Is an Annual or Monthly Subscription Better? Plus More June Money Questions

Each week, we answer money questions from around the web on the NerdWallet app. Here are three of the trending questions from June.

Should I pay for my new subscription monthly or annually?

So you’re signing up for a new streaming service and are faced with the all-important question: Should you choose a monthly plan or an annual plan?

The decision starts with the numbers. What’s the monthly price? And how much is the discount for paying annually?

Streaming subscription providers often offer a significant discount for the yearly payment cadence. It means customers are committed to the service for the full 12 months.

From a consumer perspective, whether that discount is worth the commitment can be a little more complicated.

Ask yourself a few questions.

First, do you want to continue paying for the service over that longer period? If you know that you will, then it’s easier to take advantage of the discount without worrying you’ll be paying for something you no longer need.

How likely is it that your circumstances will change over the next 12 months? Could you be moving, undergoing a household change, or facing unexpected new expenses? If so, you might not want the extra commitment of the yearlong subscription.

There’s also a hidden risk to signing up to pay for the whole year at once. It’s easier to forget to cancel a subscription that only charges you once a year.

The monthly charge can serve as a regular reminder to consider canceling the service. When you only pay once a year, you might not even remember that you’re enrolled.

Given all of that nuance that goes along with the monthly versus annual subscription decision, it can be a solid choice to stick with the monthly payment — even if it’s a little higher — to maintain your flexibility.

Should I brick my phone to save money?

Phones can be a source of mindless scrolling (and spending). Ever get sucked into social media ads? Or store your credit card information in a retailer app? Yeah, us too.

But bricking your phone — using a device to render it unusable for a period of time — can make it more difficult to fall into these spending traps.

That’s what NerdWallet writer Amanda Barroso found when she used a Brick device to block social media and shopping apps every evening. “I wanted to reclaim this time to be more present with my kids and make it a little harder for me to mindlessly spend,” she shared in her recent article.

The technique worked for her. She cut her personal spending by $300 compared with the previous month. She’s putting that money toward a family trip, savings and a home project.

Here are some reasons to try this method yourself:

Bricking adds “friction” to your purchases. Adding friction, or obstacles on the path to spending gives you more time to consider if you really want to make the purchase. If it’s easy to click and buy, then you can end up buying things you don’t really need.

Reducing unplanned spending can lead to more savings. Savings can go into an emergency fund, or fund a future goal, such as a vacation. Having more savings gives you more options.

Spending less can also free up your time. When you’re not spending extra minutes browsing retail apps or perusing ads, you have more time for activities you might enjoy more, like spending time with family or friends.

Should I track my spending?

Tracking your spending can be the key that unlocks better financial choices.

Skeptical? Consider what happened when NerdWallet writer Kate Ashford gave it a try. After just 30 minutes, she set herself on a path to save $600 in the coming year.

Here’s what happened: Ashford spent less than an hour using a budgeting app to link her bank account and credit card. Then, it analyzed her spending.

She discovered that she was spending more on Amazon and Instacart than she realized. Plus, she was shelling out a lot for subscriptions.

Ashford used that information to renegotiate the price of two subscriptions that had gone up. She also resolved to reduce her Instacart spending.

Here are some more ways to make tracking your spending impactful:

Decide on a tracking method. You can do it manually or use an app like NerdWallet to link up your accounts.

Look for patterns and unusual expenses. When expenses are recurring each month — as subscriptions often are — they can add up quickly. Dig into those recurring expenses and see what you can adjust.

Give yourself a realistic goal. Select a specific category, like online spending, to scale back, and then stick to it.

Check in after a few months. See how your spending patterns have changed and make any needed adjustments.

So should you track your spending? We’d say yes.

About the author

Kimberly Palmer is a personal finance expert at NerdWallet. She is also the author of three books about money: “Smart Mom, Rich Mom,” “The Economy of You” and “Generation Earn.” Kimberly’s work also appears at NerdWallet Canada.

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