Technology, and mobile devices in particular, can definitely make your life easier, but they also add to your regular expenses. The Oregon Society of CPAs offers some insights on technology spending and how to keep it in check.
A Big Investment
Last year, global spending on consumer technology devices exceeded $1 trillion for the first time, according to the Consumer Electronics Association. The cost of subscribing to digital services certainly does add up. According to a poll by the American Institute of CPAs (AICPA), consumers spent an average of $166 each month to pay for things like cable TV, home Internet access, mobile phone service and digital subscriptions—equal to 17% of their monthly rent or mortgage payment. Do you download apps, songs or other products? The AICPA study also found that Americans buy an average of five digital songs, five movies or TV shows, two apps, two games and two eBooks per month. That all adds up to an average of another $38 every month. It’s not surprising then that more than half of all Americans think that technology makes it easier to spend money rather than save it. How can you be sure that your technology spending doesn’t add up to some unpleasant surprises? CPAs offer several tips.
Set a Budget
It’s a good idea to create a monthly budget that identifies your regular expenses and income and helps you determine how much you will spend and save. Within that budget, set limits on what you will shell out for digital services, apps and other content. Are you currently spending more or less than you should be? Use your past and existing technology purchases as a roadmap to help you decide how to set your limits.
Separate Your Tech Spending
It can be difficult to track technology-related expenditures because many are deducted right from your bank account or charged straight to your credit card. It may be a good idea for you to set up a separate checking or credit card account for your digital purchases and set email or text message alerts that tell you when you’re near your limit. This approach makes it easy to see what you’re spending and helps ensure you don’t go over your limit. If you’re using a credit card, be sure to pay off the balance each month so you don’t run up high interest charges.
Get (Just) What You Need
Before you sign a contract for phone or other services, make sure you understand all the details so you can be sure that you’re not going to be paying for services you don’t really want or need. Review your past cell phone or cable service statements to see what you actually used, and don’t commit to a new service that offers any more than is necessary.
Cut Out the Dead Wood
Once or twice a year, review not only your subscriptions but also your devices, such as e-readers or tablets, to see whether you’re really getting your money’s worth out of them. If you have numerous devices, consider whether you truly require all services on each of them. It might be wiser to drop the data service on one cell phone, for example, and use your tablet for apps and Internet access. Similarly, if you signed up for an online subscription service that you never use, drop it! Also, investigate whether there are new features or bundles available that could lower your bills.
Dollars & $ense is a regular column on personal finance prepared and distributed by certified public accountants, produced in cooperation with the Oregon Society of CPAs www.orcpa.org and the American Institute of CPAs www.aicpa.org.
