Sure, it's sexy and the hottest gadget around, but if you don't have an iPhone, pat yourself on the back.
Avoiding first-generation, "must-have" gadgets, such as
much-hyped cell phone, when they first hit the market is a financially wise step. While your friends are flashing their new iPhone around trying to make you jealous, be satisfied with the knowledge that by waiting to purchase yours, you will get a higher-quality product for a lot less money. And your finances will be a lot healthier than those who went out and purchased one right away.
Here are five reasons that you are better off waiting before purchasing a first-generation gadget:
: First-generation gadgets are expensive. They often include new technology and components that initially come at a steep price. Over time, manufacturers will learn to produce these same components for less money, as well as make them more reliable. As the scale of units being produced increases, the overall costs of producing the gadget will fall. If you have the patience to wait about a year, you will likely see the price of the actual iPhone fall by as much as half.
Lack of competition
: New, must-have gadgets initially lack competition. As soon as they are a hit, however, other manufacturers look to build their own gadgets to compete in the market. That means that the new gadget will initially come with a premium price that's rarely discounted -- and why the iPhone can currently charge $499 to $599 and lock you into a two-year service contract, when other phones sell for a fraction of that price. Once the competition begins to offer alternatives, Apple will need to lower its prices and innovate to stay ahead of the competitive curve.
: People who purchase first-generation gadgets are paying a lot of money to work all the bugs out of the system for you. No matter how well they're tested before their release, first-generation gadgets will have numerous kinks that need to be worked out. These bugs can cost you both money and time, depending on how bad they are. As the gadget is tested by a large number of people, the company will get valuable feedback and make changes to resolve these problems in future generations of the gadget. The iPhone
already has more than 65 known bugs.
: Often, a new gadget comes with unexpected costs that its first buyers never considered. For example, most people who purchased the iPhone probably didn't consider the cost of
replacing its battery or the costs found in its
service contract fine print. These hidden costs soon surface, however, and they are either resolved or become well known enough that consumers can factor them into the true cost in newer generations of the product.
: When purchasing a gadget, most people don't stop spending money once they've bought it. Most will also purchase accessories for the gadget. Just like the first-generation gadgets themselves, accessories come at a premium. And just as the price of the gadget will fall with increased production, so too will the accessories. There are
plenty of accessories that will raise the cost for anyone purchasing an iPhone.
So if you've been feeling bad that you don't own an iPhone yet, don't.
Be proud of your patience. Take the money you didn't spend and place it into a retirement account.
It could add $17,670 to your savings over time -- even more if you include the media, accessories and hidden costs that you would have also paid for.
Instead, wait a year or two and you will be able to get a more powerful iPhone with a sexier design for a lot less money -- and you'll still have all that money you saved by waiting a bit.
Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.