Fitting cell phones into your budget

Date posted: November 14, 2012

Spending on cell phones has increased significantly in recent years, but people all have limited financial resources. If we’re spending more on cell phones, is there something we are no longer spending money for? N.C. State University economist Mike Walden responds.

“Well, you’re absolutely right …. I mean something has to give here. And we do have a new study that tried to directly answer your question that looked at data for 2007 to 2011. Now most of that time period was a recession. So, we’ll want to track this in the future.

“But what we found over that time period is, number one, spending on telephone services — most of that would be cell phones — did increase. It increased by 10 percent, which is a big increase over that time period.

“Where we saw the biggest declines in spending were for vehicle purchases, clothing, entertainment and eating out. Now, I should say vehicle purchases have actually come back in recent years. So, I think most of the decline in vehicle purchases over that 2007 to ’11 period was not due to people increasing their spending on cell phones, it was due to the recession.

“So, my guess is that what most families are doing is they are pulling back a little bit on their clothing expenditures, on their restaurant expenditures, and their entertainment spending in order to afford more on cell phones.”

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