able to cancel unwanted subscriptions, such as a plant identification app costing $7.99 a month, and gym membership payments for a gym that hadn't been used since having a baby a year ago.
This diligent review also helped the individual identify subtle financial drains, like trial-period charges that rolled into paid subscriptions, minor automatic renewals, or infrequent but recurring payments that add up over time. To make this process easier, they used subscription tracking or management tools like Beem BFF, Rocket Money, or Trim, which scan transactions automatically, help identify subscriptions, and alert them to suspicious or overlooked charges.
By canceling unwanted subscriptions, the individual reclaimed $438.40 of their money. Divided by 12, this amounts to a potential monthly savings of $36.33. This saved money can be used for savings, investments, or other financial goals.
Moreover, setting up automatic monthly transfers to savings for the same amount and on the same date as a canceled subscription can help grow your savings balance. For instance, if the average annual percentage yield on a U.S. savings account is 0.57 percent, as per Bankrate's Simple Savings Calculator, a $36.33 monthly deposit would only add $5.70 with interest. If the rate were at 4.00 percent APY, you'd earn $40 in interest.
To avoid accumulating hidden fees over time, the individual set a calendar reminder to review their subscriptions regularly (every 1-3 months). They also suggest requesting a new card number when a card expires or has to be replaced to create friction and save more money. Additionally, writing checks at the grocery store instead of using a card can help control spending.
In conclusion, by combining manual statement reviews, the use of management apps, and disciplined periodic audits, you can uncover hidden subscription fees and eliminate unnecessary expenses, thereby saving money effectively.
- The individual continued their pursuit of personal-finance improvement by setting a calendar reminder to review their subscriptions every 1-3 months, ensuring they're not accruing hidden fees over time.
- Implementing better budgeting strategies, such as automatic monthly transfers to savings for the canceled subscription amount, can help grow one's savings balance and contribute to achieving financial goals.
