The Millennial generation has been at the forefront of the surge in sharing everything from rides to clothes for both convenience and financial reasons. Taking Ubers on occasion can sometimes be less costly than owning a car you may not use very often, or living with roommates can help cut down the cost of living. But at a certain point, it’s important for individuals to do the math and see if it makes financial sense after all to consider a big-ticket purchase.

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Also see

Taxi Uber Lyft
j_nnesk_sser / Pixabay

Let's look at the pros and cons of a home purchase first. When first considering the purchase of a house or condominium, you need to look at your situation and determine whether or not your life, career and the place in which you are currently living or thinking about living are stable. Make sure to the extent that you can that you have strong job security (obviously unforeseen circumstances can arise), you are more or less satisfied with your lifestyle, and you are happy with where you live and don’t plan to move across the country.

If you can find a mortgage for a place that is suitable for roughly the same amount as your current rent or less, then the transaction makes sense. I counsel my clients that the general rule is 25% of your net salary can be allocated to your home and mortgage expenses without having the fear of becoming "house poor." Make sure that you're also factoring in condo or HSA fees (if they apply) as well as municipal taxes. Also, keep in mind that a real estate investment, like any other investment, has inherent risks. Always complete the proper due diligence before any purchase.

The decision to use ride-sharing services exclusively or purchase a car fluctuates more based on where the person lives and what shared transportation options (like Uber or Car2Go) are available. In addition, different urban areas create very different circumstances. For example, DC, where I live, is a condensed and compact city where one can either walk or take a shared ride to and from destinations for a relatively low cost. In a city like Miami, Los Angeles or Houston, where the urban area is very spread out and not as walkable, ride sharing would quickly take a heavier toll on your wallet. Of course, these assumptions aren't black and white, as people's lifestyles and commutes can vary, making the need for a car more or less necessary.

Generally, though, I tell my clients that in a world where more and more cheap ride share options are becoming available, a car purchase can be pushed out further. A car is a hefty cost in most cases, and paying for the car, gas, insurance, repairs and parking becomes very expensive. A car is also a depreciating asset, meaning you will rarely recover anything close to what you paid for it. (Your house, however, generally should appreciate in value.) So, if you can live your life through ride sharing and public transport comfortably, I recommend going forth as such.

Regardless of what you choose, check in periodically on pricing and compare your options. Changing life circumstances or new choices in the market may influence your decision. In general, it’s always a good idea to have a solid understanding of your financial situation so you can assess if you can change your living situation, lifestyle, or retirement plans.

Arian Vojdani is an investment strategist at MV Financial, a Bethesda, MD-based wealth management firm.

Investment Advisory Services offered through MV Capital Management, Inc., a Registered Investment Advisor. MV Financial Group, Inc. and MV Capital Management, Inc. are independently owned and operated.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by MV Capital Management, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from MV Capital Management, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. MV Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the MV Capital Management, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.