This story is part of CNBC Make It's One-Minute Money Hacks series, which provides easy, straightforward tips and tricks to help you understand your finances and take control of your money.
If you're looking to free up some extra cash in your budget, consider a subscription audit.
Nearly 90% of consumers underestimate how much money they spend on subscriptions, often by hundreds of dollars, a 2021 survey from consulting firm West Monroe found. Auditing those subscriptions can be an easy way to pare down expenses.
Here's exactly what it is and how to do it.
What is a subscription audit?
A subscription audit allows you to identify and cancel recurring paid subscriptions that you might not need anymore. It includes subscriptions for services that renew automatically every month or year and are charged to your credit card.
These days, there are subscription services for pretty much anything that can be delivered to you either digitally or by mail. This includes video streaming services, media website subscriptions, apps purchased on your phone and meal kits delivered to your door.
The "subscription economy" is growing too: Current revenues of about $650 billion are expected to be $1.5 trillion by 2025, per the Washington Post.
However, the growing reliance on subscription services has led to a problem: Most people don't know how many subscriptions they have, and of those that do, nearly half of them underestimate those costs by $100 to $300, according to the West Monroe survey.
How to run a subscription audit
The steps for a subscription audit are simple: Log into your banks' websites and download the monthly itemized credit card statement for every card you have. Next, go through these statements and identify unwanted services that renew automatically every month. Once those are identified, cancel the subscriptions directly with each service.
To be thorough, do this for every month's credit card statement, going back one year. That way, you will uncover annual expenses that might only renew once a year.
It's best to do a subscription audit at least once a year. You can set up a calendar reminder in advance, too, so that you don't forget.
I did a subscription audit myself at the end of the 2021 and was able to cut out just under $60 from my monthly budget. This included monthly charges for a streaming service and an exercise app that I barely used, along with a forgotten video editing app that only renews once a year.
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