- Consumers underestimate what they spend on subscription services, like Netflix, Spotify and Amazon Prime, according to a new report.
- On average, people spend twice as much as they think they do.
- Reeling in those recurring monthly expenditures is also a great way to save money.
The vast majority, 84 percent, of consumers in a survey underestimated what they shell out on those monthly expenses, also including dating apps, cable television and Wi-Fi, according to a recent report by the Waterstone Management Group, a Chicago-based consulting firm.
On average, consumers spend more than twice as much as they think they do: They estimated they cough up $111 a month on such services when they actually average $237, Waterstone found in its survey of 2,500 people in May.
And regardless of the price tag, consumers were “happily hooked” on many of their subscriptions, particularly Amazon Prime (which recently raised the price to $119 a year), cable TV and music streaming services, such as Spotify, the report said.
Still, families have less slack in their budgets than before, according to research by The Pew Charitable Trusts. Household spending has risen 25 percent or more in the past two decades, even adjusting for inflation, yet incomes have not kept pace, the study said.
Monthly recurring expenditures such as gym memberships and cable and mobile phone bills are a great place to find opportunities to save, according to David Bach, author of "Smart Women Finish Rich" and co-founder of AE Wealth Management, an investment advisory firm.
"People focus on what it costs a month but they don’t think about what it costs over a year and they really don’t think about what it costs over a decade," he said.
For example, scaling down to basic cable from premium could save $100 a month, he suggested. Investing that $1,200 a year at 7 percent interest would amount to $17,308 in savings in 10 years.
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