The Economics of: Phone Data
Last year, Mama Sasquatch wrote a post on how we have been evaluating our bills to save money. One of the main money sinks was our cellphone data plan. I wanted to expand on that particular bill to show you just how much money you can save by simply cutting your cell phone data plan. I know what you are thinking, “but I love my phone data…what about GPS? what about Facebook?”. We are addicted to our smartphones just like everyone else and I thought that I would miss it too, but I am here to say that I haven’t missed it once. The fact is, you are usually on your phone at home, in a familiar place that has free WI-FI, or have access to services like ShawOpen that make WI-FI ubiquitous.
In 2014 before we turned our data plans off we were paying an average of $175 a month for our family phone plan. We are now paying an average of $65 a month for our phone plan. That simple change is a savings of $110 a month! A friend commented that $110 of savings was too little of an amount saved to make a difference and motivate them to cancel their data. We wanted to do the math to show how a little goes a long way. Lets say we are 25 years old and wanted to retire at 65. That gives us 40 years of $110 monthly savings. If we invested it at 5% interest we would have a whooping $167,428.49. That’s an unreal amount of money for something that is a luxury service and most likely, a service you won’t even miss. But here is the fun stuff. MoneySense Canada states that the average retiree spends $28,800 a year. Since there are 2 of us, that means that when we retire we should be living off a minimum of $57,600 annually. Cancelling our data plan has given us nearly 3 years of retirement income, which is insane!
Now you might be thinking how does this work for an individual? I checked out the cheapest talk and text plan offered by Telus which is $35 a month. The cheapest Talk and data plan is $85. By cancelling the data you could save $50 a month. Seems like nothing? Using the same information from above, $50 a month invested at 5% for 40 years gives you: $76,103.86 in savings. Once again, nearly 3 years of retirement income based on an individual retiree spending $28,800 a year. Small changes do go a long way and sometimes it requires going against the grain of what everyone else is doing but in the end the payoff is huge.