Before you take the plunge and upgrade your phone, think about the total cost of locking yourself into your next two-year contract.
- Most people already have a mobile phone by the time they turn 18 (actually closer to 12 and getting younger and younger).
- Most people will own a mobile phone for the rest of their lives, with an average ownership of at least 62 years (18-80 years to say the least).
- Phone prices vary by plan, but if you had to buy that latest new smartphone outright, it could cost you up to $1,500.
- Most Canadians spend an average of $101 a month on their mobile phone (2019 Communications Monitoring report by the Canadian Radio-television and Telecommunications Commission). and additional charges.
Based on the above, most people will spend about $75,111 to $85,560 on their mobile phones in their lifetime (excluding inflation). Those who upgrade their phones every two years will spend even more!
How can I save money?
Think about missed investment opportunities. Let’s see the money.
Assuming an average annual cost increase of 5% (not including all those apps and subscriptions), and using after-tax dollars (which is what cellphones and plans cost), all that money if invested may be tax exempt.
All the money you spend (from now on) will be missed investment opportunities. Let’s take a look at the lifetime (missed) investment opportunity cost of your phone and plan for different levels of return (depending on your risk appetite) with an annual cost of $1,380.
- 4%: $1,322,648
- 6%: $2,309,402
- 8%: $4,844,418
- 10%: $10,560,088
So stick with your current phone for a while (yes, you’ll have it for 2+ years) and get a more basic phone and text plan (use data at work, home, or a WIFI hotspot for email, internet and calls). Assuming a very basic $15/month plan ($180 annual cost), the cost of a lifetime (missed) investment opportunity would be:
- 4%: $74,547
- 6%: $160,517
- 8%: $371,604
- 10%: $903,398
When you invest the difference, your lifetime savings will be:
- 4%: $1,248,101
- 6%: $2,248,885
- 8%: $4,472,814
- 10%: $9,656,690
Now we understand that we need to connect for work and family. please think about it. Just 25 years ago, no one thought they would need a cell phone or be connected to the Internet all the time. how things have changed
So before you rush to get a new phone or upgrade your contract, think about these numbers and let’s talk about you.
The content of this article is for informational purposes only and is not intended to, and should not be relied upon by you, to provide financial, insurance, legal, accounting or tax advice.
That new phone can wait!
Source link That new phone can wait!