There are two main ways you can try to save money. The first way is to go down the small savings route. This is where you make a few small changes to multiple aspects of your life, making minor savings with each one. They all add up, helping you save a decent bit of cash every month.
Ideas here include saving money on groceries every week, walking instead of paying for the bus, being more conservative with car fuel, etc. You’re not making dramatic changes, but you will gradually save money.
The second approach is to take the opposite path. Instead of making small changes, you opt for bigger ones. This involves bold moves that save a huge chunk of money either in one go or every month. Changes like this are slightly more dramatic, with the best example being downsizing.
What is downsizing and how will it help you save a lot of money? We’ll tackle both of these questions in our guide, along with some examples of downsizing at work.
What is downsizing?
Downsizing refers to something that was large but is now smaller. It’s when you take certain aspects of your life and make them smaller and more manageable.
For instance, you live in a large house with multiple bedrooms and downsize to a smaller one with less space. In most cases, the smaller property will be more affordable because you don’t pay for as much internal space. Other factors also come into account, which we’ll discuss later in this post!
How does downsizing save money?
Downsizing is an effective way of saving money because it tackles multiple things at once. Usually, if you take an aspect of your life and downsize it, you’ll see a knock-on effect. Certain things are easier to pay for than they were before. Things require less maintenance than they did when they were bigger.
Your outgoings are likely to decrease, meaning you’ve saved a load of cash every single month. This will all make more sense when we look at a couple of big ways you can downsize to save money. You’re looking at thousands of dollars a year in savings when done correctly.
That’s no joke – it can genuinely happen. You’ll see why as we present the two main ways to downsize your life:
Downsizing your home
Most of us have heard the term downsizing before, and it’s typically spoken about in reference to houses. If you downsize your home, you’re moving from a bigger property to a much smaller one.
Now, how does this save money? As mentioned before, you’re going to see multiple savings across different areas of your daily life. Here’s where you can cut down on expenses if you downsize your home:
- Mortgage/rent payments – Whether you’re buying or renting, it is always cheaper to have a smaller property in the same area. Property sizes or the number of rooms in a property will always be key value factors. It will cost more money to rent a 4-bedroom apartment than it will to rent a 2-bedroom one in the same building.
Likewise, if you’re buying a house and repaying a mortgage, you’ll massively slash mortgage payments by downsizing. In some cases, the cost of your new home is so little you may be able to pay off the rest of your mortgage and buy it outright. This’ll mean there’s no mortgage attached to your new property, removing one costly monthly expense.
- Monthly energy bills – Smaller properties have smaller energy demands than larger ones. Think about it, the more spacious your home is, the more energy it needs to heat or cool it. You’ll also have more lighting throughout, and more appliances, so your energy bill will be pretty high.
With a smaller home, it’s way easier to control energy usage. Because there’s less space, heating this small area is less demanding. You’ll generate body heat with your family anyway, and the lack of space means heat is less likely to dissipate. You will have fewer lighting fixtures because there aren’t as many rooms, and you might not have as many appliances. Overall, the monthly energy bills will be considerably lower.
- Insurance premiums – Did you know that a lot of home insurance providers calculate premiums based on your property size? Okay, that’s not technically accurate – it’s more to do with the property’s value. But, as we said before, the whole point of downsizing is to move into a more affordable home.
Therefore, insurance premiums will decrease as well. Your home is cheaper to insure, which may not seem like a huge saving, but it all adds up.
- Maintenance – Maintaining a large home is more costly than maintaining a small one. In extreme cases, people will literally pay cleaners to look after their houses because there are too many rooms to deal with. You’ll never have this problem in a downsized property, so that’s one expense you no longer have to consider.
Even from a general perspective, maintenance costs are much lower. You won’t need to spend as much money on cleaning supplies because they last longer. If you need to pay for specialist cleaning services – like deep carpet cleaning or roof cleaning – this will be cheaper too. Why? Because you’re paying service providers to clean less space than before.
These savings add up to massive amounts every month/year. The cool thing is, you’ve earned them by making one change in your life. Sure, it’s a big one, but this shows the power of downsizing your home.
Furthermore, you have an opportunity to earn a bit of money when downsizing too. You won’t need as many belongings as you had before, so it’s the perfect chance to get rid of them. Have a garage sale or sell things online to recoup money and put it towards the moving costs. This lowers the cost of downsizing as well!
What is the main thing to consider when downsizing your house?
Ensure you still have enough space to live comfortably as a family. That’s all that matters here. Don’t worry too much about personal belongings – if there’s enough room for the basics, you’ll be fine. Remember, places like SecureSpace Self Storage exist, giving you ways to store sentimental or valuable possessions without eating into your home space. The cost of renting a small storage unit is still nothing compared to the rental/mortgage savings you see every month.
Downsizing your car
The other big thing you can downsize is your car. Now, cars are funny because you don’t necessarily have to downsize to a much smaller vehicle. It’s recommended, but it is possible to downsize to a similar-sized car, only with a smaller or different engine.
It can also be beneficial to downsize to a car that’s more expensive than the one you currently own. This is because all of your savings will be monthly car expenses and having updated technology or improved engine performance can slash loads of your regular payments.
With that in mind, here are the main expenses you can cut down on if you downsize your vehicle:
- Fuel payments – Big gas-guzzling cars with huge engines and low mpg will drain fuel like crazy. You’ll be topping up at the local gas station once or twice a week, which leads to huge fuel costs.
If you switch to a hybrid car, or an electric one – or even a gas one with better fuel efficiency – you’re going to use less fuel. It makes your car so much cheaper to run.
- Maintenance/repairs – Downsizing from a big old car to a smaller modern one will save money on maintenance/repairs. New technology will reduce the chances of collisions while also helping you drive more efficiently.
This should mean you don’t have to keep bringing your car in for minor repairs for bumps and bruises. Efficient driving also keeps your tires going for longer, so they don’t need to be replaced as often.
That’s pretty much all there is to this one, but the savings from both combined are huge. As with a house, the main thing to consider when downsizing your car is space. You need a vehicle that’s big enough for your family – but does it need to be any bigger? What’s the point in driving a car with 7 seats when you have a family of 4? Downsizing to a smaller car that’s more modern and has better technology will save money.
Speaking of which, that’s the second key thing to think about when downsizing. Don’t focus too much on the cost of buying a new car – focus on the savings it can help you make. If it’s expensive, but you will save hundreds of dollars a month on fuel, it becomes a worthwhile investment.
On that note, we’ve reached the end of this post. The art of downsizing is special as it helps yu save a lot of money every month/year. If you downsize to a smaller home, your expenses decrease and life becomes more financially manageable. Those of you that can’t do this should consider downsizing to a more affordable vehicle instead – you’ll be amazed at how much you can save on fuel/maintenance costs.