Don’t let your smartphone dramatically impact the family budget

By now, we’ve all heard the buzz about the new iPhone 5.  According to the folks at Apple, the new phone is bigger, faster and sleeker than any of its predecessors.

But is it worth it to upgrade to the “latest and greatest” phones when they hit the market?

A recent story in the Wall Street Journal reports more and more people are sacrificing their family food, entertainment and household budgets for mobile phones. The story highlights statistics from the U.S. Labor Department, which showed Americans’ spending on phones rose over 4% last year, the highest increase since 2005.  The average household spent $1,226 in 2011 during the same period, consumers cut back broadly on other spending.  With the introduction of shared date plans & new mobile devices in 2012, this average is expected to rise sharply.

According to Art Beard, vice president of information technology at Community Financial Credit Union, one of the things people fail to consider when getting a new phone in addition the data plan is the cost of the accessories designed specifically for that new device.

“Think about what people purchase to go along with their phones – new cases, car chargers, speakers, alarm clocks and power adaptors,” Beard said.  “These costs in addition to new data plans, can add up and can put an even bigger dent in your pocketbook.”

The old want versus need debate

So, remember to do your homework before going out to get the newest mobile device.  Some of the questions you could ask yourself, include:

1. ·         How old is my current phone? Is it in good working order?
2. ·         Does my current phone meet my needs?
3. ·         How much will the phone, plan and accessories cost? 
4. ·         How long is the contract? Can the contract be terminated? Are there fees associated with it?
5. ·         How will I pay for any increases in my monthly bill?  What am I willing to give up to get the new phone?
6. ·         Do I really need it now?  Can I wait for a birthday or Christmas?

“When it is all said and done, it is not out of the question for a family of four to spend upwards of $300 per month on smartphones,” Beard said.  “It’s important to make sure that cost fits in the family budget.”

New gadgets can be enticing, but it’s important to study the associated costs and make sure they don't take away too much from the priority of saving for the future.