Budgeting Tips for Saving Money on Cell Phone Plans

While the cell phone industry will tell you that a typical monthly bill is about $47 as of 2012, many people are paying more than that -- and depending on their needs, it may be too much. There are a few actions that you can take to save money on your cell phone plan today. Sometimes to save money in the long run, you have to consider all the angles, such as whether switching carriers is worth the money you'll spend on a new phone.

Cut Unnecessary Services

Take a closer look at your phone bill. "If you aren't talking as much as you used to, you might not need so many minutes," says CPA Edward Janiga. Switching from an unlimited plan to one with a set number of minutes can save money every month. Many people find that they use their phones to text, check e-mail, map a location or browse the Internet -- none of which use their minutes. If your phone has web access, another service you might not need is 411. Each old-school 411 call might cost you a couple of bucks -- but you can save money by getting in the habit of looking up phone numbers for free online.

Take a Tax Deduction

If you use your cell phone for work or as a part of your business or independent contracting gig, you might be able to save money by writing off some of your cell phone bill as a business expense. "If you're an employee, you'll need to itemize deductions to write off your cell phone," explains Janiga. "But if you use it as a part of a small business, even if it's a side job mowing lawns, you can subtract it right from the income you report on your Schedule C." If you write off your cell phone, make sure that you're only writing off your business use -- "the IRS might not believe you if you tell them you only use your cell phone for business," adds Janiga.

Compare Carriers for the Best Value

Some carriers are more expensive than others for similar service. Based on similar plans, you might find that one major carrier charges $70, while at the other end of the spectrum another carrier charges $120. Other cell phone companies might offer rates between the two, with just enough subtle differences among plans that it's hard to compare them. Prices can change over time, too, but certain companies consistently are known for offering consistently lower rates than others, and it pays to do your homework. One warning: not all phones work on all networks, and you need to factor the cost of buying a phone when you are calculating any savings you hope to realize. Although it may not be the latest model, often you can find family or friends who are willing to sell their older model phone -- so you don't necessarily have to buy a new $600 phone to save a few dollars a month.

Prepaid Service

Edward Janiga notes that "sometimes you have to spend money to save money," and when it comes to cell phone plans, he's right. Some of the least expensive plans are prepaid plans that require you to pay the entire cost of your phone. Since the carrier isn't subsidizing the phones for these types of plans, it can afford to provide less expensive monthly service -- and you're not locked into a monthly plan, either. Some carriers, such as T-Mobile, are beginning to branch out from the simple prepaid plan -- which often requires users to buy minutes or renew monthly -- to offering regular ongoing plans with non-subsidized phones. These are at a lower monthly cost and include more options, such as the ability to add family members to your plan or to make small monthly payments on the latest phone rather than pay for it all at once.

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