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I Can Afford The New iPhone And You Can Too

The new iPhone just came out and folks are lining up to get their hands on it.  While everyone else rejoices about the new phone, it seems like we in the personal finance community collectively shake our heads.  I recently read a few articles about the financial evils of buying a new phone and found this puzzling.  I’ve never thought of a new phone as a financial sinkhole.  And when you do the math, it’s not very expensive if you plan it out in advance.  So why are people saying not to upgrade the single most important piece of technology most of us own?

Of course, we’re all a pretty frugal bunch.  There’s definitely no shortage of things that personal finance folks will tell you not to buy.  You’ll never catch us buying a coffee from Starbucks, watching NFL football with our cable TV subscription, or buying a sandwich at our local deli during the work day.  These are about the biggest personal finance sins one can commit, and a surefire way to make it so you’ll never be able to retire!  Or so we’re told.

From what I’ve been reading, it seems like we can add another unforgivable sin to the personal finance world: upgrading your phone.  I guess we can call it the new latte factor.

Processed with VSCOcam with g2 preset
Enjoy that cup, because you can kiss your retirement goodbye.

I’m not going to buy the new iPhone right away, but I will buy it as soon as I have the money set aside in my budget.  I currently have a pretty good iPhone 6, so why am I committing the unforgivable sin of buying a new, snazzy iPhone 7?  I’ll tell you why.  It’s because I value a new phone a lot and it doesn’t cost that much.  I can afford the new iPhone and I bet you can too. 

How Much Will The iPhone 7 Cost You?

According to the prices I found online, here’s the cost of the iPhone 7 and the iPhone 7 Plus.

  • iPhone 7: $649 (32 gb); $749 (128 gb); $840 (256 gb)
  • iPhone 7 Plus: $769 (32 gb); $869 (128 gb); $969 (256 gb)

To make things simple, we’re looking at an average cost of probably around $800 depending on which model you want.  If you’re buying a new phone every two years, that’s a grand total of $400 per year or about $33 or $34 per month.

That $33 per month is not the reason you won’t be financially independent!  I don’t care what anyone tells you.  Saving $33 per month is not going to get you to the finish line.

But What About Compound Interest?

I can already see what the phone naysayers are saying.  $33 per month is about $400 per year.  If you put away $400 per year for 30 years at an average return of 7%, you get (cue drum roll here)….$40,429.22!  Oh my goodness!  That phone you’ve been buying every 2 years cost you over $40,000!  (As an FYI, you would have put away $12,000 of your own money if you had saved that $400 every year for 30 years).

Here’s my problem with this type of thinking.  You can do this type of calculation with anything you want.

Do you drive to work?  According to one study, 70% of people commute more than 6 miles to work.  If we assume the low end of 6 miles each way at the IRS rate of 54 cents per mile, that’s $6.48 per day driving to work.  Do that five days per week and that’s around $32 per week you spend to drive to work, not including the cost of gas.  That’s way more than the cost of a new phone!

Oh my goodness!  You better start walking to work or hop on the bus, because if you don’t, you’ll never retire!  Better get used to working for 50 years.

Really, you can do this type of thinking with anything.  Are you sure you couldn’t cut your grocery bill down $33 per month.  Do you spend $33 per month hanging out with friends?  Buying anything for anybody?  Traveling?  Camping?  That’s my problem with this type of formulation.  I can point to any particular thing you buy and make a compound interest calculation over 30 years and tell you how much money you are wasting.

It’s Not An Either-Or Proposition.

The point is, we all make choices about what we value and what we want to buy.  If you value a new phone and can afford it, by all means, go buy it!  If you value something else, by all means, go buy that!

It’s not a choice between financial independence and toiling forever at work.  You can strive for financial independence, but still buy things you care about.  There’s a concept called the “false dilemma”, in which something is presented as an either-or choice, when in reality, there are multiple choices.  (You can read a summary on Wikipedia here).

I think the same is true here.  Like the famous latte factor, we personal finance people like to pick one thing, say how dumb it is to buy it, and then point to that as a reason why people can’t reach their financial goals.  But it’s not an either-or proposition.  You can buy a latte every single day, or buy the latest phone every two years, yet still also save money and reach your financial goals.

One path leads to financial independence and the other leads to years of toiling and drudgery, right?

This is true even if you’re making a normal amount of money.  Let’s say you’re making around $40,000 per year, which I’d argue is pretty low for a regular, college educated person.  That $400 per year for a new phone represents just 1% of your income.  Most people who are college educated and advancing in their careers are going to be making more than that, so more than likely, that $400 per year is going to be even less than 1% of your income.

