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Can the “sharing economy” help you reduce spending and avoid debt?

by:
Laurie Campbell

We’re hearing a lot about the “sharing economy” these days as more and more individuals turn to buying and selling – particularly renting out – goods and services directly amongst themselves. The behaviour marks not only a turning away from traditional consumer channels of trade (i.e. popular brands and commercial establishments), but also perhaps a turning inward. Increasingly as a society, we are valuing “experience” over “ownership.”

 
Born of digital information technology that makes finding and getting stuff a breeze, the sharing economy is making everyday trade an individual, home-grown matter, with added income on the supply side of things, and added savings on the demand side.
 

A positive trend with prospects for reduced consumer spending, increased savings, and better chances for individuals and families to avoid debt.

 
On the supply side of the sharing economy, there are everyday folks with personal assets – say a spare room for lodging travellers or a car available for rental – that can be offered at low prices the traditional commercial marketplace cannot match. On the demand side of things, there are everyday folks who are obviously keen to connect and take advantage of the economical offerings.
 
Apps, maps, satellite positioning, and online payment systems make the whole process easy, with a significant degree of quality assurance through online social network chatter that reviews, ranks, and encourages exploration of new service and product offerings.
 
From my perspective as a credit counselling professional, the developments mark a positive trend with prospects for reduced consumer spending, increased savings, and better chances for individuals and families to avoid debt.
 

Doubtless you’ve heard about Airbnb by now. Through it you can rent places to stay from local folks in more than 190 countries.

 
Uber is a good example of how the sharing economy is altering the status quo. Ube r cars owned and operated by everyday people are widely replacing taxicabs in cities around the globe. Other enterprising examples abound.
 
Doubtless you’ve heard about Airbnb by now. Through it you can rent places to stay from local folks in more than 190 countries. Or how about renting somebody else’s car through RelayRides, somebody else’s boat through Boatbound, or somebody else’s whole house (for a limited time) through HomeAway?
 
Come to think of it, did you know you can share a mortgage through pool deposits of up to four people? You can even put your dog up in somebody’s home through DogVacay, or rent tools from someone close to you through Zilok.
 

New sharing economy prospects are not limited to material stuff, they are expanding to encompass “experiential products.”

 
The list goes on. New sharing economy prospects are not limited to material stuff, they are expanding to encompass “experiential products” such as dining in homes boasting good “chefs,” staging a “sofa concert” with local musicians, or seeking adventures through peer-to-peer travel packages.
 
It all points to phenomenal growth for the sharing economy. Economists estimated that in 2015 the value of the global sharing economy rose to $15 billion over just seven years following the global economic crash of 2008. The crash, it’s said, catalyzed the growth.
 
To put matters into perspective, consider that over the same seven-year period, the combined growth of Facebook, Google, and Yahoo amounted to $11 billion. By 2025, the sharing economy’s value is estimated to reach an astonishing $335 billion ($US).
 

Eighty-five per cent of Canadians would rather have two years of amazing experiences than upgrade from an affordable car to a luxury vehicle.

 
Amid all the developments, new research identifies how consumer spending habits are evolving. Capital One Canada looked into the matter by hosting a roundtable discussion about the sharing economy involving top journalists, academics and industry experts. Some key findings from Capital One are very interesting:
 
“Canadians are favouring experiences over ownership, so much so that 85 per cent would rather have two years of amazing experiences (including travel, concerts and dining out) than upgrade from an affordable car to a luxury vehicle.
 
“Forty-six per cent of Millennials would be open to buying a house with friends – and living in it together – to share the cost.
 

Canadians are going to great lengths to spend on unique and exciting experiences, and will reward the brands that provide them.

 
“Although Canadians are spending more with Airbnb than hotels, the average duration of Airbnb stays may be longer. Why? The majority of Canadians (58 per cent) want to live like a local when travelling so they'll have more unique stories to tell. This number increases to 67 per cent when looking at Millennials.
 
“Canadians are going to great lengths to spend on unique and exciting experiences, and will reward the brands that provide them: 53 per cent of Millennials will go out of their way to check out something that they saw many people – even strangers – posting about on social media just so they can be in the know.”
 
Jay Acharya, Senior Director of Digital Product Strategy at Capital One, puts it all into perspective saying, “It's clear that technologies and companies born out of the sharing economy are disrupting the way Canadians are defining value and interacting with products and brands."
 

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