OUR TECH SPENDING DUE FOR A TRIM.
Communications account for almost 2.5% of Canadian households’ average expenditures
T od Maffin spends hundreds of dollars each month on what can be called communications — cable bill, cellphone, high-speed Internet, cloud services. You name it, the Vancouver digital-marketing strategist has it.
But speaking around the globe at 40-plus conferences a year, Mr. Maffin says it’s worth every cent so he can stay on top of his business and his life.
“I probably pay about $150 a month for just cable and Internet,” he said in an interview via Skype from Mexico. Throw in a $200-a-month cellphone and he’s definitely on the high end of spending for technology needs.
Yet, he’s hardly unusual. Canadian households spent on average $1,731 in 2010 on communications, Statistics Canada says. That’s almost 2.5% of average household expenditures and does not include the $483 average expenditure on home entertainment, which would include the cable bill, among other things. Go back to 1990 and there was no Internet, Canadians were spending just $176 annually on cable and $544 on telephone.
With our savings rate in many cases down close to 0% of our income after being in the teens, the question is whether technology is eating into our retirement planning.
Scott Hannah, the executive director of the Vancouver-based Credit Counselling Society, asks clients to look at what they own in terms of technology as a percentage of their salary and see if it lines up with the rest of society. “You have to decide if it’s a want or if it’s a need,” Mr. Hannah said.
That’s a difficult line to walk. Take Mr. Maffin’s case. He found himself lucky enough to lose his iPad — the good fortune being he was considering getting a separate plan for it. “It’s an extra money grab,” he said, adding that before the loss he had stuck to using free WiFi.
There’s no question Mr. Maffin is an unusual case — for instance, he has a huge monthly bill for storing things in the so-called cloud. “Almost all my work is on the computer so if my data gets lost it can affect my business,” he says.
Are these really new costs or just “insurance,” as Mr. Maffin interestingly describes it — something many businesses and individuals have shelled out for years to cover potential losses.
He spends about $287 a month on his business services, but says it’s easily worth it because of programs that monitor his scheduling and emailing. “It’s pretty darn low for all the time I’m sav- ing,” Mr. Maffin says, adding that he might be eliminating the cost of an employee by doing all the tasks that person would be required to do electronically.
Tony Olvet, group vicepresident of research at market intelligence firm IDC Canada, said consumers have just become smarter about what services they will pick up, reducing in some areas to pay for access elsewhere.
“Take the growth of Netflix, that’s something they would have paid for with a subscription service,” Mr. Olvet said. “What we see is a shift in spending by Canadians.”
Cloud service is still what Mr. Olvet calls a “rounding error” when it comes to national spending, but even as it ramps up you have to ask yourself whether money to, for example, store photos online is any more expensive than buying huge photo albums and paying for the space to house them.
His group’s estimate for 2012 is Canadians will spend $11.4-billion on wireless service, $4.7-billion on Internet, $5.1-billion on home phone/ VoIP and $9.1-billion on pay TV like cable and satellite.
“I’m not an expert on this, but are we spending less on consumer durables and things like clothing now?” Mr. Olvet asked.
But one thing to consider as we continue to spend on technology is the “return” on the investment. Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce, wonders whether there is some sort of diminishing return when we are buying the latest gadgets. “Are we adding anything or just doing it differently?” he asked.
Translation: What does the iPhone 5 get you that iPhone 4 doesn’t have? It’s something to ask yourself as you are trying to save. Me? I’m still holding on to my iPhone 3.