By Don Slater, professor at the London School of Economics,
- People are adopting lifestyle habits to save HUNDREDS of pounds.
- Will lockdown trigger the growth of the sharing economy?
- Millenials are sharing everything from cars to mortgages and leftovers.
BT is among the latest to scrap its traditional model as it aims to keep up the pace with consumer habits that are continually evolving and more flexible options coming to the fore, pioneered by players likes Netflix and Spotify.
With lockdown forcing us to re-evaluate everything from our commute to our weekly shop, has tightening the pandemic purse-strings taught us all a lesson on the money we can save when we embrace flexibility even more?
Research carried out by flexible car insurance provider, Cuvva1, found that in actual fact, millennials and Gen Z’s are reducing their outgoings by hundreds of pounds a month, in wake of coronavirus.
How? Simply through sharing.
An economic model that is estimated to make up more than 50 percent2 of the global economy within the next 10 years and a trend that experts predict will only be triggered further by lockdown.
Don Slater, professor at the London School of Economics said there are a number of factors influencing sharing behaviour: “Culture and technology shifts are likely to continue to make sharing opportunities more mainstream, creative and valued by people.
“What’s new with millennials and younger people in ‘Generation Z’ is that the usual culture shifts have collided with massively unstable social conditions.
“They cannot get houses, cars, or workspaces and have learned to pool resources and to look for micro-savings through sharing or renting rather than owning.”
- Car sharing
Before lockdown, 50% of millennials were already sharing their car, mortgage and even clothes to save cash. It’s a simple step to take, but almost half (45%) of those who car share said they decided to do so in order to save money on public transport, saving on average £100 per month. 15% of 25-34-year-olds save up to £300 a month.
Freddy Macnamara, Cuvva’s founder, said: “We’re about to see some big changes in how people spend their money. Who knows, car sharing could be this decade’s Airbnb.”
Case study: meet the couple who saved £60 per month through car sharing on their commute before the pandemic, and will continue to do so once restrictions are lifted.
Ryan Oates, 28, a sales manager from Leeds, comments on how the pandemic will continue to change the way he and his girlfriend commute to work: “Even before the lockdown, my girlfriend and I decided to start driving into Leeds together for work, mainly because it made so much sense, saving time and a lot of money. It used to take her at least an hour to get to work on the bus.
“Since August 2019, we’ve been travelling in to work together which has saved us almost £500 so far, which we’re hoping to be able to put towards a holiday in Thailand once things go back to normal! Once restrictions are lifted, we’ll continue to commute this way as not only does it save us money, but it’s a much safer option that abides by social distancing measures. And, with it looking likely that we’ll be going into the office much less and working from home two to three days a week, we plan to save even more.”
- Mortgage sharing
Sharing a mortgage with a friend or partner is a trend that is rising. Almost 1 in 10 (7%) of 18-24-year-olds surveyed said they already share a mortgage with their friends, with more than double the proportion of surveyed millennials pooling their resources with friends to buy a property.
What’s more, 12% said they would be willing to share a group mortgage with friends – even if they don’t already.
Case study – the friends who bought a property together after university to avoid high-rent costs and get on the mortgage ladder quicker.
Pippa Nicholls, 26, a dentist from Harrogate bought her current home with her friend: “We decided to buy a property together as friends after we moved back home from university. The area where we both wanted to live is quite expensive and it would have taken us a couple of years to save up a deposit to buy on our own. Seeing as we both had similar ideas on where we were looking and what we were looking for, we decided to buy together which meant we were able to buy after only one year.
“It was a great decision which meant we got into the property market earlier and mortgage payments are also more reasonable.”
- Using innovative apps
From easily accessible, temporary car insurance apps like Cuvva, to online community marketplaces like Fat Lama, and ones that encourage food sharing and reducing wastage like Olio, there is now a whole host of challenger brands using tech to offer financially flexible models to suit ‘on-demand’ lifestyles – by allowing people to only pay for what they need.
Freddy Macnamara, founder of Cuvva, said: “We’re seeing some big changes in how people spend their money. People are becoming empowered through tech to only pay for what they need, and flexible business models have been gaining ground, simply because they’re better suited towards customers’ actual needs.”