That new mobile phone can wait!
Before you take the plunge and upgrade your mobile phone, take a moment to think about the total cost of locking yourself into another 2-year term.
- Most people already have a mobile phone by the time they turn 18 (truth is it’s more like 12, and that age is getting younger).
- Most people will own a mobile phone for their entire life for an average length of ownership of at least 62 years (we’re being conservative at 18-80 years).
- Mobile phones vary in price and according to plan, but that latest new smartphone could cost you up to $1,500.00 if you had to buy it outright!
- Most Canadians spend an average of $101 per month on their mobile phones (2019 Communications Monitoring report from the Canadian Radio-television and Telecommunications Commission), however in reality this is probably closer to $115 per month if you take all the taxes, extra costs, and surcharges into consideration.
Based on the above, most people will spend somewhere around $75,111 to $85,560 on their mobile phones throughout their lives (excluding inflation). Those who upgrade their phone every 2nd year will spend even more!
How can you save money?
Let’s consider the missed investment opportunities. Let’s look at the money.
Assuming an average cost increase of 5% annually (and not including all those apps and subscriptions) and using after tax dollars (what your mobile phone and plan costs you)- all that money if invested could grow tax-free.
All the money you (will) spend , presents a missed opportunity to invest. Let’s look at the lifetime (missed) investment opportunity cost of your mobile phone and plan at different return levels (dependent on your risk appetite) using an annual cost of $ 1,380:
- 4%: $1,322,648
- 6%: $2,309,402
- 8%: $4,844,418
- 10%: $10,560,088
So, what if you stick with your current mobile phone a while longer (yes, they do last more than 2 years), and opt for a more basic phone and text plan (use the data at work, home or WIFI hotspots for email, the internet and calling). Assuming a very basic $15 a month plan (annual cost of $180)- your lifetime (missed) investment opportunity costs would be:
- 4%: $74,547
- 6%: $160,517
- 8%: $371,604
- 10%: $903,398
With the difference invested- your lifetime savings could be:
- 4%: $1,248,101
- 6%: $2,248,885
- 8%: $4,472,814
- 10%: $9,656,690
We understand that currently, we all need to be connected for work, for family. Think about it, a mere 25 years ago- not everyone believed that they would ever need a mobile phone or must be always connected to the Internet. How things have changed.
So, before you rush out to get that new mobile phone or upgrade your contract- think about these numbers, and let’s talk about you. Let’s talk about your wealth plan.
- The REAL Lifetime Cost of a Smartphone Plan, February 10 201
- The best cellphone plans in Canada: Which deals are worth your money?
- The True Cost of Owning A Mobile Phone Across Your Lifetime
- Apple iPhone 12 Pro MAX (as advertised August 17th 2021)
The content of this article is for informational purposes only and is not intended to provide financial, insurance, legal, accounting or tax advice, and shall not be relied upon by you in that regard.