In today's fast-paced world, where convenience often trumps cost, it's easy to overlook the small, recurring expenses that can add up to significant sums over time. This is particularly true when it comes to the modern phenomenon of subscription services. While they offer a world of entertainment and convenience at our fingertips, they can also be a drain on our finances if not managed carefully. Helen Baker, the founder of On Your Own Two Feet and a seasoned financial adviser, has highlighted a major money mistake that many Australians are making, which could be costing them the equivalent of a house deposit or an overseas holiday.

The convenience of streaming services like Netflix, Stan, and Kayo has revolutionized the way we consume media. For a relatively small monthly fee, we gain access to a vast array of movies, TV shows, and sports events. However, it's not uncommon for individuals to subscribe to multiple platforms, often without utilizing them to their full potential. According to Helen Baker, this can lead to a conservative estimate of $1,200 per year spent on underused services. That's a sizeable chunk of change that could otherwise contribute to a trip to a destination like Bali, where the cost of living is lower and your dollar stretches further.


But the implications of unchecked subscription spending extend beyond missed vacation opportunities. When it comes to securing a home loan, lenders are increasingly scrutinizing potential borrowers' spending habits. Since the Global Financial Crisis in 2009, banks have been mandated to assess whether an applicant can manage mortgage repayments. Excessive spending on streaming services, coupled with the use of buy now, pay later apps like Afterpay, can raise red flags about an individual's financial behavior. These habits may suggest a lack of savings discipline and an over-reliance on credit, which could compromise one's credit score and, ultimately, their ability to secure a loan.


Moreover, with the Reserve Bank cash rate experiencing significant increases in 2022 and 2023, and inflation remaining high, the cost of borrowing is likely to continue rising. This makes financial prudence even more critical for those aiming to enter the housing market. For those who do qualify for a home loan, the challenge of saving for a substantial deposit remains. Without a 20% deposit, borrowers face the additional cost of lenders mortgage insurance (LMI), which can amount to tens of thousands of dollars on top of the loan itself.


The situation is particularly daunting in cities like Sydney, where median house prices exceed $1.4 million. Prospective homeowners often find themselves in a catch-22, struggling to save for a 20% deposit as property prices soar, yet facing steep LMI fees if they opt for a smaller deposit. It's a financial balancing act that requires careful consideration and strategic planning.

Helen Baker's insights serve as a wake-up call for Australians to re-evaluate their spending habits, especially when it comes to seemingly innocuous monthly subscriptions. By cutting back on underutilized services, individuals can redirect their funds towards more substantial financial goals, whether it's saving for a home, investing in their future, or enjoying well-deserved holidays.
As we navigate the complexities of personal finance, it's essential to take stock of our expenses, prioritize our goals, and make informed decisions that align with our long-term financial well-being. So, before you sign up for another streaming service or indulge in another online subscription, consider the impact on your financial future. It might just be the difference between watching a travel documentary on your screen and experiencing the adventure in real life.