1/7/2013 6:30 PM ET|
Cellphones' bigger budget bite?
Cellphones account for an increasing proportion of household expenses. How much have they really changed your bottom line?
As technology has advanced in the 21st century, mobile phones have morphed from functional devices used solely for making calls into sophisticated portable computers. Smartphone users are now capable of texting, video conferencing, surfing the Internet and playing music and video on their handheld devices.
With this evolution in technology has come a meaningful increase in the amount of money the average consumer spends on mobile phone services. Perhaps you have noticed that you are paying much more for your cellular service now than you were 10 years ago. Rest assured, you are not alone. Here's a look at how cellphones have evolved into an increasingly indispensable component of most people's budgets.
Cellphone bills have grown
Consumer spending on mobile phone service has grown significantly since the early part of this century. In fact, according to the Bureau of Labor Statistics, Americans spent an average of just $210 per year on cellular service back in 2001. That's less than $20 per month. This figure may strike you as unbelievably low. The average cellphone bill in 2010 was more than $63 per month or $760 per year.
Does this seem like a big increase in cellphone spending? Well, on an annualized basis, these figures reflect an increase of more than 15% per year from 2001 to 2010. This is a significant gain in spending on cellphones, considering that annual household expenditures grew only around 2% during in that period.
Cellphones vs. landlines
Not surprisingly, alongside increased spending on cellphones has come decreased spending on landlines. Why pay for a home phone when a mobile phone meets all of your communication needs and then some? Here's an example to illustrate just how differently the dollars in most people's wallets are being spent now versus 10 years ago.
First, let's assume that you spend $100 per month for all of your telecommunications needs. This includes your mobile phone bill, as well as your landline. Using this assumption, back in 2001 you would have spent $23 per month for your cellphone services. Your landline bill would be somewhere round $75. Clearly, landlines were much more important components of people's budgets at the outset of the 21st century. In 2010, your mobile phone bill would take a much larger share of your wallet and your landline a much smaller share. In 2010, you would have spent around $65 per month on your cellular plan but only $34 on your landline.
Cellphone bills and household budgets
Spending on mobile phones is becoming a more meaningful component of total household expenditures. In recent years, many people have cut back on discretionary expenses such as dining out and clothing purchases. However, spending on mobile phone services has grown at a steady pace. As a result, mobile phone expenditures have increased as a percentage of household expenditures.
The bottom line
Evolution and advancements are to be expected, particularly when it comes to fast-changing technology such as mobile phones. Given the improved capabilities of cellphones since the beginning of the century, it is no wonder that cellphone bills have averaged a healthy annual growth rate in excess of 15%. Alongside the rise of mobile devices has come the fall of landlines, which see far fewer dollars devoted to them today than in 2001.
Mobile phone costs are becoming an increasingly relevant component of consumers' budgets. It makes you wonder just how much you will spend on your mobile phone service 10 years from now.
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The problem isn’t the price of the phones or services; it’s the fact that everyone thinks they have to constantly upgrade to the latest thing. I knew some people a few years ago who were having serious financial problems but as soon as the iPhone4 came out they had to immediately buy a pair to replace their perfectly good iPhone3’s. And its not like they really needed any of the new features, its just that they have this insane notion that they have to have the latest thing. And apparently this is not that unusual. In fact it’s often the poorest people who "MUST" have the latest models of everything. This is primarily due to their extremely low self-esteem. I guess having the latest models of the latest gadgets just makes them feel better about themselves – makes them feel like they’re somebody. People will also pay for expensive data services that they don’t really need. In fact most of the time they are using these services just to justify the monthly expense. That, or to make themselves feel like they are hip, trendy, tech savvy people. And it’s like that all over the world. You can find people in third world countries who live in tin shacks and don’t even have out door plumbing and yet they all have cell phones. And if one of these people were to win a few hundred dollars, which might be like a few thousand here, they would spend it all to upgrade to the latest and greatest phone. I’ve actually seen it happen. Don’t get me wrong, if you have a job that requires you to constantly be connected while on the go then the latest mobile devices are a must. And of course if you’ve got money to burn, then why not get a new phone every year whether you really need it or not. But constantly upgrading just to one up your friends or to not feel like you are behind the times is stupid. I used to always have the latest phones and latest data services back when I really needed it but now I don’t even have a data plan anymore. I can do everything I need to do online while at home on the computer. Its all stuff that can wait – the world won’t come to an end if I don’t check my e-mail every 5 minutes. And while traveling I can usually find a WiFi hotspot these days so why pay for an expensive data plan that I might only use once a month or less. I will admit that cell phones in general are great though and I havent had a landline for nearly ten years.
Keep It Simple,
I have only a basic minutes-per-month plan on a regular flip phone and it's more than enough to take or make calls. For anything else the home office laptop works just fine. Many of the people I observe with the newest iPhones, Androids etc seem so totally mesmerized and preoccupied with them that they are oblivious to actually interacting with the people around them.... sad.
Peace to all ~
I'm 34, work in IT, and have still never had a cell phone. I figure I've saved over 10k over the last decade by not having one; money that has gone to investments rather than an indulgence.
Spend your money on what you want, but don't complain when you're 70 and working as a greeter at Wal-Mart because you didn't save enough to retire.
Cell phones are a waste of Time and Money...
And the Companies selling the phones, Are getting rich playing to the fools that buy them...lol
I have a stupid phone and only use it to talk to other people, cost about $40.00 bucks a month...
Canceled our home phone years ago, got tired of sells people calling while trying to eat dinner...
Yet another article that doesn't say anything meaningful. Yet another fluff piece. I think we were all aware of the trend; more cell phone use, less landline use. I think we all knew we were spending more on cell phone plans, too.
The only facts in this piece were the comparisons from 2001 to 2010.
Ok, so what?
How about some meaningful information that would make a difference, say a comparison of cell phone costs? Or more in-depth information about landlines, when they can be useful or necessary, and what companies are doing to shift their focus as more customers leave? Are more people using contract cell phones or pay as you go? Is the infrastructure keeping up with the demand for data use?
So many of the articles in this section are two or three paragraphs of fluff that any high school student could have written for an essay - complete with typos!
Wish I could get paid for so little work.....
They call them smart phones, but they cause you to do dumb things like pay huge bills for a device that does stuff you can live without!
Prepaid, cheaper ,makes calls,texts,tells time and not subject to price spikes or runaway internet fees.
Stop being smart phone sucker and down grade 4 G is way to much BS!
Or pay the big bucks and stay poor, its all about choices smart ones or smart phones!
One basic phone....no internet, no apps for everything, do not text, and no high monthly rates. Why people must buy the next "fabulous phone" or tablet, or whatever is beyond me. So many folks are "addicted" to these fancy phones.
Love my land line.
I'm in a phone book so vistors can find my address.
Try sending a letter/package to someone that you don't have an address.
Works all the time.
I'm in the county with many hills so service and a cell phone can't
be counted on.
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