How the Sharing Economy Is Changing Personal Finance
Disruption is such a cliche these days, especially when discussing the explosive nature of Silicon Valley. That ubiquity largely comes from companies that inhabit the sharing economy. The sharing economy runs on the philosophy of, “Why pay through the nose when you can rent it more cheaply from a stranger online?” This concept is a truly disruptive idea that has only come about in the past few years.
AirBnB, a marketplace platform that allows homeowners and renters to offer their living space as a hotel alternative, and Uber, a ride-sharing mobile app, are kings of the sharing economy while also being two of the most controversial companies around, due to their status as cheaper and more accessible alternatives to hotels and taxi cabs.
Users are flocking to these services because of these benefits. According to research from PricewaterhouseCoopers, 86 percent of adults agree that the sharing economy, in general, makes life more affordable, while 81 percent agree it is cheaper to share goods than to own them. By spending a portion of the cost to rent instead of paying the full price to own, consumers are able to save their money, which means they have more funds to spend elsewhere or to keep as savings for future use.
Katherine Krug was able to ditch her car, which she needed to commute to work, and utilize Uber and Lyft, one of Uber’s biggest competitors, which saved her thousands a year. Her total monthly car related expenses were $1,518, which included lease payments, repairs, parking and gas, among others. By getting rid of her car and subsequently using only Uber, Lyft and GetAround, Katherine cut her monthly spending to $572, which amounted to $11,352 in yearly savings. Now, she doesn’t have to worry about finding rare parking space in San Francisco and puts her savings towards traveling the world.
The sharing economy also lets people find an extra source of income to help pay their bills and even get through retirement. Frederic Larson, a 63 year old laid off photographer turned college lecturer, was able to supplement his smaller salary by putting his home up on AirBnB for others to stay in for $100 a night. Larson was able to pocket an extra $3,000 per month via AirBnB, which he lets him help pay for his San Francisco rent and his two kids’ college tuition.
Ultimately, both consumers looking to save and folks in need of extra income now have a vast, flexible number of options available to them due to the driving forces of the sharing economy.