We rarely go to the bank these days, as financial transactions can be made via mobile banking. Groceries and clothing can be ordered online; digital books can be found and read any time; we can even pay our bills can easily.

I had been using my smartphone for the last six years. It was even older than my daughters. However, after thinking long and hard, I finally decided to replace it with a new one.

There were three reasons for this: the battery could no longer be fully recharged, even after six hours and the battery power dropped to 40 percent after an hour of use; the hardware could not accommodate the latest operating system (OS) updates and thereby limited app use; and the most frustrating of all, it crashed a lot.

A smartphone is a luxury good and can be pricey. Recklessly buying a new one may even hurt your wallet more than benefiting you in the long term. Here are the four steps I followed in picking a new phone.

Read also: Ten most popular phones of all time

1. Define your needs, not your wants

Many phone brands and models are available in the market, and if you do not have a clear idea of what you need, then chances are good that you'll end up with the most sophisticated phone – one that you may not need and the features of which you may not be aware.

So before going to the shops, I defined my solid needs: a phone that can accommodate my writing hobby, find art and reading materials, and can run casual games. Clearly, I did not need a phone with an HD camera, a big storage capacity or high RAM, which greatly narrowed down my choices.

2. Stay within budget

In the first step, you are able to narrow down your choices, but honestly, the options are still overwhelming. To narrow them down even further, it is time to ask yourself a painful question that will put you firmly back in reality: What is your budget?

This is a very personal question and no one will have the same answer. Think and analyze everything carefully before coming up with a figure. What are my living conditions? How much savings do I have? Do I have any installments? What will happen in a year?

Essentially, the number you come up with should not hurt your finances.

In my case, after analyzing everything, I decided that my budget was Rp 5 million (US$347), tops.

3. Set (phone) life expectancy

I am not the type to upgrade my phone every time a new model comes out. Every phone I have ever bought is expected to last a long time, at least five years, because that is a typical economic value for an electronic device, it can be less, but for me this is it. If a phone lasts longer than five years, it's a plus.

I did a little research on which brands have the longest life expectancy and, for reassurance, I also asked friends and colleagues. In the end, only one brand survived this selection process.

Read also: Seven vintage mobile phones that are worth a fortune today

4. Look for promotional offers

After following the three previous steps, I found a phone that matched all the criteria. Finally, I never forget to look for three promotional offers before finalizing my purchase.

First, cashback: no matter how small, it helps lower the price. Fortunately, there was a Rp 500,000 cashback for my selected phone, which lowered its price from Rp 4.8 million to Rp 4.3 million.

Second, 0 percent installment, which is a good way to ease our daily cash flow without incurring any additional burdens. Fortunately, the phone I had selected allowed for a 0 percent installment of up to 12 months. Personally, 12 months is too long, so I chose the six-month installment plan.

Third, is something I discovered recently: the data package bundle. By combining a new phone with a year's data package paid upfront, it was possible to receive more cashback on the phone. I chose a data package that nearly matched my monthly usage that cost Rp 235,000 per month. So my phone cost a total Rp 4.8 million.

Wait, wasn’t that the amount before the first cashback? Yes. 

The difference is that Rp 2.82 million of that amount was the data package for my new phone. Since I have a reimbursement facility from my job that covers Rp 200,000 of the monthly data package, I will be reimbursed Rp 2.4 million within a year. This means that the actual phone cost me only about Rp 2.4 million.

As I mentioned at the beginning, the smartphone is a powerful device and is worth having. But we must be equally "smart", and choosing a phone that suits our needs and budget will keep it from jeopardizing our financial situation. (kes)

**

Pandu W. Soeprapto earned his bachelor's at Bandung Institute of Technology and master's from Monash University. He currently works as an assistant vice president in corporate banking and has handled many financing projects in various sectors. He has a passion for teaching and loves to write about people and finance inbukanpohonuang.wordpress.com.

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