You can save money on your phone and plan if you do a bit of homework before you buy.

It's never fun to pay more than you need to. And that includes your phone and plan you use with it.

Like most things, you can find a balance where you pay for what you actually use and need rather than pay what someone else thinks you need. That's the real secret to saving money on your phone and the service — your needs. Once you know what you need, what you want and where to get it you can save yourself a nice chunk of cash.

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Your phone

A new phone is the biggest single cash outlay, but only a small part of the total costs. It's not hard to spend $1,000 or so on a new phone, and there are plenty of folks who need the things a $1,000 phone can offer.

Know what you want, what you need, and the difference between the two.

While I'm not saying those phones aren't worth $1,000 (that's for you to decide), I am saying that you can probably find something that does exactly what you need for a lot less cash. The key is knowing what you need, what you don't need, and the difference between the two.

Make a list of what you expect to do with your phone before you check out what's available. Some of us only want to make calls and send texts. Others primarily use Facebook. Or love 3D games. You should also look at secondary features that aren't quite as important but still matter — how fast a critical bug will be fixed or how easy it would be to use the phone abroad. You know how you use the phone you have right now. If you don't yet have a smartphone, you know why you want one. Pay attention to your needs and don't be distracted by the latest shiny thing.

Where to buy? And how.

This is important, too. You can get a new phone online from places like Amazon or eBay, through a big-box store like Best Buy or CPW, or through a carrier's store. Buying a phone is really easy when so many places are selling. But not all shopping is equal.

Price is the obvious thing, but other factors like extra warranty or insurance costs come into play. Be sure to consider things you pay extra for and if they're worth it. I might not buy insurance from Amazon for a $199 phone, but I probably would for a $799 phone. Look at what's covered and what part of a replacement or repair fee you have to pay before you just click or say yes.

You can buy a phone almost anywhere and that means a lot for your wallet.

And don't forget about financing. Ideally, we all want to pay cash for things and be done with it but sometimes that's just not possible. If you need to finance a phone, never use your credit card (and its monthly interest fees) if you can find cheaper financing through the place you're buying it from. Most carriers will offer 0% financing as long as you stay with them for service, so if that's your plan it's not a bad idea. Just be mindful that finance fees can (and do) add up and your phone might cost a lot more than what it says on the sticker if you don't pay attention.

Know what you want to buy before you get started. Never walk into a store to buy a phone unless you know exactly what phone you want to buy. And if it's not available don't settle for something else just for the instant gratification. That's an easy way to pay too much for something you didn't really want or need.

Finally, don't forget about buying used. If you can find a reputable place that brokers used phones (in the U.S. we like Swappa) or know someone who is getting rid of their phone, don't be afraid to have a look. There are plenty of phones out there that are like-new but the owner is an enthusiast and wants to move on to the next thing. If you find one you might be able to get what you want for even less.

Your service

Like buying the phone, buying the service all comes down to what you need.

Not too long ago that meant visiting the local carrier store in the mall and signing up for a 24-month agreement that included hefty fees if you changed your mind. Some carriers still offer these sorts of postpaid plans and they work well for many, but there are plenty of other options now. Prepaid service can be great, especially if you've figured out just what you need as written above. But with so many different companies offering service today, it's important to consider a few things before you buy.

There are three things you really need to do before you buy service for your phone:

  • Know what service works best where you need it. This is the single most important thing to consider when you pay for cell service. We all want to get the cheapest option that fits our needs, but it never makes sense to pay for something that doesn't work when you need it to work. This is super important if you buy a phone that's not unlocked, and something you need to know before you give any money to any company. Ask your friends, check out the online coverage maps and think about the places you will be going.
  • Know what you use every month. If you make 300 minutes of voice calls and use 3GB of data on average each and every month, you should never pay more to get more than you need. Always leave yourself a little headroom (especially at first) by finding out how to add more minutes or data in the middle of the month or getting the next higher usage tier. And don't be afraid to change what you're paying for if you find out you are using more or less than you originally planned.
  • Know what service you're paying for. This sounds silly, but you need to know in advance if the cell service you're buying includes features like tethering or international texting. Many people just need the basics without any frills, but if you need any frills you need to check before you buy — you're not likely to get a refund.

More: These are all the ways you can save data and monitor your data usage

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If it ain't broke

The final and possibly most difficult thing to consider: do you really need something new or something different? You might be able to save some money by changing carriers or cutting back on the plan you're paying for, but that's not what we mean here. We're talking about throwing in the towel and moving on to something new.

Don't buy a new phone just because it's new.

There are plenty of good reasons to do so, but also plenty of reasons not to. You don't have to buy the newest thing or jump to a new platform, especially if the new features aren't important to you. Moving to the next big thing from Apple or Samsung might not be worthwhile and will probably cost you some serious cash. Sure, those are great phones and we all have a twinge of desire inside when we see the cool commercials, but if you're not going to use any of the things that make them stand out (and make them expensive) think before you leap.

Besides, you can probably buy the same phone next year for a lot less when early adopters move on and sell theirs!

A secret is you

As you can see, there's no real secret to saving a little money when you buy a phone or when you pay your bill each month. It just takes a little legwork on your part, but it can (and will) pay off in the long run. If you need to change a few things or you just want to save a few dollars every month, you won't go wrong if you follow this advice.