The innovations coming out of this past month's Consumer Electronics Show, from new video-streaming services and ultrahigh-definition TVs to cable boxes with better search functions, might have you lusting after the latest gadgets and services.
But before you buy another product, consider this: Expenditures on home technology have to come from somewhere. All those bells and whistles—from data plans for smartphones to digital video recorders—are taking an increasing chunk of the family budget, even as household spending has been relatively flat.
The average American household spent an estimated $2,160 in 2011 for telephone, cellphone, Internet and telephone services, the most recent data available, according to the U.S. Bureau of Labor Statistics. That is up 21% from 2006 and equal to 4.4% of the family budget.
Households with an income of at least $100,000 spent more than $3,100 on average, or more than $250 a month, up 17% since 2006—and close to the amount those households spent on clothing. In reality, your technology spending is probably much higher because those averages include people who don't use these services at all.
The first step is to coldly assess your needs and determine whether you really need a cellphone, a home phone, Internet and pay television all at once.
If you can ditch any of these—and the growing ranks of "cord cutters" living without home telephones and cable television suggest it is possible—you can save easily by paring back.
For instance, 36% of U.S. households were using only wireless phones as of the first half of 2012, up from 23% in early 2009, according to the Centers for Disease Control and Prevention, which tracks phone use so that it can contact participants in its health surveys.
If you want the full gamut of services, you can save by bundling some of them together or, if you already bundle, by playing new offers against your current provider.
Simply threatening to change providers could get you a lower monthly rate, a free premium channel or free installation of a new service. Just take careful notes to be sure the billing is correct later.
For many families, the biggest—and perhaps the most essential—expense is the cellphone, especially as smartphones have become ubiquitous. The average individual plan last year cost $71 a month, up 6% since 2009, while the average family plan cost $139, up 9.4%, according to J.D. Power and Associates.
Television is getting pricier, too. NPD Group says the average cost of pay TV, such as cable and satellite, has been climbing 6% a year, to $86 a month, and the firm expects prices to keep climbing.
Providers want to sell you as many services as possible, which is why they are bundling the pieces together or giving big discounts to customers who ask.
The savings can be substantial. Verizon Communications says customers buying a package of its FiOS phone, Internet and television services could save close to 50% off the cost of buying them individually.
At AT&T, a U-verse bundle of phone service, a 360-channel TV package and speedy Internet will save you 21% over two years, with a one-year contract; the company's wireless customers get an additional $5 discount.
How much speed do you need? If you just surf the Web and use email, up to three to six mbps should be enough. If you watch videos and download music, photos and movies, you will want 15 to 25 mbps.
Basic DSL at speeds of less than one mbps, adequate for email and Web surfing, can cost $20 to $25 a month at Verizon and AT&T, respectively (or less with a first-year promotional offer). Higher DSL speeds that are better for streaming music and watching videos can cost up to $30 a month at Verizon and $43 at AT&T. (Prices often vary by region.)
AT&T charges the same $43 a month for up to six mbps for its digital U-verse service, though for $5 or $10 a month more, users can double or triple their speed. Verizon's fiber-optic FiOS service, by contrast, is about $70 a month for up to 15 mbps, with a contract.
For those willing to negotiate or switch services, deals can be had, at least for a year or two, especially if you also are buying multiple services. Be realistic about what you need; there isn't a reason to pay for packages of channels you never watch.