All those songs, games, apps, mobile connections, and movie downloads are taking a toll on Americans' wallets, with more than half of US adults saying technology has made it easier to spend money and only 3 percent saying it has made it easier to save, according to a survey conducted for the American Institute of CPAs (AICPA) by Harris Interactive for National Financial Literacy Month.
The national phone poll of 1,005 adults found that Americans who subscribe to digital services spend an average of $166 each month for cable TV, home Internet access, mobile phone service, and digital subscriptions like satellite radio and streaming video – the equivalent of 17 percent of their monthly rent or mortgage payment. Those who download songs, apps, and other products spend an additional $38 per month, on average.
Given those expenses, it's no wonder that 56 percent of Americans believe that technology has made it easier to spend money, and only three out of 100 say it has made it easier to save. Thirty-seven percent are split on the issue, saying technology has made it easier to both spend and save.
"Our gadgets and connections can bring benefits like mobility and efficiency", said Jordan Amin, chairman of the National CPA Financial Literacy Commission. "But they can also bring financial challenges, taking money that could go to savings, for instance, or contributing to credit card debt. We have to mind these expenses and budget for them to ensure the benefits outweigh the costs."
Here are three tips from the National CPA Financial Literacy Commission on managing digital expenses:
1. Set a budget. Decide how much you're willing to spend each month on digital services, apps, and content. Not sure where to start? Look at how much you've spent on technology purchases in previous months and how that compares with your overall spending and saving. Too much? Just right? That will give you a baseline for determining an ideal budget for such purchases.
2. Set up an account. Since many digital purchases are automatically drafted from bank accounts or charged to credit cards, it can be difficult to keep track of spending. To help, set up a separate checking account or credit card account – with a low limit – for your digital purchases. Set e-mail or text message alerts to let you know when your balance is near your budgeted threshold. If you use a credit card, be sure to pay off the balance each month.
3. Evaluate. Regularly evaluate your spending on digital products – especially subscription services with recurring fees. Are you using the services enough to justify the expense? At least yearly, you should also look at spending on technology infrastructure, such as cell phones and Internet connections. Are there new features, bundles, or technologies that could lower your total bill?
The CPA profession has a comprehensive financial literacy program – 360 Degrees of Financial Literacy – to help Americans build budgets, boost savings, and achieve long-term financial success. The 360 Degrees of Financial Literacy website is the centerpiece of the program, offering tools, tips, and advice to help Americans manage their financial needs during ten life stages, from childhood to retirement.
Since 2007, the AICPA has conducted an annual survey of Americans to determine their top financial concerns and assess their financial well-being. Additional findings from this survey include:
- Four in ten adults, or 41 percent, download and pay for digital products or services.
- Based on those who download each type of content, Americans buy an average of five digital songs per month, five movies or TV shows, two apps, two games, and two e-books.
- Seven in ten adults, 69 percent, with annual household incomes of $100,000 or more download and pay for digital products and services. This is significantly higher than the roughly one quarter of those, 28 percent, with annual household incomes of less than $35,000.
- If facing a financial crunch, Americans would rather change what they eat than give up their cell phones, downloads, or digital TV services. When asked to choose the one action they would most likely take when finances are tight: 41 percent said they would cut back on eating out, 20 percent said they would cut off cable TV, 8 percent said they would end cell phone service, and 8 percent said they would stop downloading songs and digital products.
Source: AICPA Press Release