Do You Need To Own It To Use it?

The World Economic Forum made a pronouncement in 2016 and made some enemies in the process. “You’ll own nothing, and you will be happy.” In fact, the idea arose in a 2016 essay by Danish MP Ida Auken and became part of the WEF’s late 2016  video “8 Predictions for the World in 2030” 

Number one in the video is the “you’ll own nothing” idea.

Owning nothing is likely a huge overstatement.

I think it would have made sense if the “own nothing” idea became, “You’ll own fewer things.”

Much as I think the WEF is overreaching, this thought is not as wrong as you might expect. People who own businesses are familiar with the idea, and what they have learned can be helpful for all of us.

As one client put it, “I don’t need to own it; I just need to be able to use it.” Ownership is one way to get that control, and until the 70s, there were few ways other than ownership to do so.

The criteria to consider are:

  1. If I don’t own it, is the asset available to me 100% of the time?
  2. Is it likely to become obsolete in the intermediate term?
  3. Is it specialized and difficult to get control without owning it?
  4. How much cash must I tie up to buy it
  5. If I borrow to buy, how much of my cash do I need now and in the future? What is the effect on cash flow to meet the financing costs?
  6. What is the effect on cash flow if I gain control in another way, like a lease with nothing paid upfront?
  7. What alternate uses do I have for my money?

Making the financing decision

Sometimes this decision nearly makes itself. For example, suppose you can earn 15% on money invested in inventory. You need a new delivery truck and can buy it for cash, or you can lease it. How hard would the decision be if the interest equivalent cost to finance the truck turns out to be 5%? That saves your cash to invest in inventory or some other way.

In your personal life

Ask yourself two questions.

  1. Can I use it without owning it?
  2. Is there an advantage to using my cash in another way?

Leasing a car is often a cash-efficient choice. Even when it is breakeven or so, other factors make it attractive.


For some people, it is easier to budget with a monthly cost instead of a lumpy purchase every few years. When doing retirement plans, I use lease value monthly as the factor even if the client intends to buy for cash or finance with a large down-payment.

Forced Saving

Financing a house is different than a car because the house tends to have enduring value while the car depreciates. There can be a cost recovery when the house is sold, and that factors in.

The rent versus finance and buy decision for a house is not as easy as it looks because of the costs the landlord pays when you rent. It is easier with commercial situations because almost every commercial lease is triple-net, meaning the tenant pays all the operating costs, like municipal taxes, insurance and most repairs.

Guarantee of Use

A tenant has a guarantee of use during their lease, but what happens after? The owner may increase the price, or they may ask the tenant to leave because they intend to sell the building or provide it to a family member or even themselves. Even if the rent due is less than the cost of owning, there is an implied cost to a potential forced move. If you have a successful business that depends on the location, how long should the lease be? The loss of equity is worth considering, too.

Durable or consumable

Durable assets will eventually return to the owner. Consumable assets like cars, trucks and business equipment likely to become obsolete are usually the best choices for leasing rather than buying. The advantages are clear.

  1. Little or no cash committed to ownership
  2. Payment from earnings.
  3. No sunk cost thinking errors as the asset becomes less useful.
  4. No tendency to hold assets beyond their obsolescence date just because they work and are paid for.

Of these, if you own the asset, #4 is hard to overcome. No one likes to dispose of something that works.

Assessing acquisitions on whether I own the asset or just want to use it parameters is efficient financial management. It is easier to assess value in terms of the present value of net future cash flow when there are fewer variables.

The bits to take away

BY 2030, you will still own many things because you have analyzed your reasons and have assessed your best financial situation modified by convenience and alternative investments for your cash.

Some things we expect to own or have exclusive of will turn into timeshare or service contracts as with many computer programs. We already see vacation properties and private jets working that way.

In many large cities like New York, car ownership is a liability. Several hours a month of use might turn out cheaper even if the price per hour seems high. In other cities like Los Angeles, cars are still a necessity. The New York Public transit and Taxi service permits a different approach.

I know a person who has two small, 5-year-old, inexpensive cars for use within 15 miles of home. If they wish to go further, he rents a Lincoln.

Many non-intuitive decisions come clear when you assess the total cost of ownership.

Let usability rather than title drive some of your decisions.

I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software startup, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Federal Business Development Bank.

Be in touch at 705-927-4770 or by email at

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