and let’s talk about buying an iPhone for $ 1,000. Apple CEO Tim Cook once compared that exorbitant price to buying a cup of coffee a day for a year. No big deal, right?

But financial advisers see it differently. By some estimates, an investment of $ 1,000 in a retirement account today would climb to about $ 17,000 in 30 years.

In other words, $ 700 to $ 1,000 – the price range of modern smartphones – is a big buy. According to the Pew Research Center, less than half of American adults have enough savings to cover three months of emergency spending. Yet 1 in 5 people surveyed by financial site WalletHub thought a new phone was worth getting into debt.

Tech companies rightly argue that our smartphones are our most powerful tools for working and playing, and therefore worth every penny. But they also play number games to keep the costs of a new phone down. Samsung, for example, said its new Galaxy phone was priced at $ 200, but that’s only if you trade in a year-old phone for credit for the new one. The real price is $ 800.

So it’s worth looking at phone upgrades in a different light to assess their financial impact. It can help us make thoughtful decisions so that the move is not automatic.

The irony of Cook’s coffee analogy is not lost on Suze Orman, the financial advisor who once equated people’s coffee habits with “peeing $ 1 million down the drain.” The seemingly small amount of money people mindlessly spend on Java – and now on phone upgrades – could be a path to poverty, she said.

“Do you need a new one every year? Asked Orman, who hosts the Women and Money podcast. “Absolutely not. It’s just a ridiculous waste of money.”

Apple and Samsung did not immediately respond to requests for comment.

So what is the real cost of upgrading a phone? Let’s look at the math.

Flipsy, a company that buys and sells used phones, released an analysis this year saying it makes sense to buy a new iPhone every year. Here is its breakdown:

– The iPhone 12 cost $ 799 last year. It’s now worth $ 460 if you trade it in to cover the cost of a new phone. The most recent iPhones, the iPhone 13, also cost $ 799. So if you trade in your iPhone 12, the iPhone 13 will cost $ 339. At this rate, if you bought an iPhone every year for four years, including the original $ 799, the net total would be $ 1,816.

– If you waited three years for the iPhone 15, the trade-in value of your iPhone 12 would drop to around $ 200. Swap it in and the iPhone 13 would cost $ 599. Add the original $ 799 and your four-year net cost would be $ 1,398.

In summary, a three-year annual upgrade costs $ 418 more, or about $ 12 per month, compared to an upgrade every three years, Flipsy said.

Framed this way, it might seem like a good deal to get a new phone every year rather than every few years. But plugging those numbers into a financial calculator tells a different story.

If you put $ 12 per month in a retirement account, like a Roth IRA that has an average annual rate of return of 10%, that amount would turn into $ 25,161 over 30 years, according to Orman’s savings calculator. .

Orman likened the trade-in dilemma to buying cars. Automakers might argue that your car’s diminishing trade-in value should require you to buy a new one on a regular basis, but don’t be fooled.

“I love my car and I don’t care if the value drops,” she said. “Think of the 11 years I saved money without paying for a car, or by trading it in and spending more money on another car.”

What about those cups of coffee? On average, we pay $ 3 a cup, so $ 1,000 could buy about 333 cups. But of course, making your own coffee is a lot cheaper.

I plugged some numbers into a coffee calculator designed by Bone Fide Wealth, a financial planning service. A $ 16 bag of beans from Peet’s Coffee at Costco could make about 41 cups of coffee for 39 cents each. So a $ 1,000 iPhone is worth around 2,500 cups of coffee. Not so convincing.

Doug Boneparth, the president of Bone Fide Wealth, provided a counterpoint. For people with a lot of money who are aware of the effects of their spending, splurging on new phones might be of no consequence to their overall savings goals compared to larger expenses like housing – and if phones make them happy, go for it. He said he puts money aside every year to buy a new iPhone as a kind of hobby.

“Personal finances are pretty personal,” Boneparth said.

But he recognized that even his hobby was starting to have diminishing returns because new phones didn’t improve much technologically every year. “The 13 is the first one where I’m like, ‘This one literally has only one better camera,'” he said of the latest iPhone.

Orman warned that for most people who didn’t have so much money in the bank, especially those in debt, the effects of a phone upgrade could snowball. A $ 1,000 phone billed to a credit card could turn into $ 3,000 with interest when it’s paid off, she said. More debt could also affect your credit score, making it more difficult to buy or rent a home.

“If you think a phone is worth getting into debt, then, oh my God, you’ve just prepared yourself to always be in debt,” she said. “The truth is, there is nothing but a medical expense that is worth getting into debt.”

This article originally appeared in The New York Times.