by It starts with a free 2 month trial and it ends with “how many services am I signed up for?”.
The chains of habit are too weak to be felt until they are too strong to be broken. By Samuel Johnson
Companies make it easy to sign-up for a service. Many have subscription fees that are so low you barely think about it. They might be marketed as “less than $1 a day” or “Not even 50 cents a day”.
The service might have a show that everyone at work is talking about or maybe they unlock one feature that you just have to have. Today we explore entertainment services and how they might be impacting your future savings goals.
Before we get too far rest assured we will not make you unsubscribe from all of your services. What we are going to ask you today is to understand how much you are spending on these services. After you know the number then you can determine if your future self will thank you or wish that you had cancelled.
Entertainment Services That Many Have and The Costs…They Really do Add Up
Let’s look at some common services that many have and see what the monthly cost is going to be. For each service we outline the basic entry price to be a part of the platform as well as the upgraded version.
If there were multiple versions, such as with Netflix, we chose the highest price plan available as the upgraded version. For plans like Amazon price we converted the annual payment into a monthly to make the comparison easier.
| Service | Basic | Upgraded |
| Disney + | $6.99 | $12.99 |
| Netflix | $8.99 | $17.99 |
| Spotify | $0 | $9.99 |
| Apple + | $4.99 | |
| CBS All Access | $5.99 | $9.99 |
| Amazon Prime | $8.99 | $9.91 |
| Total Monthly | $35.95 | $60.87 |
| Annual | $431.40 | $730.44 |
At first glance all of the numbers are relatively small. In some cases you can’t get a fast food meal for what the monthly subscription fee costs. This is exactly how these companies make their services attractive.
Today isn’t about reducing costs to a minimum it’s about understanding how much these services cost. In a survey conducted by Statista nearly 70% of Americans don’t have $1,000 in savings. When you don’t have an emergency fund every cost matters and it’s important to look at all expenses.
Before we go too much farther look at the chart and see where you are on the savings chart.
Do you have money saved if you were out of work for 1,3, or 6 months?
Write that number down. Even if that number is zero that’s ok just write it down and let’s take a look at the cost of these services from a different perspective.
Before you consider investing we recommend having money saved for an emergency. In the next section we are going to look at the value of these services should you decide to invest.
Putting Some of Your Entertainment Funds Into Investing
You might be saying to yourself “Nobody has all of those services”. It’s quite easy to see how someone, maybe someone you know, could easily spend $61 a month on streaming services.
As we do around here it’s not about giving up on technology or refusing to ever go out to coffee. It’s about choices and understanding the impact of the choices.
Let’s use the example of two individuals and see how this works itself out.
Tommy decides that he wants all the services we listed and he wants the premium version of each. He decides that it’s “only $61” so he buys all of them.
Billy decided that, while he likes entertainment, he really likes Disney+ and bought the upgraded version because it had additional content he enjoyed. He also loves his music and so he decided to purchase Spotify premium. He decides he is going to invest the difference.
| Individual | Services | Investments | Annual Service Cost | Annual Investment |
| Tommy | $61.00 | $0.00 | $732.00 | $0.00 |
| Billy | $22.98 | $38.02 | $275.76 | $456.24 |
In the first year, as we can see from the chart above, Tommy ends up with $0 in investment dollars and Billy has $456. Tommy isn’t concerned as he is having a good time watching lots of movies.
Billy decides to put his investing dollars into an S&P Index fund and he has forecasted an 8% annual return (well below the historic 10%) however he knows times are changing. Billy is investing $38 a month and in 36 months has $1,541. He now has savings greater than man in America.
| Individual | 24 Months | 36 Months | 48 Months | 72 Months |
| Tommy | $0.00 | $0.00 | $0.00 | $0.00 |
| Billy | $985.98 | $1,541.16 | $2,142.42 | $4,498.80 |
It’s all about choices. Billy gets to enjoy his streaming. He also has additional investments years later. In Billy’s view he has the best of both worlds. He has investment dollars and entertainment dollars.
What Choices Are You Going to Make?
The choices you make with your hard earned dollars can have a lasting impact. We encourage you to look at the services that you subscribe to and if you are getting the true value of these services.
Take Action Today
Today we want you to ask yourself a few questions:
- Are you investing regularly?
- Are the services you subscribe to preventing you from investing?
- Have you thought about what the future version of you would say about the choices you are making today?
We always want to remind you to:
- Invest Consistently
- Develop Your Squirrel Funds
- Manage your fear and you WILL succeed
