If you had to guess, how much money would you say you spend on monthly subscriptions?
...It’s hard to remember without looking at a statement, right? For reference, my household spends $133/month on subscriptions before counting gym memberships, Wi-Fi, or cell phone bills. My point is: the subscription model is so seamlessly woven into our daily lives that it feels normal. Streaming platforms, fitness apps, software tools, meal kits, medical products, even toothbrushes! Behind the convenience lies a system that exploits human psychology. And the financial consequences may be more damaging than you realize. At The New Diligence, I like to explore how subtle behavioral patterns shape financial behavior. Few systems illustrate this better than the modern subscription economy. The Psychology Behind Why We Stay Subscribed 1. Frictionless Payments, Cumbersome Cancel Process Subscriptions usually involve automatic billing. That isn’t accidental. Behavioral economists call this decoupling, and it reduces the “pain of paying” (the discomfort we feel when we spend money). By removing friction from the payment process, companies make sure you don’t think twice when the charge hits your account each month. Some companies even offer discounts for enrolling in autopay, because they know you're more likely to keep paying once you're signed up. On the opposite end, companies often make it purposefully difficult to cancel a subscription. For example, Amazon Prime requires 6 different clicks to cancel a prime membership on their mobile app¹. Even worse, some companies still require a phone call to cancel. That’s just plain cruel. 2. The Endowment Effect Once we subscribe to something, we begin to feel like we own it, even if it’s digital or barely used. This is known as the endowment effect, and it leads us to irrationally overvalue what we have simply because it’s ours. Canceling can feel like a loss, even when keeping it is clearly wasteful. 3. The Status Quo Bias Humans have a strong tendency to stick with the status quo. In behavioral economics, this is status quo bias. Combine that with our natural resistance to change (a.k.a. our propensity for laziness) and you get a powerful reason why people keep paying for services they rarely use. Companies know that even the smallest amount of friction will keep customers onboard. 4. The Sunk Cost Fallacy Ever thought, “I already paid for this, I should at least keep it a little longer”? That’s the sunk cost fallacy in action. Instead of evaluating whether something is still worth paying for, we justify continuing to spend based on what we’ve already spent. Subscriptions are designed to exploit this bias. The Financial Danger of “Just $9.99” A 2022 study from C+R Research highlights how damaging unchecked subscription costs can be. While each service may feel cheap—$9.99 here, $12.99 there—they compound quickly. Most consumers underestimate their monthly spending by 100% or more². The study indicates that the average U.S. household spends over $200/month on subscriptions (though individual spending varies widely depending on family size and habits). That’s money that could go toward debt repayment, emergency savings, or retirement contributions—quietly leaking away instead. Why This Matters for Your Financial Plan Financial planning isn’t just about the big decisions; it’s also about daily habits. Subscription creep can:
And because subscription costs often go unnoticed, they don’t spark the same internal budgeting alarms that a large purchase might. It’s like having a slow drip in your financial faucet. How to Fight Back The first step is acceptance: we are lazy, and that’s okay. But just like we show discipline to get our lazy butts to exercise, we also need to flex that muscle for our financial health. Here are some strategies that could help in regaining control: • Opt for manual renewal (my personal favorite) If possible, choose subscriptions that don’t auto-renew. This makes it purposefully difficult to pay, essentially building in a conscious decision point. • Do a quarterly (or bi-annual) subscription audit Review your bank and credit card statements. Ask: When did I last use this? Is it still worth it? • Set calendar reminders for free trials I’m serious when I say I’m speaking from experience here. I recently made this mistake with Youtube TV. Don’t trust your memory. Cancel before it renews automatically. • Use fintech tools Apps like YNAB, Monarch Money, and Rocket Money can automatically flag subscriptions. Personally, I use Monarch, but any of the above will get the job done. • Bundle smartly, not blindly Bundles can save money only if you actively use all components. Conclusion: Subscriptions Aren’t the Enemy, But Your Habits Might Be Subscription models aren’t inherently bad. They offer convenience, access, and flexibility that many of us value. But they’re also engineered to keep us paying, even when we're no longer benefiting. The real danger isn’t the $11.99. It’s the 8 different $11.99s you forget you’re paying. When left unchecked, subscriptions can become termites in your financial house: quiet, hidden, and costly over time. Understanding the hooks baked into technology is the first step to breaking free. I believe in intentional spending. Reclaim your awareness, fight the status quo, and make every dollar part of your plan, not just someone else’s profit model. What's your worst "how-did-I-not-cancel-that" subscription story? Feel free to share with me, I’d love to hear how you’re breaking free from the subscription trap. More Reading: The Less I Know the Better: How Over-Monitoring Your Investments Sabotages Your Success When It Comes to Money, It Pays to Keep Things Simple Forget Willpower: The Smartest Investment Strategy is Forced Saving ____________________________________________________________ References ¹According to a 2023 FTC complaint, Amazon used "manipulative" design patterns to hinder Prime cancellations. The mobile app required users to tap through six screens to cancel. https://www.reuters.com/legal/amazon-defends-prime-program-bid-defeat-ftc-lawsuit-2023-10-19/ ²Clifford, C. (2022, June 2). Consumers say they spend $86 a month on subscriptions—but they actually spend $219: Here’s how to save. CNBC. https://www.cnbc.com/2022/06/02/consumers-spend-133-more-monthly-on-subscriptions-than-they-realize.htmlDistort your spending awareness
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