Can you really not spare 1% of your income to buy that phone, if you really want it and find value in it?  You don’t have $33 to spare per month?  If you plan it out in advance, I guarantee you that you can afford it, if that’s something you really want.

If You Can’t Find The Money, Then Make More Money.

Okay, lets say you really don’t have a single cent to spare in your budget.  In that case, don’t buy the phone if you really can’t afford it.  Instead, use the money in ways that bring you more value.

But if you really want to buy the new iPhone, you have another solution.  Make more money!  Can you make a mere $33 per month?  I can name three ways that take up very little time:

  1. Rent out a room on Airbnb for 1 night per month.  Actually, you’d probably only need to rent out a room 1 night every other month or so in order to have enough to buy a new iPhone every 2 years.  Can you let someone stay in your house 8 days per year?  As an added benefit, you’ll have an incentive to keep your house clean for at least 8 days per year.
  2. Dog sit a dog 2 days per month.  I’ve already detailed how I make money by pet sitting other people’s dogs a few times per month.  Can you take one weekend per month and watch someone’s dog for them?  Bonus: you get to play with a dog for a weekend.
  3. Make food deliveries 2 or 3 hours per month.  This is coming in a future post, but you can easily make $33 per month by just hopping on your bike and making food deliveries on Postmates.  Plus, you’ll get some exercise biking around town.  If you aren’t exercising 2 or 3 hours per month…well, I think I’d recommend hopping on your bike and getting some exercise because it’ll cost you much more than $33 per month in the future if you aren’t staying healthy.

There’s plenty of other options too.  You can probably flip some trash that you find in the street and make $33 per month.  I know I’ve been able to do that.

The point is, $33 per month is not a large amount.  If you really don’t want to spend $33 per month on a phone, then that’s perfectly fine.  But don’t tell me you couldn’t find a way to make yourself $33 per month on the side and buy your phone with that money, if you really wanted.

Make Active Choices About What You Value

The point of this post isn’t to say you need to buy the new iPhone.  My mom isn’t buying the new iPhone.  She only uses her phone to text and call people and occasionally go on Facebook.  You think a new iPhone matters to her?  She’ll stick with her hand me down iPhone 5s until the battery just doesn’t work anymore.

But me, I use my phone almost every minute of every day.  I’m constantly on it.  (Whether that’s good for me or not is another story).  I download every new app I see.  I have 5 gb worth of podcasts sitting on my phone that I’m trying to catch up on.  It’s a central part of my life.

It’s not about it being cool.  I don’t really care if having my new iPhone makes me look cooler.  Heck, my phone goes in a case right away, so no one can even tell what type of phone I have.  What I care about is having the fastest and best phone out there because I use this piece of property more than anything else in my life and I value it a lot.

And yes, your phone does get slower.  The operating system gets updated for a new phone.  New apps get introduced that are optimized for the new operating system.  Your phone will get noticeably slower if you are an iPhone power user like myself.


So if you want something, figure out how you can afford it and go buy it.  Go buy the new iPhone if you want it.  Go buy yourself a latte every day if that’s what you value.

The point is, choose the things you value and don’t let anyone else tell you what you should or should not buy.  It’s not an either-or decision.  You can still save while spending on the things you find important, as long as you plan it in advance.

I’ve planned ahead.  I set aside money each month so that I can buy the latest and greatest phone when it comes out.  The new iPhone is not going to make it so that I can’t reach my financial goals, and my guess is, it won’t make it so you can’t reach your goals either.


  1. DS DS

    Extreme frugality is certainly one way to build a retirement nest egg, but it sure is a tough way to go through life. Saving/investing more in combination with earning more is much more enjoyable.

    Enjoy the iPhone!

    • Thanks DS. And it’s not even about extreme frugality as much as it is knowing what you value and what you don’t. We all spend money on things, whether you know it or not. It’s just easy to pick on certain things that we all see people buy.

  2. Excellent post on deciding what you truly value in life. If someone’s desire is to keep up with the Jones than maybe they need to reevaluate what your values are. But if they absolutely love the iPhone and it’s something they value then go buy it.

    Extreme frugality is a badge that some people love to wear but at what expense. Like everything in life there needs to be a balance between savings and spending.

    Personally I like to keep my iPhone until it dies but I love to spend money eating great BBQ with friends once a week. I’m sure the BBQ would come out to more than the iPhone’s monthly plan it’s what I currently value.

    • Exactly. If you don’t use the phone, then of course, hang onto it until it dies! And there’s nothing wrong with going to eat BBQ once a week. That’s what you value and you’ve got it in your budget as something you can afford. As long as you’re reaching your financial goals too, then there’s nothing wrong with it.

