Tech Gadgets Can Overload Tight Budget

Plan Ahead; Forgo Bells, Whistles

Date: August 1, 2012

Contact: Paul Golden 303-224-3514, [email protected]

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]

DENVER—Sebastian and Naomi Turner know what they want to do after graduating from high school, but not where they will be Friday night. That is what their cellphones are for. The brother and sister, 15 and 17 respectively, keep their phones turned on and within reach nearly all the time. They text friends more than 100 times a day and make plans at the spur of the moment.

“I don’t really turn off [my cellphone]—ever,” says Naomi, attesting to the necessity of staying constantly connected to friends.

In total, the Turner family of six owns four cellphones, two computers, one iPad, two Nintendo DS consoles and many other pieces of technology. And according to the U.S. Bureau of Labor Statistics Consumer Expenditure Survey, that’s average. The survey found that from 2001-2010, the percentage of computer ownership in the U.S. climbed from 54 percent to 79 percent, and spending on cellphone services increased from $210 to $760. In total, Americans spent on average $1,000 more on cellphones, computer systems, televisions and other audiovisual equipment than they had 10 years earlier.

“With a constant flood of new products on the market and the growing importance of technology in our lives, it is no surprise that spending on electronics is up,” says Patricia Seaman of the National Endowment for Financial Education. “With back-to-school shopping right around the corner, families and individuals should consider what technology they truly need and how it will benefit their lives and affect their budgets before giving in to buying the latest trends.”

Time for a Tech Check

The latest gadgets and their seemingly never-ending upgrades are tempting for even the least tech-savvy shopper, but they easily can strain a tight budget. With retailers advertising the latest technology in time for back-to-school season, it can be a struggle to resist. Here are several ways to manage technology spending for you and your family:

Consider whether you need or want the technology. Do your children require a computer for school? Do you need a smartphone for work? Or is it just a case of keeping up with the Joneses or needing entertainment?

“You have to look at the real purpose of the technology and whether that purpose is in alignment with what you think is important to have,” says Seaman, a mother of two teenage girls. “For example, the laptop can be a necessary tool for school, or it can be a place to watch YouTube and surf the Internet and never be used for homework.”

Susan Turner sees her teens’ phones as necessary for maintaining a healthy social life, but also she observes her children using the phones for schoolwork. Last spring, Naomi used her phone to communicate via text and Facebook with four classmates about a 45-page group paper. The high school senior also hopes to get a laptop for college.

Calculate how technology fits into your budget. Electronics can take up a majority of your discretionary spending and often are not even a part of people’s spending plans. Determine how much you comfortably can commit to technology services, and don’t go over that amount. If your children’s wants exceed the budget, consider having them pitch in for gadgets or services with their own money.

Determine the basic function you need and then figure out what gadget will perform that function sufficiently. Can one component accomplish the jobs of many? For example, can a smartphone or tablet substitute for your landline, laptop, digital camera, wireless Internet service and TV? Cellphones and cellphone services were an integral part of the Turners’ lives, but the costs added up so they made the decision to drop their landline a few years ago.

“Everyone seemed to be able to communicate without using the home phone,” says Susan. “It was an extra expense.”

Don’t fix it if it isn’t broken. If you don’t really need an upgrade, resist buying a new version just because you can. And if something breaks, see whether you can use an old version or live without the technology until you really need it. 

After her last cellphone broke, Naomi waited a month and a half without a phone to get an iPhone4 as a birthday present. But her parents passed on the latest model that comes with “Siri,” a digital personal assistant. The couple also passes on upgrades to their own phones and home computer in favor of their children’s gadgets, which can help them in school or develop their creativity.

Find the best deals:

  • Comparison shop online and at wholesale stores, and wait for sales or until the price of a newly released gadget drops.
  • Buy an older model, one with less memory or lower resolution. If you opt for a used model, make sure to do your research, test it if possible, consider accessories, warranties and return policies, and purchase from a trusted seller.
  • Determine whether you can save money by bundling with a family or couple’s plan, or by switching from one service provider to another. Susan saved money this way by adding Naomi and Sebastian’s phone plans to her own.
  • Take the time to regularly evaluate all of your current plans. If you can get a better deal somewhere else, and you can handle whatever cancellation penalties are associated with your current contract, go ahead and make the switch.

Consider all the costs. You might be able to afford the cost of the actual device, but the accompanying service charges often are what can strain your budget. Examine recurring service charges and take into consideration the data package, fees for overuse of texting or minutes, and insurance. For other technology, include the cost of Internet, cable or satellite service and installation fees. And don’t forget that when you choose cellphone and Internet services, often you are entering into a contract with associated penalties for early termination.

Take inventory. Assess whether your penchant for purchasing gadgets is an occasional slipup or a spending habit that has gotten out of control. Ever made an impulse purchase that you later regretted? You’re not alone. Visit NEFE’s Spendster website ( to calculate how much your money could have been worth had you not spent it on electronics, and view confessions from other Americans addicted to technology.

Clear the clutter. Get rid of old gadgets taking up space in your home. Consider trading them in for collateral at big-box stores such as Target and Best Buy, or selling your stuff on Craigslist or eBay. If selling isn’t an option, donate or recycle your gadget. Go to the Environmental Protection Agency’s website for a detailed listing of local and nationwide programs.

For ways to keep spending in check and be realistic about your shopping habits, visit



  • Paul Golden

    Media Relations Director

    Direct: 303-224-3514
    Cell: 303-918-3620
    [email protected]


  • Paul Golden

    Media Relations Director

    Direct: 303-224-3514
    Cell: 303-918-3620
    [email protected]