Cell phones these days are becoming less of a luxury and more of a necessity. We need them to get us from point A to B, check emails, send text messages, pay bills, read the news, update social media and, on a rare occasion, to make phone calls. However, just because we’ve experienced an increased reliance on our phones, doesn’t mean we have to pay top dollar to use them.
How do we Lose Money with our Cell Phones?
1- Average Cost of a Cell Phone ≈ $528
According to Statista.com, the average cost of a smartphone in 2019 was $528.20. [1] Before making a lofty investment in a cell phone, it’s time to do some research. The first step is to think about the functionality you actually need from a phone. Do you to take a lot of high quality photos? Then you should prioritize a phone with a fantastic camera. If not, there’s no sense in paying substantially more for a phone with dual 12-megapixel cameras that you won’t be using.
Do you download movies or files that take up a lot of memory? If so, great, max out the storage to 512GB. However, if you're only using your phone for simple tasks, like checking email and making calls which don’t use a lot of storage, get a cheaper phone with 64-128GB.
For example, as much as I wanted to get the latest Pixel 4XL, with a staggering price tag of $999, I decided that I didn’t need most of the tech being advertised. Instead, I purchased a much older Pixel 1XL, which had all the functionality I needed and saved myself $791.
Had I opted for the latest iPhone 11, this would have been an additional $941. In my opinion, I was able to get all the functionality that I actually need from a phone, for a quarter of the price.
The key here isn’t to make any sacrifices in terms of functionality that you need on a day-to-day basis, but to recognize where you could be paying substantially more for technology you don’t use. By defining what matters to you most before shopping around, you can make sure you are not buying more phone than you need.
2- Average Cost of a Cell Phone Plan ≈ $74/month
Similarly to paying too much for our cell phones, we often pay too much for our cell phone plans. In 2018, the average American aged 25-64 paid $114 for their cell phone plan according to the US Bureau of Labor and Statistics. [2] This value does include the cost of the phone which averages out to be around $40 per month, therefore, the true cost of the plan itself is $74.
Choosing a cell phone plan should be approached in the same fashion as picking out a cell phone–with the first step being an analysis of what you actually need. Does it make sense to pay for unlimited data if you are only using 4GB per month? Are you frequently streaming HD video on your phone? If so, can you create a habit where you only stream videos when connected to public Wifi?
In most instances, we can substantially reduce the cost of our cell phone plans without sacrificing a whole lot. In some cases, we may need to become accustomed to minor inconveniences, like asking for the Wifi password when we’re out at a local business or restaurant. Another concern is, your service may not be as good with a cheaper provider. This is a valid point, but take a closer look at the potential savings and see if a few dropped calls can be tolerated from time to time.
With a plan like Virgin or Boost Mobile, you can get unlimited talk, text, and data for only $50/month. As an added bonus, there is no contract so you can cancel any time if you feel their service isn’t to your liking. This is a savings of $24/month without much, if any, sacrifice. Think about what you can do with the extra $288/year in your pocket and use it as motivation to switch your service provider.
3- Cost of Apps and In-app Purchases ≈ $63/year
Research shows that in 2017, the average iOS user spent $63 dollars per year on apps and in-app purchases. In most cases, this is money that could have been put to work for us in much more productive ways. Given that we are developing a habit of tracking our spending to avoid spending money on things that don’t bring us joy, this is certainly an area that we can focus on cutting down.
4- The Cost of Time (Our Most Precious Asset)– 1000+ hours per year
Like we discovered in the post entitled, Your Television Costs Much More Than $85/month, we waste an incredible amount of time each day that could have otherwise been used to work on side hustles, improve our fitness, or deepen our relationships with loved ones.
In 2019, we spent nearly 3 hours and 10 minutes on our phone each day! [3] This means just over 22 hours per week, 89 hours per month, and 1064 hours per year. In other words, we are spending just over 44 days per year on our phones that, in part, could have been used in more productive ways.
5- Opportunity Costs: So Much More Than $1292
Let’s see what would happen if we opt for the latest iPhone 11 with a typical unlimited data plan and in-app purchases vs a more modest phone with a Virgin Mobile plan, still with unlimited data.
iPhone $1149 + (Usage plan $74 x 12 months) + In-App Purchases $63 = $2100
Reasonable Phone $208 + (Virgin Mobile $50 x 12 months) = $808
Total Savings = $1292
That’s $1292 extra in your pocket without changing your lifestyle whatsoever! Imagine how that figure would change if you took that savings each year and invested it in an index mutual fund with a 6-8% return, or invested it in your side-hustles, or used it to pay for online classes to help you better your career, etc. The opportunity cost here is tremendous and that’s without calculating all we’d gain by spending less time on our phones.
Your smart phone is simply one aspect of life where you might not be getting the best return on your money. There are others. The game is to actively engage with and evaluate these areas with the same scrutiny. I’m sure you’ll identify other areas where you can make changes and save money without sacrificing your quality of life or happiness in the process. The good news is, all the money you do save can be used toward those areas that bring you the most joy/value helping you live your best life possible.
How about you? Do you know of any cell phone hacks to save on this monthly expenditure? What service plans are you a fan of and why?
References:
https://www.statista.com/statistics/619830/smartphone-average-price-in-the-us/
https://www.moneysavingpro.com/cell-phone-plans/comparing-us-and-uk-bills/
https://www.emarketer.com/content/us-time-spent-with-mobile-2019