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Published: Dec 06, 2019 6 min read
Illustration by Jade Schulz

Welcome to Dollar Scholar, a personal finance newsletter written by a 27-year-old who’s still figuring it out: me.

Every week, I talk to experts about a money question I have, whether that’s “What if I don't have a 401(k)? or “How many credit cards do I need?” As I learn, I share simple ways to improve your financial life… and post cute dog photos.

This is (part of) the 21st issue. Check it out below, then subscribe to get future editions of Dollar Scholar every Wednesday.

Q: What's tiny, green and making me reconsider my monthly entertainment budget?

A: Baby Yoda.

The internet has spent the past couple of weeks collectively raving about Baby Yoda, a character in the newly released Star Wars show The Mandalorian. And though he may or may not be a baby and may or may not be Yoda, I love him, too. Just look at that face!

Only one problem: I don't have Disney+, which is the only place to watch The Mandalorian.

Don't get me wrong — I'm signed up for a ton of subscriptions. Every month, I make payments to Dropbox, Spotify, Patreon, the Los Angeles Times and the Washington Post. Every year, I pay an annual fee for Squarespace, TapeACall and Amazon Prime. (I also share friends' passwords for Netflix, Hulu, the New York Times and the Wall Street Journal. Please don't tell the FBI.)

My hangup is just that I already pay $75 a month for all of that. As adorable and wrinkly as Baby Yoda is, adding Disney+ seems like it might be overkill. How many subscriptions is too many? How can I walk it back?

I stopped cooing at my computer screen long enough to consult Chris Kampitsis, a certified financial planner at Barnum Financial Group in New York. Kampitsis told me that in today's day and age, it's "getting more and more difficult for busy individuals to stay on top of all these different recurring expenses."

There have been a ton of studies that prove exactly that. Last year, tech consulting firm West Monroe Partners asked 2,500 people how much they thought they spent on subscriptions, and 84% underestimated the dollar amount. PYMNTS.com found that roughly 124 million American adults pay for streaming subscriptions.

Kampitsis explained that it's easy to overspend on these services because they pile up quietly and over time. While I'd definitely balk at dropping $200 on a single meal, for example, I might not see such a problem with signing up for $18 recurring energy bar shipments (which I just did).

It's a perspective thing.

"The major con isn't the cost of any one service but in the accumulation of subscriptions that recur long after the consumer might have stopped using the product," Kampitsis adds.

To be clear, I'm not talking about necessary-for-life expenses like health insurance or electric bills. I'm referring to voluntary subscriptions, whether that's Dollar Shave Club or Blue Apron or Kindle Unlimited. Or, in my case, MoviePass and Adobe Creative Cloud, both of which I held onto for wayyy too long out of the fear I may need them one day.

"If you use things, it's OK to pay for them," says Jared Friedman, a financial planner at Redwood Financial Planning in New Jersey. "My problem is when you sign up for everything, and you don't use it."

Friedman advised me to take a hard look at my spending to make sure I'm meeting my savings goals before splurging on entertainment. He always tells his clients to work backwards, asking: What are they working to achieve — buying a house, paying for college, having a six-month emergency fund? How much will that cost them per paycheck? How much will they have left over? Only then can they decide how to spend that extra cash.

If I go through the same process and realize I only have $100 to spend on TV, I need to prioritize. Do I care more about fawning over Baby Yoda on Disney+ than I do bingeing new Queer Eye episodes on Netflix?

Often, something's gotta give.

"Figure out what you're watching the most and cut everything else off," Friedman says. "You have to be a rational person. You can't be someone who wakes up two years later, having missed a bull market and saving, just so [you] could watch The Handmaid's Tale."

Bottom line: As long as I'm meeting my financial goals, it's OK to add more subscriptions. But I need to be careful to stay on top of them. If I'm not using my services and they're keeping me from saving for the future, I should cancel them.

"Is there a limit [to] how many streaming services you should have? No, there's no actual limit," Friedman says. "It's all relevant to your savings goals, your income and the rest of your expenses."

Photo by Peter Ardito