How the sharing economy can save you money
Monday, 13 May 2019
The whole idea of sharing assets isn't new.
You're probably familiar with timeshares, vacation homes that have multiple owners who take turns using the properties, that became popular after World War II. Today, that basic concept has been expanded to many business and service sectors, including lodging, transportation, dining, retail goods, and even media and entertainment.
The emergence of this broader sharing economy has been fueled by technology and therefore is still in its early stages. But the sharing economy is gaining popularity, as more and more consumers are becoming familiar and growing comfortable with it.
What is the sharing economy?
The sharing economy is an economic model in which individuals are able to borrow or rent assets owned by someone else. The sharing economy model is most likely to be used when the price of a particular asset is high and the asset is not fully utilized all the time.
The popularity of this model is appealing to consumers interested in sustainability and reducing personal ownership of things. If you can share a car, you don't need to buy a car. Thus you spend less and consume less, ultimately reducing your environmental impact and saving you money.
How does the sharing economy work?
One of the most popular and well-known sharing economy businesses today is Uber, the ridesharing company that's an excellent example of how the sharing economy works.
Even though 95 percent of Americans own cars, very few Americans use their cars one hundred percent of the time. The idea behind the sharing economy is to let someone else “rent" your car, or pay you to drive them around, when you're not actively using your car for your own purposes.
Most of the business that have made a name for themselves so far in the emerging sharing economy depend heavily on technology. As with Uber, the entire transaction is done via mobile app. You request a nearby car for a pickup and pay for the ride—all from your mobile device. What's more, you'll know exactly how much it will be prior to agreeing to the transaction, eliminating expensive surprises after the ride.
Airbnb works in a similar way, with consumers viewing lodging options online or via mobile app, then booking and paying electronically. This type of transaction is proving very popular with consumers. Airbnb is closing in on one million guests per night, more than some large international hotel chains.
Experts and consumers agree the sharing economy relies heavily on trust. You must be able to trust the room they are booking is actually the one you saw online, and that your Uber driver is legit. Sharing economy companies are acutely aware the success of their business depends on establishing trust with their clients. As a result, they are working to enhance transparency, verify identities, and provide other systems for screening users and building confidence with customers.
How can the sharing economy help me?
Saving money and increased convenience are perhaps the biggest benefits to consumers. This model offers consumers the ability to quickly compare prices, which gives them the ability to choose a less expensive option and save money. In terms of convenience, many of the goods and services exchanged are provided ondemand, and almost all transactions are paid for using electronic payment services.
Currently, the most obvious savings come from reduced travel and transportation expenses. But there are also companies that give consumers the ability to share a nanny, pet sitter, food, and much more. In many cases, when goods such as clothing are sold secondhand, they'll be less expensive than if they were purchased new. Renting a wedding dress instead of buying one, for instance, can help reduce anyone's budget substantially.
Don't forget the sharing economy offers the opportunity to make money as well. Whether it's an extra room, an underused vehicle, or those bridesmaid dresses in your closet, sharing can be a smart way to turn your unused stuff into very useful cash.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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