The Slow Death of Ownership: Why Young People Can't Build Wealth

“You’ll own nothing and you’ll be happy.”

This was a real slogan from the World Economic Forum back in 2016, and it’s becoming a reality.

• Renting a home is becoming more popular.

• Car finance is becoming more popular.

• Consumer debt levels are rising.

The overall amount that we own as people is falling, and it’s an alarming revelation.

Here’s why.

Why is Ownership Dying?

Take a minute to think about what the world looked like 50 years ago.

There’s no doubt that we live in a better world today, but not all of it has improved for the better of the common people.

50 years ago…

• If you wanted a new house, you had to buy it.

• If you wanted a new car, you had to buy it.

• If you wanted anything new, you had to buy it.

In the past, your possessions were a true reflection of your wealth and living standards, because that’s all you could afford.

But now, in the world of…

• Credit

• Financing

• Monthly payments

…you’re able to “own” things that you wouldn’t have been able to in the decades prior.

Access to financing and debt has enabled people to:

• Live in more expensive homes.

• Drive more expensive cars.

• Live more expensive lifestyles.

The sacrifice for this better lifestyle?

A lack of ownership.

And this, to begin with, doesn’t sound so bad. It sounds pretty good.

But, is it really better to sacrifice ownership for living standards?

Not for me, it isn’t.

What You Need to Prioritise

If I wanted to, I could walk into a BMW dealership this afternoon and get a brand new M Sport car on finance for a few hundred pounds a month, but I won’t.

Why? Because I use a different rule to most other people my age.

I don’t want the best thing available to me right now.

I want what’s going to make the most sense financially.

And does this make sense financially? No.

Signing a 60 month contract to pay £500 a month on a car that…

• Will depreciate by 50% in the first three years

• I’ll never own outright

…sounds like one of the worst things I could ever agree to.

But, all anyone seems to care about is driving around in a brand new car, so that’s what happens.

Again, sacrificing ownership, for living standards.

Instead, my car is:

• A few years old, but it still feels brand new to drive.

• Completely paid off — I own it fully and can do whatever I want with it.

• Not going to depreciate anywhere near as quickly as a brand new car.

And it’s still a nice car! I always get compliments about it.

You don’t need to drive a rubbish old banger to see my point.

Am I sacrificing my “living standards” for ownership? No.

The only difference is that I acknowledge the importance of owning things, and how you need it to boost your:

• Net worth.

• Financial position.

• Mental well-being.

I worry less about money because I own things: Assets.

Everyone else worries more because they don’t: Liabilities.

Is it really worth it, just so you can drive around in a car that normally you wouldn’t be able to afford?

Not for me, it isn’t.

Here are 3 reasons why you need to prioritise ownership.

Benefits of Ownership

Increased Net Worth

There’s more to life than your net worth, but it’ll always be a good measure of how well you’re doing for yourself, and when you might be able to retire.

Adding to your net worth brings you closer to retirement and financial freedom.

If you own things, you can add to your net worth, because you have more disposable income.

If you don’t own things, you can’t, as you have less disposable income.

If you don’t own things, you’ll work much longer than those who do.

Less Financial Worry

I know in the back of my mind that I have £30k of value in a car, and in an extreme circumstance, I can sell the car for cash.

Owning things like your home, car etc. are extensions to your emergency fund and can improve your mental well being.

Sure, they’re not as liquid as a cash fund, but the difference in financial worry between…

Someone who owns their car.

And

Someone who’s paying $500 a month for a car they’ll never actually own.

…is huge.

I’ve seen both sides close up, and I’ll choose ownership every time.

More Flexibility & Control

Financing a car, or renting a home, might be more accessible for most people.

But, what you gain in availability, you lose in control.

If you take a car for example, there are many restrictions that you’re contractually obliged to comply to.

There are even some finance options that restrict your mileage, which is something that I couldn’t live with.

For the most part, people finance a car because they want to drive around in a car that’s too expensive for them to afford outright.

Renting is a bit different, as some people can find it hard to qualify for a mortgage.

But, when it comes to buying where ownership is a viable option, I recommend you to choose it…

Every single time.

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