Everything we never knew we needed at our finger tips. Not to mention that you can get it on a monthly basis. From clothes and shoes to pet toys/treats and beer, you can get it in a monthly prescription. There are so many in fact that I found a site that listed the top 150 subscription boxes this year!
Why Are They So Popular?
What most of these subscription services give the illusion of is being able to buy back our time. Instead of spending time grocery shopping, clothes shopping or planning our next date why not just use what comes in this month’s (or week’s) subscription box? Well, then what are we doing with all of our free time that we’re buying? Here’s what the Bureau of Labor Statistics American Time Use Survey says about that.
The most common draw to getting more leisure time is the desire to spend it with our families and friends, right? Well, taking a look at what is shown above, it doesn’t look like we’re doing as much of that as we’d hoped. I know that I’m not and I agree with this chart. TV comes into my life FAR more often than it should. It’s just so easy to get sucked in with that Netflix subscription.
Worth the Cost?
Taking a step back, I recommend that we all use great caution with these subscription services. A monthly expense is, as advertised, not just a one time deal. As an example, say you signed up for Gwynnie Bee clothing service to get one garment at a time for $49/month (it goes up to 3 garments at a time for $95/month). Let’s see how that looks over time:
$49/month x 12 = $588/year
Spending $600/year on clothes seems to be a reasonable expense, however, you only received 12 new items AND with this service you do NOT get to keep them.
Let’s assume you keep this subscription for 10 years:
$588/year x 10 = $5,880
If that money had been invested in stocks with an assumed return of 7% instead, you would have even more; $8,530.63 to be exact.
For someone earning $50,000/year, this expense works out to be ~35.5 hours of work each year to pay for this subscription service. Do you think that you spend 35.5 hours clothes shopping every year? If you do, you probably get to keep all of the clothes at the end of the year.
*Quick caveat that you can keep some clothes from Gwynnie Bee if you’d like. You just have to buy the item from them on top of your normal subscription fee.*
That $588/year is just on one subscription service. I know many people who have 5 or 6 of these subscription services that come in the mail constantly. If the average subscription box price is ~$25, that cost would be $125/month or $1,500/year.
Over a 10 year period, that’s over $21,760 of potential investments.
To add insult to injury, not only would you be minus that $21,760 working for you towards retirement, you would then have to save an additional $37,500 in your retirement accounts to cover those costs indefinitely (assuming the 4% rule). This would put you at least $59,260 behind where you would be if you cut the subscriptions today if you were retiring in 10 years.
If you were to retire in 20 years: $102,995
30 years: $190,885
40 years: $367,515
That’s equal to $1,225/month in passive income 40 years from now!!
Drop It Like It’s Hot
If you see this math and think, “you know, I get it, but I really do see the value in it personally and getting the clothes (or meals, or art projects, kids game/toys, etc.) delivered every month brings me true joy and frees up my mental space,” then I will be the first to encourage you to keep it in your budget. However, if you see this and think, that’s really not how I want to spend my money and time to pay for this then drop that line item from your budget like it were on fire.
Wrap It Up!
If you can think of it, there’s probably a subscription box for it. While some of these may be worth it and add true value to your lives, there are a lot that can just add another line item to your budget while adding more junk into our homes. Take the time to evaluate what you may be knowingly or unknowingly subscribing to that doesn’t add to the future you’re trying to build.
Keep in mind that every dollar spent means that it can’t be saved towards your dreams and goals, like your child’s college or dream vacation.
Would you rather have this?
There’s no right choice. Just make sure that you go into the decision eyes open and choose what works for you.
Do you have any subscription boxes? What value do they bring to your day to day? Let me know in the comments below!
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