Millennials and baby boomers may have more in common than previously thought. As it stands, baby boomers are continuing to retire in large numbers after being passed by millennials as the largest generation. Both groups grew up in different economic circumstances that have come to shape their mindsets and ideals.
For example, baby boomers grew up at a time when it was common to own a house by age 25. These days, millennials are generally renting instead of buying. This has led to short supply of rental units and a sharp increase in prices. In fact, according to a recent study from the Enterprise Community Partners in conjunction with the Harvard Joint Center on Housing Studies, rental affordability in the U.S. is about to get worse before getting better.
The desire to keep renting is only one aspect of current living standards that reflects a larger trend, which is often referred to as the sharing economy. As it turns out, people of all ages are discovering opportunities in this new economic climate.
What is the sharing economy?
Wired Magazine highlighted the sharing economy and defined it as an unseen marketplace where businesses offer a platform for individuals to rent out their cars, apartments and other work-friendly services. For example, popular ride-sharing companies Uber and Lyft allow individuals to use their car to drive passengers to their desired destinations. Airbnb lets homeowners or apartment renters temporarily rent out their space to travelers looking for an affordable place to stay.
There are some positive and negative effects from the explosion of the shared economy. First, people have learned to trust others on a larger scale. Even as few as 10 years ago, it would have been unimaginable if strangers - aside from those driving licensed taxis - were giving other strangers rides to the airport. On the other hand, the freelancers are turning toward self-employment to make ends meet. It is not unheard of to hear the story of people who spend eight hours a day driving as their full-time job, but still have flexibility not afforded by their traditional, previous employer.
It's not just younger citizens who are embracing shared services, either. A recent article from The New York Times revealed retired individuals are finding work by renting out their knowledge, property or expertise. Some have turned to self-employment because Social Security or pension checks are not large enough to hold them over for the duration of retirement.
While it is relatively simple to enter the shared economy, individuals will have to take certain precautions before doing so, depending on what business they will be taking part in
Ride sharing companies often have strict guidelines for new drivers. Cars have to be newer models. Drivers must pass a background check and have auto insurance. There is no denying thousands of people have reaped the benefits of becoming a driver. In fact, Uber states that it's ridesharing platform experienced a growth of nearly 400 percent among driver signups during 2013-2014. On average, drivers earn $19.04 per hour. Before entering this type of employment, potential drivers should settle their finances, because hourly wages will fluctuate depending on demand. Individuals may find it somewhat difficult to rely on a steady income because some days may be be slow when it comes to picking up passengers.
That being said, the shared economy undoubtedly provides many benefits and opportunities for extra income. Students can drive for a few hours during the week and use the money to pay for textbooks or rent, while parents can drive during the weekends to save for an upcoming family vacation. The opportunities aren't limited to ridesharing platforms and it's up to the individual to find the best opportunity.
The shared economy is here to stay. According to Fortune, one of the biggest benefits is the flexibility offered to freelancers. From college students to recent retirees, there's an opportunity for everyone to rent out apartments or services.
Before jumping in feet-first, individuals will have to make sure they meet the latest guidelines put forth by various platforms, as well as ensuring finances are in check. The sharing economy can provide that extra boost some checking and savings accounts need to provide financial security.
For more information about smart ways to manage your finances, contact Landmark Bank.
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