Everyone can enjoy the benefits of sharing costs and reducing risk and waste. Taking a few cues from economics shows us that reducing the amount of money we tie up in stagnant resources is good for our finances. Read on to find out how you can save serious money by sharing a little every now and then.
Ownership of resources is vital to a vibrant economy. People who own factors of production are able to steward them to produce wealth through wise allocation of those factors. Factory owners leverage their factories to produce a product that people buy, therefore generating income. That income is used to pay the people who produce that product and invest in further factors of production.
Now, not all factors of production are created equal.
Some generate more value than others, some generate less. As a wise money manager, as owner of You, Inc., you want to allocate your resources in the best way possible. That means putting your money where it does the most good for producing wealth. Our current economic “mode” is to just buy things that are useful to a point, but wear out. That means it benefits the people who produce the items we buy to engineer them to wear out so we need to buy another one. This means that we need to be smart about where we “park” our money in the things we buy.
No one wants to put loads of money into things that serve no purpose, that’s like throwing money away. So what can we do, as wise owners of our personal resources?
We need to increase the amount of money we park in places that increase value, and decrease the amount we park in things that decrease in value.
Sometimes factory owners will agree to share the cost of a piece of equipment with another owner that adds value to both factories, but is seldom used. This could be in the form of renting the equipment, or actually becoming co-owners of the item. This serves two purposes: it decreases risk for both owners, and it parks less individual’s money in something that produces small, but vital, returns.
We can do the same thing when it comes to sharing costs of things that only return small value or return vital, but rare results. Sellers of these items or services will try to convince you that you need to own these things – in fact, everyone should have one. Sadly, these things only cost you money, but return little. Think of Lawn Mowers: they are really only used, let’s say, four months out of the year, and only two or three times per month. They are also pretty expensive. From a lawn mower salesman’s perspective, everybody needs one, so he can sell more product. From a consumer’s perspective, why dump a few hundred dollars into something that you only use a dozen times a year at best and that requires frequent inputs of money to stay operational? if you buy a $300 mower, and put $25 of gas and oil in it per year, you’re paying $27 every time you mow your lawn that year. Sounds silly now, doesn’t it.
A better option is to share the cost and use of the mower with other yard-owners. If you buy a mower with ten other people, you own 1/10th of a mower, and your cost for the first year is reduced to $2.70 each time you mow. Everyone’s lawn still gets mowed, the mower actually gets used, and the costs to each person are significantly less. Over five years that is a lot of money saved.
Marketers will try to convince you that you must must must have your own lawn implements, your own snow blower (gets used maybe 5-10 times a year), your own subscription services, your own everything, and that sharing the cost of these kinds of products and services is only for people with no money who you should have nothing to do with. The kind of people that share the cost of a barbecue grill with their neighbors are crazy communist hippy types, not smart affluent people like you. But that only equates to bigger bucks for the salesmen, and less bucks and more stuff, sitting unused, for you.
On the other hand these same sales types will tell you that parking money in things that go up in value is only for the “rich,” the kind of people you’ll never be – that hurts a little. Having your own retirement account is only for people with loads of cash, and having private insurance is only for people with too much to lose. Well, you do have too much to lose, whoever you are, and if your money isn’t parked in things that decline in value, you will have loads of cash too! Owning things that increase in value is a central tenant of wealth creation, and everyone has access to these kinds of things: investments like index and mutual funds, land and real estate, business equipment, education, and financial products like insurance.
Anyone can get them.
Anyone can park their money there.
But the predominant message is that we need to share these factors of production, that we only need to buy the product but never share in the wealth that the sales of the product generate. We need to have shared retirement plans, shared insurance, and shared benefits – dividing up the returns so many times that they are almost non-existent to the individual, but are worth a lot to a company who can take a percentage of the whole sum. The myth is we can’t have control over our money’s long-term potential (that can generate interest, aka dividends, daily), yet we have got to have our very own post hole auger that we will use maybe twice in a lifetime.
If you’re not actively using a piece of equipment or a service that you’re paying for to generate income or facilitate income generation, it is likely that you are sending money into something that is decreasing in value. Take a look at what your money is doing. Examine where you are getting value and seek to maximize those things, and look to share or get rid of the rest.
Share and Share, Alike – and save money!
Do Brave Deeds and Endure,
– Ben at Debt Freeks