Making the Most of Smartphone Ownership

a person with a phone in their hands as it projects many capabilities.

Keep your phone costs within your budget  

Cell phones have become a practical necessity for most of us. They’ve replaced our old landlines, making them essential to staying in contact, earning an income, and managing our lives.

In particular, smartphones increasing fill multiple roles in our lives and can carry a hefty cost. From buying the phone to paying your monthly cellphone bill, to maintaining and repairing your device, that device in your pocket is a major budget item for the typical consumer.

The Pew Research Center found that 97% of Americans own cell phones, and 85% have smartphones, with only around 11% carrying non-smart cell phones.

Are Smartphones Essential?  

Increasingly, people use smartphones for purposes beyond just making phone calls and texting. While those two uses alone are important enough to make a cell phone a necessity, other uses for smartphones will increasingly make them indispensable.  

  • Email -  Besides calling and texting, smartphone users don’t need a computer to send and receive email
  • News - Most people have replaced newspapers with getting their news online
  • Entertainment - Smartphones are used to watch videos, play games, etc
  • Radio - Smartphones can stream radio stations from all over the world (check out the app for iPhone and Android)
  • Camera - Phones are used for photography and video, putting a camera in everyone’s pocket
  • Healthcare - Apps are used for storing and sharing medical records, consulting healthcare providers, and tracking physical activity
  • Navigation - Smartphones use GPS and mapping apps to help people navigate
  • Calculator - Your math teacher was wrong to tell you that you wouldn’t always have access to a calculator
  • Commerce - Smartphones offer ways to pay with credit cards that are more secure than swiping plastic and access to online commerce for buying and selling
  • Scanning - Smartphone cameras can now scan documents and soon most devices will be able to scan text to make it editable
  • Translator - Phones can help people translate text into many languages, and communicate with people who speak a different language
  • Flashlight - Smartphones’ camera flashes double as flashlights
  • Alarm - Your smartphone is perfectly capable of replacing your alarm clock
  • Timers - Speaking of clocks, your smartphone can be a timer, stopwatch, and serve as a multi-time zone clock
  • Magnifying glass - Your phone’s camera zoom can help you augment your eyesight
  • Accessibility - Besides vision, smartphones link to modern hearing aids to help the hard of hearing, and can translate text to speech
  • Smart controls - Phones control smart home features like lights, garage doors, thermostats, etc., and can be used as the “keys” to your vehicle—these kinds of features will become more and more common over time  

It’s no wonder 85% of Americans have a smartphone, and over time you can expect these devices to become more essential.    

Smartphone costs  

As smartphones have become more capable and indispensable, they’ve gotten more expensive. The top devices today can cost over $2000. That may seem excessive for a phone, but when you consider that phone is also a computer, camera, flashlight, compass, world clock, personal assistant, mp3 player, game console, eBook reader, fitness tracker, GPS navigator, and more… it’s easy to understand the cost.  

The average smartphone costs around $750 for just the device, though a good phone can be had for as little as $400. Considering the capabilities of these devices that we’ve discussed already, this seems like a bit of a miracle. But we’re still left with the question—given that smartphones are increasingly essential, how do we make sure we can afford them?

Should you buy used? This is a risky proposition, and the risks often outweigh the financial benefits. If you buy a used phone that has some kind of activation lock on it, you’re going to be out of luck—there’s simply no way for you to truly establish ownership of the device unless you can provide the original proof of purchase. That means you need the receipt from the original retailer—Apple or Best Buy or whoever. (A receipt from eBay doesn’t count.)

Even if you acquire the used phone with no activation lock in place, when you connect it to your Apple ID or Google account, you may end up needing the original proof of purchase if you forget your password, your account is compromised, or if someone in your family inadvertently changes your login information and you can’t reset it.

Because this kind of scenario is more common than you might imagine, it is best that you buy the phone new or refurbished from the original manufacturer or an authorized reseller. Don’t buy a used phone from the original owner just to save a few dollars. Make sure you keep all of the paperwork safe in case you need it to remove the activation lock someday.

Buying a previous model  

Just because you aren’t buying used doesn’t mean you can’t save money by purchasing a model from a prior year.  

Using Apple as an example, the iPhone’s current model might cost you $700 or $1000 for a “pro” model. But last year’s model is available for $600 and the model before that is still available for $500. As long as the model is still available for sale as new, you can save a lot of money and get a device that is reliable and comes with full warranty coverage.

A smartphone with multiple app icons floating around, representing maximizing smartphone usage.

Should I buy the extended warranty?

Speaking of warranties, this is a common question for smartphone buyers.  

