I love Spotify. The app is good, the music library is fantastic and it’s frankly the only reason why I no longer pirate music. The great part? I just saved $1400 using a new feature called the ‘family plan’.

For those of you who’ve been living under a rock: Spotify is a music streaming service that gives you access to an immense catalogue of music. The music streams from Spotify’s global network of servers and to say that there’s a lot on offer is an understatement: the music library is absolutely insane. Spotify has saved me hours upon hours of obsessively downloading album art and updating ‘ID3 tags’. Plus it’s legal. Totally worth it.

Spotify has two membership tiers. The first one is a free service that interrupts your music every so often with an advertisement. The second tier is a ‘premium’ tier, which grants you access to a host of new features, such as offline listening, a larger music database and a higher sound quality. Here in Australia, premium sets you back roughly $11.99 a month, which is a no-brainer given the amount of mobile data you can save by storing your favourite tunes on your phone.

Great, cut to the chase please

As it turns out, you can easily get Spotify Premium at a significant discount:

  • Family memberships: Spotify has a featured called ‘Spotify family’ that allows you to add friends and family to one overarching account. The account costs $18 per month and allows you to add five people, which works out to an almost laughable $3 per month per person.
  • Gift card codes: you may have heard of this method. If you go on eBay and search for ‘Spotify premium’, you will find a long list of people offering to sell you a ’12 month Spotify gift card’. I personally wouldn’t go for this, as there are lots of fake / stolen codes flying around and you may get burned.

What I did was simple. I started a family plan and recruited ms. Someday Millionaire along with four friends. They all pay $3 per month into my account, so we now all have Spotify premium for $3 per month. It’s so cheap that it’s funny.

Doing the math: how this adds up

Using this little trick, I managed to save a grand total of $11.99-$3 = $9 per month. Pocket change and hardly worth the effort you say? Let’s take this a little further and look what happens if we consistently save $9 per month for a decade, a good horizon to work with for those seeking to make a million bucks. $9*12 months*10 years = $1080.

Starting to look more interesting to you? Let’s sock this $9 in a reasonably conservative investment fund with an average annualised return of say 5%. We plug the numbers in ASIC Moneysmart’s handy Compound Interest Calculator and things will look like this:

Almost $1400 saved. 0.14% of a million bucks. Who's a sucka now?

That’s right. Over my investment horizon, I have just saved approximately $1,400. 0.14% of a million bucks. Who’s a sucka now?

Yes, there are loads of assumptions. For starters, I don’t know if Spotify will still be around a decade from now, and for what it’s worth they may well stop selling gift codes tomorrow. But if there’s any takeaway from this post, it’s that you should never overlook small savings. Compounded over a long time, these can make a substantial difference to your long term goals.

TLDR: I started a spotify family, got 5 friends on board and saves $9 per month, which translates to roughly $1400 over a 10 year period.