Downsizing a home could just be one of the best financial decisions any homeowner can make especially if the kids have moved out already or for those who may need some extra financial legroom to spend on other things that matter to them.
And while living on a smaller space may take a little bit of getting used to, it has a lot of immense benefits. Like having less room to clean and care for, and of course energy efficiency and lower bills.
Personal finance website The Balance summed up the many advantages of downsizing a home in one of its blog posts. Some of the areas they highlighted in their write up is that downsizing increases cash flow and opens up the budget for more savings. One thing more, it also saves the owner a lot of extra time.
“If you’re spending less on your mortgage payment, you are likely to have money left over every month to allocate for other needs or desires. Or perhaps you could pay cash for a smaller home from the proceeds of your existing home. More Time. Fewer rooms and smaller spaces cut down on the time expended to clean and maintain. Smaller homes can reduce the time spent on household tasks, leaving more hours in the day to do something else more enjoyable.”
Take a look at the rest of the benefits they mentioned in their original write-up here.
Downsizing can be equated to more flexible finances
Personal Finance Guru Dame Ramsey also shared his thoughts on downsizing a home. Some of the financial benefits he mentioned is that it can help owners pay off debt if they have incurred any, it also paves the way to being able to immediately pay off the home mortgage, and put through more funds towards retirement. National Association of Realtors
“Once you’re debt-free with a fully funded emergency fund, it’s time to build wealth for the future. Dave recommends investing 15% of your household income into Roth IRAs and pretax retirement plans. If you’re still working your way up to 15%, that extra $500 could be the push you need to get there. And, boy, the difference $500 could make! In 30 years, you could have an additional $1–1.6 million in the bank to get you through your golden years.”
Check out the rest of his advice here.
Tips on downsizing
Moneycrashers.com meanwhile shared some tips for homeowners who are moving to downsize their homes. According to their write-up the challenge is usually making the new space accommodate what they need in order to live comfortably in their new home. Emphasis on what they really need.
“Things get a little trickier when you’re downsizing space, but not bedrooms – for example, moving from a 1,800 square-foot, three-bedroom home to a 1,200 square-foot three-bedroom home. You may need all your bedroom furniture, but you may not be able to fit all your living room or dining room furniture. Look carefully at the floor plan of your new space, or do a walk-through with a tape measure to really get a feel for where you can place your tables, chairs, and sofas.”
Check out the rest of their tips here.
Downsizing into a smaller home indeed comes with a lot of advantages.