Why Depreciation Matters To Uber Drivers

The Real Cost of Driving

You and I know the cost of fuel and probably also maintenance. But still, there's a hidden cost that few drivers account for. It's called depreciation. Let me explain it in simpler terms. Think of your car as an investment; every mile you drive is chipping away at that investment's value. I’m not talking about taxes either.

For example, a friend of mine drives an old Camry for rideshare. He loves that car because it's cheap and reliable, and he's making decent money from it. He recently told me, "My car is fully depreciated." But here's the thing—it's not.

The Numbers Behind Depreciation

Let's take a look at some quick numbers. His Camry is currently worth about $3,745. Once it hits the junkyard, it'll be worth around $500, also known as its salvage value. That means the car will lose $3,245 over the next 50,000 miles. Now, that works out to about 6 cents per mile.

If my friend drives 500 miles a week, that's roughly $32.45 in depreciation every single week. That's not just a number; it's money he should be setting aside but probably isn't.

Why It Matters

You're probably thinking, "So what? It's only $32 a week." But if you add that up over a year, it's around $1,500! If he doesn't save that money, he'll have to come up with it from somewhere when it's time to replace his car.

Think of it like this: every week you drive without accounting for depreciation, you're spending the future value of your car. When the time comes to get another vehicle, you'll have no down payment ready, and that could really hurt your finances.

Innovative Ways to Handle Depreciation

So, what can you do? It's simple. When you calculate your earnings each week, take that depreciation amount and put it into savings. As you account for gas and maintenance, depreciation should be a business expense.

For example, if you're making $1,000 weekly, but your car depreciates by $32.45, you should set that aside. When you're ready to replace your vehicle, you'll have a decent chunk of change saved up, prepared for the down payment or even to buy the next vehicle outright.

Don't Wait Until It's Too Late

Here's the bottom line: you might be making decent money driving for Uber or Lyft, but if you're not factoring in depreciation, you're not truly maximizing your profits. Depreciation is like a slow leak in your bank account. Ignore it long enough, and you'll be left scrambling when your car finally gives out.

Take it from me—accounting for depreciation is just as important as accounting for fuel. Every mile costs you something, whether you see it or not. Be smart, save for it, and you'll thank yourself when it's time to upgrade your ride.

So, are you tracking your car's depreciation? If not, start today. You'll be surprised how much of a difference it can make in the long run.

Drive safe, and keep thriving!