What happens when our growing appetite for “wants” like smartphones, on-demand entertainment and other personal technology crowds out “needs” like healthcare and saving for retirement?
The ever ballooning cost of smartphones and other personal technology was the subject of a recent blog post by the Center for Retirement Research, part of Boston College’s Financial Security Project.
“Nearly half of people who have cell phones pay more than $100 per month for the service and 13 percent pay $200 or more,” says Boston College’s Squared Away blog.
“The cell phone isn’t the only electronic habit that’s costing us. We also pay hundreds for cable TV, the Internet on our home computers, the land line. The automatic withdrawals for these services suck hundreds from our bank accounts each month – and we may not notice how much we’re spending since the transactions are electronic.”
“One-third of cell phone owners are instead cutting back on water, electric and gas use to pay for these smart phones.”
Those of us who use smartphones for work, or have teenagers living in the house, know first hand how much these services can cost. The latest research actually shows the average U.S. teen sends a mind-boggling three thousand text messages per month.
But it is still distressing to have someone tell me they “can’t afford” to save anything for retirement or start an emergency fund when they are spending hundreds each month for premium cable, unlimited texting, and HDTV in every room.
For many of us, it’s time to go back to Finance 101 and learn how to distinguish between “needs” and “wants.”
You “need” to save for retirement, unless you are content living on $14,760 per year, which is the average amount Americans with Social Security and no other personal savings will subsist on in 2012.
If you are not saving 10-15% of your annual income, review your budget to see if you can’t reduce or eliminate a few “wants” to make room for more “needs.”