Downsizing your living arrangements has become a popular topic in the financial community and rightly so. There are many financial benefits to downsizing your home such as reduced expenses and increased cash flow as well as enabling you to add more to your retirement assets. Pair those with other lifestyle benefits like freedom and flexibility to do the things you always have wanted to do, and the argument for downsizing becomes more prominent.
Have the kids left home and your finding yourself rattling around in the house that you bought for the family? Downsizing can help release capital and provide you with a significant lifestyle change. It also offers the added benefits of reduced outgoings on utility bills, council tax, repairs and maintenance which can offer peace of mind, given the rising costs of these items.
In addition, there are the practical benefits of downsizing your home for retirement and moving to a smaller property as they are easier to manage and maintain, particularly should your degree of mobility start to lessen.
Many Australians are considering downsizing their home because they:
- Are approaching retirement
- Have become empty nesters
- Are overwhelmed with the upkeep and maintenance of the property
- Realize they have just too much empty space
What are the benefits of downsizing your home?
While this won’t be true for every homeowner, pairing down your small living lifestyle can help you from overspending, overcharging, and overbuying for your large home. A smaller home will help you keep on a budget and shopping sprees will be curbed because there isn’t enough space to house too many new additions! If you are trying to save money and keep your credit from going into the red, consider downsizing your home – your future will thank you for it.
Living in a larger home requires more time spent on its upkeep. From cleaning, maintenance, furnishing, outdoor home upkeep and the cost to run all of these can lead to a home that is stressful. By downsizing, you’ll have less responsibility, smaller workload, increased cash flow and greater flexibility which all help reduce stress. This frees you up for fun, spending time with family, getting more rest and just enjoying your home rather than being a slave to it.
Reducing the size of your living space has many financial benefits:
- Reduced mortgage payments
- Less real estate taxes
- Lower utility costs
- Lower insurance costs
- Fewer maintenance costs
All of these reductions in your expenses can lead to significant savings. It’s certainly up to you on what you do with this extra cash. However, now you have the option to either invest this extra cash for retirement, reduce your debt from loans or credit cards or used for travel and life’s rewards if you have already accumulated enough savings for retirement.
There's a problem with space in houses: you have to fill it. In most cases, you won't want to simply have vast expanses of nothing and will require purchases like furniture, rugs, art and more to add colour to these areas. This means you won't only be paying more for the bigger house but will have to take into account these extra costs as well.
Downsizing is a great motivating factor for embracing simplicity and eliminating anything you absolutely don’t need or value. Don’t think of it as parting with memories. Think of it as moving into a new phase of your life, one that is less stressful and more relaxing or fun.
It took you years to accumulate your belongings and the process to de-clutter can be overwhelming. Start now so you can take the time you need to inventory your belongings and decide what things are important to you and what you can eliminate. Some items will be easy to dispose of, but others will make you stop and think. To make this easier, categorize your items as those which you should:
- Give to relatives
Items you cherish and which have sentimental value you keep. These are the pieces with the fondest memories. Give those items of value that you don’t need to family members now so they can enjoy them.
Items that have value but you don’t want can be sold at a yard sale, on Craig’s list or on eBay or you can donate them to your favourite charity. Recycle items you can and throw out the trash.
Although usually not the focus of downsizing, one of the positive side-effects is a simpler lifestyle free of stress and mundane tasks. Moving into a smaller home or a townhouse eliminates a lot of tasks that can keep you from doing the things you dream about. A smaller home and fewer belongings:
- Take less time to clean
- Need less routine yard work
- Cost less to maintain
All of which means more time and money to enjoy activities you want to do and living a more balanced lifestyle. When you downsize and simplify, you can be more focused on goals and spend more time doing things that are important to you.
If you have a family, there are some benefits that could result when buying a smaller home - family members are more inclined to bond, work together, be organised and compromise with one another. Nothing like sharing a bedroom and a closet with a sibling to learn how to share and be patient…let alone the fun of having someone to talk to when you lie in bed at night. A cosier home is often the way to a happier domicile.
Lower Energy Bills
Energy bills, which continue to climb, are nothing to shake a finger at. For instance, according to Expatistan's Cost of Living Index, the average utility bill for two people in a Sydney flat was $202 a month. Considering that larger homes require more power to stay warm or cool (depending on the season) and lit, you could shave quite a bit off your energy expenses by living in a smaller home.
If you have ever lived in a large home you know one of the downsides is energy costs. From heating and cooling costs to water savings in your bathrooms and kitchens, it costs a lot to run a large home. Smaller homes will give you the added benefit of reducing you and your family’s carbon footprint meanwhile you will enjoy a lower energy bill in the warmer and cooler months. If you are curious to find out how a smaller home and energy-efficient appliances and systems could work in your home, contact your local home energy provider. They often can give you an audit of your current usage and estimate how you can save.
Furthermore, you'll be doing your part for the environment by consuming less energy that is often produced by dirty fuels.
A smaller home means often leads to a happier home
While your home lifestyle varies from your neighbours, many homeowners agree that smaller homes enable the family to bond and work together as opposed to large and spread out floor plan homes. Smaller homes create an environment where family members and roommates get organized and can compromise over living arrangements, sharing closets, and making a small home feel cozy instead of cramped. Instead of looking at a smaller home as a down-grade, look at it as a way to a happier domicile.
Small home living is enhanced in an urban city
Have you ever noticed a one-room loft in a bustling urban city feels more cosmopolitan than a one-room apartment that has 5 times the amount of space in the suburbs? There is something to be said about being amongst other city dwellers – where everyone is living in smaller homes than they would prefer. Make the most of your urban abode with colour, creative multifunction furniture and bring in plenty of light into your space. While you may not have the penthouse of your dreams, you can play up your small home living with urban wall art, colourful home decor and lighting.
Splurge on a few key furniture pieces in a smaller home
While many people consider a downsize to mean they can't make their home look fabulous, think again! Some of the greatest dwellings are ones that have style and creative uses of space and proportions. Look to your favourite home designers who specialize in bringing colour and life to small spaces. Splurge on a few key pieces like a dynamic coloured couch that draws attention to your decor and not the size of your room. Beautiful design is about how to functionally use a space, while still being inspired to enjoy the room. Size shouldn’t be a hindrance!
A creative organization is key to small home living
Wake up your interiors with creative organization. Bookshelves that are built-in to what normally would be a bare wall can make any space into an instant library. Vertical organization in a small closet can be enhanced with split areas for folded, hung, and drawer wardrobe storage. Downsizing your home will you get rid of the clutter and will help you organize only what is essential.
Start of a new chapter
For many homeowners downsizing their home can be a new chapter. Whether you are an empty-nester who has older children who have moved out to those who have suffered from the death of a spouse or close roommate. Downsizing can represent a way to start a new life in a new home. Consider opting for a smaller home that could have less upkeep, the possibility of a homeowners association that can maintain the grounds and other amenities to enjoy your home as opposed to maintenance.
By downsizing and reducing your costs such as your mortgage along with maintenance and energy bills, it can often mean you have the extra money in the bank that can be spent on you and enhance your lifestyle. Perhaps it’s a trip to one of your bucket list destinations, or an annual visit to the family interstate. Also, travelling can be less of a hassle when you have downsized, especially if you live in an apartment as you can normally lock it up and go, rather than concerning yourself with ensuring your home has enough security while you have gone.
Interestingly by living in a smaller home, it will reduce your consumption. If there is no place to put it, you’re much less likely to buy it. That means less money is spent on clothing, food and consumer goods and more money that can be spent on enjoying your life.