There is not a day that goes by where I don’t see someone promoting a fancy new online course, or an E-book that Guarantee’s to save you money. Do you know what they all have in common though?… you have to pay for them!
Seems a little counter-intuitive to me.
People are trying to SAVE more money, not SPEND more money! So it got me thinking. What handy little tip can I offer someone, which will save them money, but not require them to spend anything more? Then it came to me.
So today, I present to you the simplest, easiest and most effective way that you could use to save money. Everyone will be able to do it, and I GUARANTEE it will save you more than £1000!…. and the cherry on the cake is…… It won’t cost you a penny!
So here we go! Grab your phone, open up your banking app, and start scrolling through your transactions. What do you see a lot of?
It seems everything these days comes with a monthly subscription fee!
Disney +, Netflix, Hulu, Spotify, ESPN +, Apple Music, Amazon Prime, Graze, Deezer, Youtube Premium, Gym memberships, the list just goes on and on and on.
We sign up to these services, use them for a little while, and then quite often, forget we even have them! The kicker is though, regardless of whether we use them or not, we are still paying for them!
You might be thinking, ‘Why would anyone pay for a service they don’t use?‘, and that would be a great question. The answer is quite simple though. Most subscription services are cheap, meaning most people see the cost as negligible, an amount so low that they won’t miss it when it leaves their bank account.
Companies know this, and they are using it to their advantage. They track the behaviour’s relating to subscriptions, and the data suggests that once people are signed up, the percentage of people who cancel is relatively small. This is why so many companies have moved into the subscription business model, it is a road to riches! The only thing they have to worry about is how to get people to sign up in the first place, which is why they price themselves so low, offer TONS of incentives up-front, and market the hell out of it!
Half price for the first year? ‘Yes Please!’
£50 gift card up-front… ‘Where do I sign?’
First 3 months free? ‘Hell yeah!’
These are the marketing tricks that have the masses subscribing in their droves! Companies are brainwashing people into believing that the service they are getting is so cheap, that they never even think of cancelling it!
So how do we change this way of thinking?
For every subscription you have, forget about what it costs per month. Instead, look at what it will cost over a 10 year period.
Not convinced? Let me show you.
Let’s take Netflix as an example, as it seems EVERYONE has a subscription for that.
Netflix UK monthly Cost = £8.99 x 12 months = £107.88 x 10 years = £1078.80
Netflix US monthly Cost = $12.99 x 12 months = $155.88 x 10 years = $1558.80
The 10 year cost of having a Netflix subscription is £1078.80 in the UK and $1558.80 in the US.
Cancel this today, and you will save yourself more than £$1000.
Do you see how easy this is?
The best thing about this is, Netflix is one the cheapest things you could subscribe to, if you can find a more expensive subscription to cancel, the savings will be even greater!
Up until late last year, I was paying £24.99 for a gym membership that was rarely used. I didn’t see the cost as a big deal, so I continued paying it, even in the months I didn’t use it. But then I came across this idea, thinking about the cost of something over a 10 year period, not its monthly cost, and my mindset shifted immediately.
Gym Membership cost = £24.99 x 12 months = £249.99 x 10 years = £2499.99!
As soon as I saw the gym membership at its 10 year cost, I immediately realised it had to go.
With one quick phone call, I saved myself £2499.99!
“So, what should I do once the subscription is cancelled ?”
There is one really important thing that you MUST do once a subscription is cancelled. Set up an automated payment, for the exact same amount that you have saved from cancelling the monthly subscription, and have that money sent to your savings account or an investment account. By doing this, you will protect yourself from the effects of Lifestyle Inflation, and you will eliminate the temptation to spend your new found wealth on something else, maybe even another subscription!
But that is not all. By sending the payments to an Investment/Savings account, you will also activate The Magic of the Compound Effect.
Let’s go back to the Netflix example to explain this in a little more detail.
Instead of paying Netflix £8.99 or $12.99 for the next 10 years, totalling £1078.80 or $1558.80, you will now send those payments to an account that earns you interest.
This is the game changer!
£8.99 sent to an Investment/Savings that averages a 5% interest rate over 10 years = £1402.37
$12.99 sent to an Investment/Savings that averages a 5% interest rate over 10 years = $2026.34
Can you see how powerful that is?
The £1078.80 that you would have paid to Netflix, has now turned into £1402.37, over the exact same period of time! And the $12.99 turns into $2026.34!
Compound interest really is a wonder to behold, which is why it is so important to make sure that once you cancel a subscription, you set up the automatic payment to the savings account. If you don’t, you will miss out on the incredible benefits that come along with The Compound Effect, and you will be missing out on hundreds, if not thousands, of lost £’s and $’s over time.
So, now you know the simplest, easiest and most effective way to save money, I want to set you a challenge.
I challenge you to open your mobile banking app right now, scroll through the transactions, and note down all the subscriptions that you are currently signed up for. Then I want you to look down that list, choose one that you do not need anymore, and cancel it TODAY! … And don’t forget to set up the automatic payments afterwards!
Taking just 5 minutes of your time to complete this challenge will save you thousands. I would love for you to let me know down in the comments what subscription you chose to cancel, and how much it’s going to save you.
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