We’re going to use Apple as an example again, because it’s easier to evaluate prices compared to the dozens of different Android phones available. Even so, these prices are comparable across the industry when it comes to extended warranties.

Apple’s AppleCare+ warranty for their iPhones varies by model, but the most common plans would cost around $149 for 2 years of coverage or $7.99 per month for an ongoing subscription. Remember this coverage is a service plan, so you need the actual phone in order to have it repaired—a lost or stolen phone would need a greater level of coverage to replace.

Is that warranty worth the cost? If you ever damage your phone, it certainly will pay for itself. For example, on an iPhone 12, with the extended warranty, the deductible for accidental damage to the display is $29, vs. $279 without AppleCare. Damaging the rear glass could cost $449 to repair vs. $29 with the extended warranty coverage

We often talk about emergency savings, and that you should establish a savings fund to get you through an unforeseen crisis or emergency. Having an unusable, damaged phone can be considered a legitimate emergency. If you can’t communicate, you might not be able to earn a living, or stay in touch with elderly/sick family members or be “just a call away” from your children’s school. So, you will want to set aside enough money for a replacement phone—at least $500—if you don’t have the extended warranty. Afterall, plunking down an extra $149 up front for AppleCare seems like the better move financially.

You might reflexively think extended warranties are always a bad idea, since most products don’t fail within the extended warranty period. This might be true of refrigerators and other appliances, but smartphones are much more prone to damage and some kind of accidental damage protection is always recommended.

How often should I upgrade?  

Apple, Samsung, Google would love it if you upgraded every year. But is that necessary?

Let’s assume you keep your phone in physically good condition and don’t need to replace it due to damage or excessive wear and tear. What’s a good upgrade cycle?

Well, if you want to keep your current phone as long as possible, the ultimate factor is security. After a few years, you will stop getting security updates, leaving you vulnerable, and limiting what you can do with your phone. That’s when you know it’s time to upgrade. For iPhones, this happens every 5-6 years, and for Android phones, the lifespan can be 3-5 years. Depending on the operating system and the device, after 5 years or so, you’ll be forced to update when your phone stops getting software support from the manufacturer.

Financially, there’s a case to be made for upgrading sooner. If your phone is in good condition, you can trade it in and get a new one every other year and offset the cost. After 2 years, you can usually get around 50% of the device’s value in trade, but if you wait 4 years, you’ll only get around 15% of the original purchase price back. Depending on the models you’re dealing with, trading in every 2 years could make more financial sense than keeping the device for longer.


All of this leaves out some big extra costs—adapters, cases, and screen protectors. We’re comparing prices of just devices, but there are always extras, like carrier activation fees, when you switch phones. So don’t immediately jump to updating every 2 years if you are someone who uses screen protectors and has a carrier who charges hefty activation fees.  

Cell phone plans  

All of our discussion so far has focused on the cost of the device itself and ignored cell phone carriers. How should they factor into the decision?

When you buy a cell phone through your carrier, you’re locked into a contract with them, usually for 2 years or more. This is not a good situation to get into. When you own your device outright, you’re free to shop around for the best deal from any carrier and switch whenever you want. You can even keep your same cell phone number when you switch.

We think this is really important. Having the flexibility to switch carriers lets you take advantage of deals that come your way, try alternative providers who offer much better rates, and gives you leverage to negotiate with your current carrier. They won’t make it easy for you to switch to a cheaper plan when they have you locked under a contract.

Keep your phone number  

We linked above to the FCC’s page on keeping your cell phone number, but we want to stress how important this is.

Ford Motor Credit and ZestFinance published a study that found people who keep the same number are a better credit risk than people who change cell phone numbers frequently. This means for that major creditor, keeping your number is like having a higher credit score than someone who switches.

Besides that, 2-factor authentication schemes typically tie your account security to your cell phone number. Therefore, if you get locked out of your online accounts, you could lose access if you have not updated your cellphone number with all your accounts. The bottom line is never change cell phone numbers if you can avoid it. Always port your current cell phone number over when you switch carriers.

Lowering Your Cell Phone Bills  

  • Own your own device. Don’t buy it on contract through the carrier, buy a device that is unlocked and free to be used anywhere.
  • Shop around. Compare rates with smaller carriers, including pre-paid plans.
  • Combine plans. Put everyone in the household on a family plan to get a better group rate.
  • Don’t buy redundant coverage. We think it’s a good idea financially to have an extended warranty or coverage for your device, but you don’t need to have coverage from both your carrier and the manufacturer. If you get AppleCare, for example, you don’t need to pay extra to your cell phone provider for insurance.
  • Get every discount you can. Your employer might have a group discount from a cell phone carrier. Ask about student discounts, veteran’s discounts… don’t leave anything on the table.
  • Pay automatically. Your carrier might offer a discount if you set up automatic payments. We believe in saving automatically, and if paying bills that way saves you some money, go for it.
  • Negotiate. If you need to cut costs, call your carrier and ask for a better rate. They’ll come up with some kind of option that will save you money, especially if you own your own device and are free to take your business elsewhere.  

