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 "They were starting to see all their friends get smartphones and
iPads," says Valecka, a financial planner at her own firm. "They
started lobbying hard."
She caved when they started 5th grade and got them basic cell
phones. The boy-and-girl twins are now 13 and in 7th grade. Their
upgrade to smartphones costs Valecka about $75 a month each.
Valecka is hardly alone in dealing with the emotional and financial
consequences of giving kids smartphones. A quarter of U.S. 8-and
9-year-olds now have them, according to the 2015 Parents, Kids &
Money survey by Baltimore money managers T. Rowe Price. And a new
study from Pew Research Center discovered that only 12 percent of
American teens age 13-17 do not have a cell phones of any type.
To make the correct call, though, do the math to be sure you are
ready for far-reaching consequences. After all, it's not just a
one-time purchase that parents are agreeing to, but a stiff monthly
charge that could last for many years to come.
If you get your 12-year-old a plan that costs, say, $50 a month,
that will set you back $4,200 though age 18. And that's not even
including any ancillary costs like equipment and upgrades, repairs
and app purchases. Data overages, especially if your kids are heavy
video watchers, could inflict significant extra damage.
Indeed, 23 percent of households report paying much more for their
kids' phone plans than they originally expected, according to a
study by the National Consumers League.
That doesn't have to be the case if you are thoughtful about how
your decisions will affect household finances. Here are some
suggestions:
1. Start with baby steps
A basic cell with phone and texting capability can be very
reasonable indeed; Sprint, for instance, offers a 'WeGo' starter
phone for only $9.99 a month.
There are also prepaid plans available, with varying restrictions on
minutes and data, and low-cost handsets. T-Mobile, for instance,
offers a $40-a-month prepaid plan with unlimited talk, text and data
on its own network, and 1 GB of nationwide LTE data. With hard
limits in place, parents are essentially saving themselves from any
unwanted bill surprises.
Consider it something of a trial period: If your kids prove
responsible with their new gadgets, and aren't constantly calling or
texting their buddies late into the night, then you can talk about
graduating to more elaborate phones and plans.
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When you are all ready, every major carrier offers a version of a
family share plan, like Verizon's More Everything and AT&T's Mobile
Share Value. Additional lines cost less money than standalone
packages, but contracts are often involved.
At that point the training wheels are off - and if you are sharing
your family data package with your teenager, be prepared to blow
through some usage limits.
2. Have the money talk
"The question that must always be discussed is, 'Who will pay for
what?'" says Mark La Spisa, a planner with Vermillion Financial in
South Barrington, Illinois. "It's critical to talk about it in
advance of a child receiving their first phone."
For an 8- or 9-year-old, it is unfair to expect anything beyond a
token contribution. But teens who have their own income from
part-time or summer work can start chipping in to cover part of the
bill.
Also consider who the phone is really benefiting. If it is mainly
for the parents' peace of mind, that's one thing. But if it is only
for their enjoyment, and parents are not deriving any benefit at
all, then "then they should be footing the bill," says
personal-finance expert Gail Vaz-Oxlade, author of "Money Rules".
3. Resist the lure of the constant upgrade
For her own kids, Vaz-Oxlade pays the bills, because she wants to
get in touch with them. But she draws the line at hopping on the
"hamster wheel" of getting them the latest-and-greatest gadgets on
the market. That's just throwing away money, in her opinion.
As a result she, her son and her daughter are all still using trusty
iPhone 4s they got a few years ago.
(Editing by Beth Pinsker and Frances Kerry)
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