How Much Is Your Smart Phone Data Plan Really Costing You?

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The following was originally published as a guest post on Free Money Finance written by me on January 20th, 2011.

Recently, I took a trip to the lovely land of Verizon Wireless.

I embarked on this journey due to the fact that my family’s chocolate lab, Portia, had chewed up my cell phone the day before, after it accidentally fell out of my pocket. Poor phone!

Needless to say – I was desperately in need of a new phone.

Before I elaborate further on the story, one thing you should know about me is that one of the things that I feel is unnecessary in my life is a smart phone (i.e. a phone with internet, chat, Facebook, etc capability). I am a big fan of regular phone calls and text messaging, but I realize that with my personality, I would be way too addicted to a smart phone if I got it. Just think – a PF blogger having 24/7 access to their email and blog. My friends would never let me hear the end of it!

Nevertheless, when I entered the store, I was amazed at how numerous the options for smart phones were (Droid, HTC, Blackberry, Palm – just to name a few that I saw). In fact, the options were so numerous that upon checking out, I inquired with the clerk as to if she could give me an estimate of the percentage of people that come in using smart phones.

She mentioned that definitely more than half of people are using them currently. This definitely wasn’t very surprising, considering how common it is to see people using their smart phones in public.

However, this got me thinking – just how much is having a smart phone / data internet plan costing consumers in the immediate and long term? Let’s take a look, shall we?

Smart Phone Data Plan Cost Analysis

According to Verizon’s website, an unlimited data plan (what I hear from my friends that most people choose) costs $30 per month on top of the regular phone/calling charges. That’s a whopping $360 per year! 

In order to make this analysis more applicable to real life, let’s consider that our imaginary friend, Jim, is a tech-savvy 25 year old. He’s in the generation that grew up when social networking was becoming popular. He lives and breathes Facebook, Digg, Twitter – the works!
We’ll then consider two competing scenarios.
Scenario 1 – Jim pays the $30 per month every year from now until he retires at age 65.
Scenario 2 – Jim instead saves the $30 per month every year, and invests the savings in a Total Market index mutual fund. His savings in this fund will be assumed to earn 10% per year in interest.
  • In Scenario 1, the total cost of Jim’s data plan is $14,760.00. Quite astounding if you ask me!
  • In Scenario 2, not only does Jim avoid this ~$15k expenditure, but his savings accumulate to $175,626.65 as a result of the miracle of compound interest.
  • Note: for the specific calculations performed to obtain these numbers, please see the Google Docs spreadsheet below at the link below. Simply save a copy to your computer to allow for editing the file.

The final step in this analysis is to try to make some sense out of these numbers. Clearly, $14,760 is a significant sum of money to be spending over the years for a data plan. Furthermore, if compound interest is added in to the mix, the magnitude of the savings amounts to something along the lines of a down-payment on a person’s house during his/her retirement years.
While for me personally, having a smart phone data plan isn’t worth it, I think it is up to everyone to determine individually whether having a data plan provides enough value in your life. I know that for some of my friends, their smart phone is a “part” of their life – something they wouldn’t want to do without.
The key is to know how much it is truly costing you, and to make your respective decision from there. 
So, I leave you with a final question – Is it worth it to you? Share your thoughts by commenting below!

***Photo courtesy of


  1. Recently I moved to prepaid with a basic brick phone and I couldn't be happier!

    I didn't really have a need for a smartphone as I'm without access to a computer only a few hours a day so decided the urge to buy an iPhone and live with iEnvy but with a heavier wallet!! 🙂
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  2. Definitely a good point here, interesting. At the very least, many people can get by with the $15 plan for half the data transfer, I used to pay the $30 until I realized I didnt need that much
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  3. Edwin@CashTheChecks says:

    For me I use my iPhone all the time, even for work relating things like checking on feeds, writing comments and even composing posts. So for me it is worth it.
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    • Good to hear Edwin! My goal for the post was for people to just take a step back and really think about if the cost of having a smart phone is worth it for them. Sounds like it is for you!
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  4. I can't imagine being without my smartphone, but I am planning to switch from Verizon to Virgin Mobile as soon as I can without penalty.
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  5. Yes, you can get unlimited email, text and web browsing for as low as $25 with 300 minutes and a max of $60 a month for unlimited everything.
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    • Those are good prices! I'll have to look in to that if I ever decide to upgrade in to the 21st century smart phone revolution!
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  6. I personally wouldn’t pay for an unlimited data plan. I was lucky enough to get a limited data plan before they went extinct. If you pay for internet at home and on your phone it can get pricey. And since my phone works on wifi, I can limit my data use when at home or in a place with wifi.

  7. Wow! I never thought about the real cost of my data plan before. Those numbers are really eye-opening…

  8. The Money Mail says:

    @ Lori: The compounding really kicks, I have to apply this to the cable bill and land line bills to see how much

    One way to save on data plan is to use wifi in cafes and other locations.

  9. This is a great article. One thing that now makes data plans a reality for some is the fact that they have significantly dropped in price. T-mobile has an unlimited data, unlimited text and 100 minute plan for $30. If mostly what you use is data & texts, this could enable that while saving you thousands over the years…

    For me, the data plan is worth it, because I don’t pay full price. I use it to save money on purchases by comparison shopping, check reviews on products to ensure I am not buying a dud, look up rebate offers, clip coupons, get directions (save gas and time), and many other things.

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