Digital Payments Are Convenient. They Also Can Wreak Havoc on Your Finances.

For some people, a financial wake-up call manifests in the form of a credit-report ding or the need to eat ramen for a few weeks. For Jeremy Eisengrein, it was what happened after he took a tumble and tore a knee tendon during a trip to the beach.

When the 28-year-old communications professional was informed he would have to pay $3,000 upfront for surgery and an MRI before getting any reimbursement from insurance, Mr. Eisengrein became hyper-aware of how his spending had ticked up during the pandemic. When he examined his checking and savings accounts, he discovered he had less money than he thought. More worrisome, he says, was that he didn’t have a firm grasp on where the money was going.

So as Mr. Eisengrein worked on his physical recovery from his home in Spring Lake, N.J., he also set out to do some financial recuperating. That included taking stock of all the ways he had been allowing money to “leak out” of his accounts. He noticed that most of his additional expenses came from new subscriptions or other digital purchases, including roughly $50 to $75 a month in food-and-product deliveries from Chewy for his dog and a plant-delivery service he hadn’t used in months.

“I think I’m good with my money,” Mr. Eisengrein says, “but then you ignore one email and you can’t get money back for the $100 I was charged for the GQ subscription.”

Digital transactions make the financial lives of young adults more convenient. Consumers can purchase almost anything, or send money to friends and family, with only a phone swipe. Meanwhile, subscriptions for things like music- and video-streaming services, fitness apps and cloud storage, along with ride-hailing and food-delivery platforms and “buy now pay later“ billing options, allow people to put much of their spending on autopilot.

Jeremy Eisengrein says a recuperation from knee surgery allowed him to take stock of all the ways he had been allowing money to ‘leak out’ of his accounts.

Photo: Jeremy Eisengrein

But this convenience has left many young adults with “decentralized” finances—in a sense outsourcing expenses in a way that makes it easy to lose sight of what you are actually spending. And that can make it easy to overspend and hard to budget.

A June 2021 report from digital consulting firm West Monroe Partners found that American consumers on average are paying $273 a month in subscription services, up from $237 in 2018. Yet the report, which surveyed 2,500 U.S. consumers, also found that most people thought they were actually spending less on subscriptions than they did in 2018.

“When you hear people talk about savings, it’s like ‘pay yourself first,’” says Zarak Khan, senior behavioral researcher with Common Cents Lab, which focuses on financial wellness for low- to middle-income Americans. This “is quite literally the opposite of that,” he says. “You’re paying everybody else first.”

How can young adults guard against “cash leakage?” Here is some advice.

Grabbing the wheel

While it’s easy to become lulled into complacency by the convenience of free trials and autopayments, you’re the one in control, says Annamaria Lusardi, a professor of economics and accountancy at George Washington University.

She advises getting into the habit of checking your bank or credit-card transactions at the end of each day, so you have a clearer picture of where your money is going. Otherwise, she says, “it is really easy to lose sight.”

Setting up bank alerts—for example, setting a withdrawal threshold that will trigger a text message or email from your financial institution—can be helpful for the same reason, says Malik Lee, founder and managing principal at Felton and Peel Wealth Management, an Atlanta-based financial-planning firm. “For some people that threshold can be $50, for others it might be $100,” he says. “So whenever that transaction comes through, your eyes at least touch it, especially for those automated bills.”

Priya Malani, founder and CEO of Stash Wealth, a financial-advisory firm geared toward high-earning millennials, says many consumers struggle to keep track of their transactions because they have so many payment options at their disposal.


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“Between credit and debit, cash and Venmo, PayPal and Zelle, the list goes on and that makes it really hard to understand what we’re spending on,” Ms. Malani says. 

She says the first step in regaining control is to whittle down the payment options you use, preferably to one. That could mean sticking with one mobile app for payments to friends and family or using one credit card for all of your subscriptions and digital purchases, so it’s easier to see how much you are spending and on what.

“People forget to take that step, because it’s like whatever card you pull out of your wallet, you sign up for Netflix and a different one for Spotify,” she says.

Apps and alerts

When it comes to subscriptions, researchers and financial planners says consumers should be aware these services aren’t static. If you sign up for recurring monthly withdrawals, you also sign up for potential—and sometimes inevitable—price increases and term fluctuations that could affect your finances, they say.

“A lot of things now have gone to the ‘set it and forget it’ model,” says Mr. Lee. While there are benefits to that, there also is a lifestyle creep that comes along with it, he adds.

Experts advise taking note of and budgeting for any price increases in your ongoing subscriptions. If you have to absorb a price increase for one service, consider canceling or not signing up for another. Mr. Lee suggests switching monthly subscriptions to an annual version if it’s cheaper over time.

“This is your disposable income,” says Mr. Lee. “You’ve got to safeguard it.”

Another big factor contributing to cash leakage is that it is often more difficult to cancel a subscription service than it is to start one up.

Tre Ingram uses a budgeting app to help keep track of his digital transactions.

Photo: Tre Ingram

“It’s basically like, ‘Hey, one click and you’re subscribed,’ but if you want to cancel, come and cross this moat, fight this dragon and deliver a handwritten letter,” says Mr. Khan. 

Mr. Lee suggests creating check-in points every six months to evaluate the subscriptions you have and how much you use them. If you set a calendar notification to review or cancel a subscription, you are more likely to make the time to jump over whatever hurdles you have to complete the unsubscribe process, Mr. Kahn says.

To reduce cash leakage, some consumers are turning to money-management apps such as Truebill and Trim, which will comb through your spending activity and identify any recurring charges. Some of these apps will even negotiate those bills down or cancel subscriptions on your behalf, for a fee. Ms. Malani urges caution when using such services, however, saying you could accidentally lose a promotion or pre-negotiated rate on, say, your phone bill.

Tre Ingram, age 23, started using a budgeting app called EveryDollar when he moved to Los Angeles from Virginia in August and noticed his digital transactions starting to creep up for everything from HBO Max to mobile payments for parking. Because he didn’t have a lot of financial education growing up, Mr. Ingram says, some of the app’s features—like being able to clearly view billing dates on a calendar—are providing crucial insights along his financial journey. 

“It definitely helps me stay on track as I’ve used it more,” Mr. Ingram says. “I come from a single parent household, so the concept of budgeting wasn’t existent. It was about surviving.”

Mr. McCorvey is a reporter for The Wall Street Journal in New York. Email him at

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