What is Budgeting?
Definition
The process of creating a plan for how to allocate income, including accounting for recurring subscription expenses.
Understanding Budgeting
Effective budgeting requires a clear picture of all recurring expenses, including subscriptions. The 50/30/20 rule suggests allocating 50% of income to needs, 30% to wants, and 20% to savings. Subscriptions typically fall into the 'wants' category and should be reviewed regularly.
Common budgeting methods include zero-based budgeting (YNAB), envelope method, and percentage-based allocation. Tracking subscriptions is a crucial part of budgeting because small recurring charges compound — a $15/month subscription costs $180/year and $900 over five years.
Related Terms
Subscription Audit
A systematic review of all active subscriptions to evaluate their value, identify unused services, and optimize spending.
Subscription Savings
The money saved by optimizing subscriptions through cancelling unused services, downgrading plans, switching to annual billing, or using bundles.
Payment Date
The specific day within each billing cycle when a subscription payment is processed and charged to the subscriber's payment method.
Subscription Tracker
A tool or application that helps users monitor, manage, and optimize all their active subscriptions in one centralized dashboard.