Analog to Digital
For those of us in the Boomer age group, recent years have been a blur with changes in technology. It was even worse for our parents who lived through the Depression and WW2. Many of them had to retire or leave good paying jobs because tech changes were very stressful.
They had lived a simple life where things lasted, and they had learned to survive with less stuff. My mom was not impressed with the new digital phone we bought her. She had us leave her old black analog desk phone connected. Then, when she got a call, she would switch to the analog desk phone to talk. That phone was installed when they bought the house in 1959. And it was still in use when she died in 2014. Do you know anyone who has had the same phone for 55 years?
As a Boomer, I experienced tech changes in my career, as an accountant. I did enjoy the invention of the digital calculator. However, the introduction of personal computers for use in the office required me to learn keystroke commands in MS-DOS. That was prior to Windows and Apple system technology. Continuous changes in appearance, functionality, and software improvements. Continuous learning.
Most of us had to learn on the job. Classes were few or not readily available. Learning was hit and miss. Obviously, there are many more learning opportunities today. So, be thankful!
Flexible Youth
I know younger readers will scoff at what I am saying since they grew up with computers. They are more comfortable with and look forward to technological changes, such as the latest phone model.
It is good to be flexible about change. However, constant change reduces the life span of equipment you use for your daily activities, such as your phone, your tablet, or your computer.
With some limited use and a battery change, you might get two to five years out of your digital devices. The point is that technological change comes with a cost.
Budget for Tech Changes
We all like the changes in technology that make things easier and more convenient and more entertaining. The question is can we justify the cost to the benefit that we will experience in our lives? Which includes what we will give up getting it.
It concerns me sometimes when the battery goes out in my TV remote, and I want to change the channel. Did you know that there are manual controls on your TV?
Then, there is the email versus the post office. Electric vehicles versus fossil fuel vehicles. Streaming versus cable or antenna TV. And the list goes on.
Will your budget allow you to experience any of those tech changes? Technology from any source relates to someone trying to make a profit—to make a living. After all, they had a great idea!
However, what is the value to you? Do you value that tech more than food? More than education for better employment? More than paying off debt? Or saving for future travel? Or how about being able to retire, eventually?
I like my TV remote. I like my computer. However, I have had to give priority to saving for my future and limit my venture into new technology.
My limits are not your limits. You may be able to afford a lot more technology than me. If so, I am happy for you. That is, I am happy for you if you thought to take care of all your basic needs first.
Did you build a good savings reserve? Did you get your debt paid off or paid down to less than your savings reserve? Are you able to make a consistent contribution to your retirement account?
If you said yes to all those questions, then you are putting your priorities in good order.
Save on Technology
Knowing some simple facts can save you a lot of money. And technological changes have some financial facts to understand.
While having the latest version of a technology comes with bragging rights and making yourself feel good, that version may cost you twice as much as the previous version. You will be paying for the recovery of their research costs for that new technology.
After the research cost has been recovered, then the price will be reduced for mass distribution. That is why the older model is so much cheaper. An additional point to note is that the “bugs” in the software have been corrected!
So be cautious about the “new” technology and consider the savings on the “almost new” technology. Be a good steward over your financial needs and benefit from your ability to provide for your welfare.
Build a Mindset for Future Tech
My purpose for writing these blog posts is to help you build a better mindset for money. With that in mind, I would like you to make note of the technology you find useful in your daily living and its potential life span.
As you consider what your budget will allow you to spend, please add a reserve for replacing the digital tools in your household. And, by tools, I mean using your phone or tablet or computer to pay bills, source information, shopping, or to communicate. Of course, there are many other digital tools that you might find useful, such as a digital doorbell, etc.
List your digital devices and their expected useful lives. Then, do some research, some online “window shopping” to get an estimated replacement cost. That will give you the basis to set up a separate savings account to accumulate money to replace those items. The monthly contribution to that account will come from the replacement cost estimate divided by the expected remaining life, in months.
Qualify Your Tech
Most of you will ignore my advice to save for replacing your digital tools. You will just use the credit card and pay whatever it takes to get whatever you want.
Stop! What were you thinking? You may be cutting into your future possibilities to look good today.
With a little patience, you can get the desired technology, after the initial market introduction and research recovery, at a much lower cost. And the product will have been tested and improved over time.
Plus, by planning for your purchase and saving to provide for the purchase, you can save on interest by paying cash versus credit. The additional benefit of planning and saving comes from knowing when a price is a bargain and being able to take advantage of promotional sales or other lower cost opportunities.
Keep It Simple—Make It Last
The best approach to a good mindset for money is to keep it simple.
Building a budget requires you to give some thought to your current and your future needs. What are your current spending limits? What will you need to spend in the coming months or years? Do you have enough income? Can you afford newer technology? How much benefit could you get from that new technology and at what cost?
By saving for future spending and covering unexpected expenses, you will put yourself in a more secure position, with a positive cash flow.
Spend less than you make. Make saving a priority. Reduce or eliminate your use of debt. Be insured. Pay your taxes. Be thankful!
Keep it simple. Make it last!