Evolution in new technology – in our homes, our offices, in our cars, and even worn or carried on our persons – are supposed to bring abundant and inexpensive smart tech solutions to our every day lives, right? The cool new computing and media devices and options may be omnipotent, but surprisingly, the price tag on all of this “cheap” tech has gone up, not down.
A study released last year by the American Institute of Certified Public Accountants found some startling evidence that we’re spending far more for technological devices and services. Add it all up at the end of the month and tech is taking a bigger chunk out of the average household budget, even though we have more and cheaper tech options than ever.
In fact, Americans now spend the equivalent of about 17% of our average monthly mortgage or rent payments on technology every month. When you consider the rising cost of housing and especially rent (about 1/3 of our monthly incomes now go towards housing), that’s not an insignificant number.
The crazy thing is that those numbers just reflect tech devices like electronics and hardware, but don’t even account for services, subscriptions, media downloads, apps, etc. that boosts that price tag immeasurably.
Consider that we spent $4,014,210,000 on video streaming services in 2014!
What else might we spend money on?
- Satellite radio
- Pandora (3.8 million users at $5 a month)
- Rhapsody (2.5 million users at $5-$10 a month)
- Spotify (15 million users at $10 a month)
- Netflix (60 million users at $9.99 a month)
- Other websites subscriptions
- Mobile apps
- iTunes, Amazon, and other music and media download sites
- Apple TV
- Chromecast
- Smart phones
- Tablets
- Laptop computers
- Desktop computers
- Smart watches, glasses, etc. (not yet a significant part of our budgets – but it will be soon)
- Hard drives, media players and devices
- Video game systems
- Cell phone plans
- Wi-fi and high-speed internet
- Cable television
- Bundled cable and internet packages
Here are some interesting statistics on how America spends on technology and electronics:
Average monthly spending on electronics by age:
18-25 years $41.67
26-35 years $46.83
36-49 years $51.08
50-65 years $51.83
Average monthly spending on electronics by household type:
Single female, no kids $30.67
Single parent, with kids $41.83
Married, no kids $48.75
Single male, no kids $49.33
Married, with kids $56.58
Average monthly spending on electronics by income:
Below $20k $23.50
$20k-$40k $33
$40k-$50k $40.83
$50k-$75k $51.42
$75k-$100k $58.92
$100k-$125k $67.33
$125k+ $84.58
The top 10 cities in the country for average monthly spending on electronics:
San Jose, CA $91.08
Austin, TX $78.50
Nashville, TN $74.25
Madison, WI $73.58
Plano, TX $67.58
Arlington, VA $67.33
Seattle, WA $67.25
Oklahoma City, OK $63.58
U.S. Average $48
A big part of our spending is on broadband internet and cable televisions. In fact, research by the data consultant Gigaom reveals that we spend an average of $528 a year just on basic U.S. broadband Internet. Bundling that with home cable and telephone service now adds up to more than $128 per month, with those prices rising rapidly in the last few years.
“The total keeps creeping higher because people get in the habit of using things like satellite radio in their cars or more add-ons for their cable service, and all kinds of options,” says Jordan Amin, a certified public accountant and former head of the National CPA Financial Literacy Commission. “It’s easy to spend money.”
We shared with you the statistic that we spend about 17% of our mortgage or rent budget just on electronics every month (and far more on tech and services), but how else can we put the amount we’re spending in context?
The American Institute of Certified Public Accountants found that we roughly spend 5.5% of our total discretionary spending on technology (or far more if you add in those tech extras we mentioned.) By comparison, the average U.S. personal savings rate hovers a little below 4%, up only from all-time lows during the recession.
Quite possibly it’s time to start looking at slashing spending on tech, and padding our savings accounts first? That is, until that new, cool, cant-miss smart phone or laptop comes out.