Nobody enjoys wasting money, yet everyone does it to some degree. Whether you wasted money on that pair of shoes you never wear, the gym membership you rarely use, or the groceries that you ended up throwing out because you ordered takeout instead, everyone wastes money occasionally.
If these occasions only happen every so often, it's not the end of the world. But if you're consistently paying for things you don't use, all that wasted money adds up.
One common expense thousands of Americans waste money on each year is entertainment subscription services. When these services -- such as Netflix, Hulu, and Spotify -- go unused, they cost the average American around $348 per year, according to a survey from GOBankingRates.
Roughly half of survey respondents said they subscribe to at least one of these services, which can cost anywhere from $5 per month to $50 per month. Individually, these costs may not seem like much. But each one can cost over $100 per year, so once you start paying for two or three services, the costs add up quickly.
Now, if you make good use of these services, they can actually help you save money. For instance, cable can cost hundreds of dollars per month, so if you can cut the cord and spend $12 per month on a subscription service instead, you can save hundreds or even thousands per year. The problem arises when you start paying for subscription services that go unused.
How to trim costs and save money
Entertainment subscription costs aren't the only expenses that could lead to wasted money. There are dozens of subscription services out there, from paying for access to your favorite newspaper to boxes of goodies delivered monthly.
Because they each might only cost a few dollars per month, it's easy to overlook the costs. But before long, those costs start creeping up without you realizing it. That's why it's important to take a close look at your budget every so often to see if there are things you can cut.
You don't need to study your budget every day, but every few months, look at all your expenses over the last month and see where you're spending the most. It might also be helpful to create a "subscription" category of your budget to see exactly how much cash you're devoting to these services -- you might be spending hundreds of dollars every month without even realizing it.
Once you know just how much you're spending, decide whether these services are worth the cost. The first costs you can ditch are the ones you aren't using at all. But it's also a good idea to consider cutting any services that aren't necessary, even if you do use them. How choosy you are about the services you keep depends on what your financial situation looks like. For example, if you're struggling to pay down debt or save for retirement, those unnecessary subscription services might be more expensive than they're worth. But if you can afford these services while still comfortably reaching all your financial goals, then there's no harm in splurging.
The difference a few hundred dollars can make
Saving a few hundred dollars per year may not seem like it would make a significant impact on your finances. After all, $348 per year comes out to just $29 per month, which doesn't seem like it would go far when saving for retirement or achieving your other financial milestones. However, every little bit counts, especially if the money is going to waste on unused services anyway.
Say, for example, you end up saving $350 per year on subscription services, which you put toward your retirement fund. If you were to contribute just $350 per year for 25 years, that would amount to around $22,000, assuming you're earning a 7% annual rate of return on your investments. In other words, continuing to pay $350 per year on services you don't use not only costs you the amount you're spending, it can also cost you tens of thousands of dollars in potential earnings.
Of course, $22,000 isn't enough to retire on. However, saving for retirement often involves making several small sacrifices that make a major impact over time. As you're combing through your budget, look for any other unnecessary expenses you can cut -- you may be able to find a couple hundred dollars per month that you can put toward your savings.
Saving for retirement (or any other big financial goal) is about making smart financial choices. If you're unknowingly wasting money every month on things you don't use, it will be harder to save enough to reach those goals. But if you know where all your money is going, you can make adjustments to ensure you're spending and saving wisely.