The online streaming of music, movies and television programs is certainly disrupting traditional record companies and broadcasting networks, to name just two sectors. And subscribing to a possible excess of online streaming services may be disrupting or at least disturbing your efforts at personal debt control.
What may seem like small, innocuous monthly charges for a range of services from music and video streaming to gym memberships can really add up. However, these charges can sometimes seem to go almost unnoticed if automatically charged to your credit or debit card.
Have you ever signed up for a gym membership only to stop going after a couple of times yet the monthly charges keep coming? Perhaps you have subscribed to a music streaming service that you hardly use or is almost duplicated by another music service billed to your credit card?
Journalist Ron Lieber writes in a recent New York Times personal finance article about his review of the recurring charges to his own credit or debit cards. Apart from payments for gas, electricity and the like, nine regularly-charged items were found. He immediately cancelled two of them.
Lieber comments that while "none of your subscriptions will bankrupt you", the total amount of money saved by cancelling unwanted services could make a valuable contribution to your savings.
Of course a challenge is persuading yourself that it is worth making the effort to cancel an unneeded service costing, say, $9.99 a month that, when taken in isolation, mightn’t seem much. Keep in mind that $9.99 a month is $120 a year – a sum that can be more meaningful if multiplied by dumping several unwanted services.
As discussed in Vanguard’s Principles for Investing Success, a long-standing and regularly-updated research paper, the setting of a realistic savings target is a basic component of a sound investment plan. And it is fundamental that careful budgeting is critical to successfully meeting a savings target.
One of the principles for investing success outlined in this publication is to take a disciplined approach to savings and investing by focusing on factors within their control. These factors include the amount regularly added or contributed to their portfolios.
And the tighter your personal budgeting – down to keeping those $9.99 recurring charges in check – the more you can potentially contribute to your savings. Maximising your savings rate throughout changing market conditions may have a surprisingly positive impact on your long-term investment success.
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Robin Bowerman is Head of Market Strategy and Communication, Vanguard Australia. As a renowned market commentator and editor Robin has spent more than two decades writing about all things investment. |
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