Repairing Your Device  

The consumer’s “Right to Repair” is in the news lately, as advocates argue for a device owner’s legal right to repair their own products. Over the years it has gotten more difficult and expensive to repair smartphones, and independent repair shops and consumer advocates are making progress in arguing for legislation that will ensure everyone’s right to repair their own devices.  

On its face, the right to repair seems self-evident, and it’s very difficult to find anyone making a cogent argument against these rights.

However, the situation isn’t as clear-cut as advocates make it sound. Even though it seems self-evident that you should have the right to repair your own smartphone, can you actually do the job? Would you even know how to start, and would doing so really save you any money?

Apple now makes it possible to repair your own phone with OEM (Original Equipment Manufacturer) parts and the proper tools, diagnostics, and etc. For something like a battery replacement, you’d pay $69 to Apple to replace the battery, or pay a total of $96 to replace it yourself (this includes renting equipment, parts, and a credit for returning the old battery).

Taking your device to a 3rd-party repair facility might lower the cost, but what’s the trade-off? How can a 3rd party repair the device cheaper than Apple, or cheaper than you can by ordering parts yourself? Probably by using very cheap non-OEM parts, and offering no guarantees or warranties on the repair.

If you’ve got a very old device that you want to keep going, you might be able to get a cheap repair from a 3rd party but beware that the clock is ticking on those old devices, and you can’t expect much more life out of your 5-year-old phone.

Filing a Warranty Claim  

If you have a phone that is damaged or malfunctioning, take some steps to ensure you’ll get the best warranty service:  

  • Keep your paperwork. Have the original proof of purchase available if needed. Make sure this is the original receipt from the point of sale, not eBay or any 2nd-hand reseller. The receipt should have the serial number or IMEI number for the cell phone on it.
  • Contact the device manufacturer first. Don’t go to your carrier or a third party, start with the manufacturer. If you find the device is out of warranty or the issue is carrier-related, let the manufacturer refer you to the proper avenue of support.
  • Back up your data. Make sure you have a secure backup of your data in case the device needs to be erased or replaced. Do this before seeking service.
  • Know your passwords. If your device is locked to your account, you’ll need to disable activation lock to get service. Make sure you know your password and it works.

What to Do When Out of Warranty  

If your device’s warranty is expired and you don’t have extended coverage, consider some other options:    

  • Credit card coverage. If you bought the device with a credit card, see if your card extends the manufacturer’s warranty on purchases.
  • Check your insurance policy. Is your device covered by your homeowner’s or renter’s insurance policy?
  • Is there a recall or quality program in place? Ask the manufacturer is there are special repair programs or recalls in effect, or consult
  • What’s your phone worth? Find out if your device has any trade-in value in its current condition. Then find out what it will be worth after you have it fixed. Don’t spend way more than your phone is worth to have it repaired.  
  • Find a reputable 3rd party. Read online reviews and get personal recommendations from friends and family to find a 3rd party shop in your area. Compare their repair rates to what the manufacturer would charge, and ask what’s different about their repairs—what kinds of parts do they use, what guarantees do they offer, will they charge for shipping? If that 3rd party repair is drastically cheaper than a 1-st party repair, try to find out why.

The Bottom Line  

  • Smartphones are a necessity of life these days, and will become even more indispensable over time.  
  • Your best bet is to buy your own device directly—avoid buying used or through your carrier.  
  • To save money, buying a previous year’s model new is a good option.  
  • Upgrading is an individual decision; with trade-ins, you can upgrade frequently and not pay much extra, but a good smartphone could last at least 5 years if you take care of it. Do what makes the most financial sense to you.
  • That extended warranty is a good buy. If you opt not to get extra coverage, make sure you have enough saved in your emergency savings fund to replace your phone if necessary.  
  • Always be ready to negotiate a lower rate either with your carrier or by switching to a new one.  
  • Keep your current cell phone number whenever you switch to a new carrier.  
  • The Right to Repair is a good thing but may not realistically make repairs much more affordable.  

A smartphone and its associated cell phone plan are going to be part of almost everyone’s budget, and impossible to cut completely. Getting the best deal on your monthly cell phone bill and budgeting carefully to buy a reliable device is an important task.    

Article written by
Melinda Opperman
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined in 2003 and has over two decades of experience in the industry.

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