  3. I like that you provide your perspective on the new iPhone but I will have to take a contrarian approach here. I’m a big fan of buying things for value, not price, but I don’t know if the value is worth it, just for me personally.

    I drive a little under 2 miles to go to work plus 2 miles back and my car is so fuel efficient that I spend like $20 on gas every month and a half. I’ve made a conscious decision to get a fuel efficient car and live close to work that set myself up for frugality and can’t see going to buy the latest iPhone because my 5s does me good. Just a personal opinion that I have!

    • Definitely a good idea to buy things based on if the value is worth it to you. If the 5s does exactly what you want, then of course you want to stick with it. You just have to pick whats important to you and what isn’t, and plan for those purchases.

  4. FP, as someone wearing a new series 2 Apple watch, I’m not gonna argue with you…haha.

    In fact, I’m gonna upgrade my iPhone 6 in mid-November to a 7 also! 🙂

    The truth is that one purchase won’t make or break you like you said. Rather it’s the long term habits that will ultimately dictate your financial situation.

    Finally, I love your idea to make more money!!! Such a novel idea that shouldn’t be novel.

    How are you liking iOS 10?

    • Hi Michael! Exactly right. We all have things we spend money on, no matter what anyone says. It’s up to you to decide which things you want, and which things you don’t want. That’s why I don’t think its ever wise to make blanket statements that buying a certain type of thing is simply wrong or will destroy your wealth. A new phone isn’t a necessity for everyone. But by the same token, it’s definitely not something that is worthless to everyone. It really depends on how you use the item. And if you value something, you can divide up the cost of it and figure out a way to get it.

      And I’m totally not liking iOS 10, but probably just need time to get used to it.

  5. I suppose the joy of financial independence (or even just financial awareness) is knowing what makes you happy and what you want. You definitely don’t have to be rocking the Nokia 3310 to still count yourself as kind of frugal.

    Having the latest iPhone is a way better financial choice than the latest Mercedes. At the moment my wife and I have 3 year old (and counting) HTC One XLs – they work fine for us, so we’ll keep them for longer.


    • Yep. If your phone still works for you and you don’t need the newest phone, of course hang onto that phone! $33 per month for a new phone is not going to be the reason someone doesn’t reach financial independence. Now, if someone is spending all of their money buying things they don’t need and don’t care about, then that’s a different story. You can’t buy everything you want, but you can definitely buy the most important things you want. For myself, my phone is literally my most used item. Why would I not make room in my budget to make sure that I have the fastest and most high quality phone? Of course, this means I can’t buy the fanciest shoes, or the nicest TV, or countless other things. But that’s my own personal decision I made.

  6. Here is one for ya, the new iphone 7 costs over €1.000 here in the Netherlands, and albeit we could afford it, in our case we find it too expensive and without the added value to our life. So won’t buy it 😉

    But you make a very valid point, if something does add value to your life, and you can financially obtain it without causing a major hiccup, definitely go for it!

    • That’s definitely pretty expensive, but something you could definitely afford IF it was something you valued. Divide that 1000 euros over two years, and suddenly, it’s not all that expensive. It’s about picking the things you value and dumping the things you don’t value. But, in my opinion, we can’t make a blanket statement that everyone buying a new phone is wasting their money.

  7. Great insight into the central item of my life. When I was a student I had a laptop chained to my wrist. I lived and died attached to that thing.

    Now that I’m a cop and father my phone is my second brain. Everyone’s schedule, my court dates, email, personal finances, shopping, and blog all run off of my humble phone. I use a Bluetooth keyboard for serious typing. The laptop, haven’t touched it since I finished my masters degree.

    If you use it for more than YouTube and Candy Crush, it makes sense to invest in the one tool useful in streamlining the rest of your life.

    • Exactly right Jack. The important thing is we can’t put universal value judgments on what people purchase. A phone might be important for you and me. Might be less so for our parents. Just as a fancy camera or something might be important for a photographer, or a fancy laptop might be important for a computer programmer. We can’t just say, buying any one particular item is a waste of money because we all use and value things differently. What matters isn’t what you are buying, but are you using your money in a way that aligns with what you value.

  8. Great post! Too many people say “I work hard, so I deserve nice things.” No one owes you anything. If you want something, find a way to earn it.

    Personally, I’m not a tech guy or gadget guy, but I am a golfer and have had my eye on a new set of custom made Muira clubs. Do I need them? No. But I want them and will find a way through side hustles to earn them so I don’t have to take away from my money set aside for investing and saving.

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