How To Downsize Your Life And Save Money

Are you at that stage where you are seriously thinking about how to downsize your life and save money?

Perhaps you are thinking the only way to have a simpler lifestyle is to be downsizing your home, the home you love and cherish.

Or maybe you got inspired by the minimalist life trending on social media now?

Downsizing as a term has long been associated with trading in a large home for a smaller place that is less expensive and requires less maintenance.

And of course, downsizing your house to save money can definitely come with big financial savings.

But there are lots of other areas that you can use this concept in your life to save more money.

Take a look at the ways downsizing your life can help you spend less, save more and simplify your life.

What are the Benefits of Downsizing?

The major benefit of downsizing your current home and your future life is that it will save you a lot of money. A smaller home means less time cleaning and keeping up with the demands of a larger space (costing you lots of money to maintain your home), smaller bills and gives you back more time.

Choosing a smaller living space allows you to be specifc about your needs and cut out wasted space and wasted costs. A smaller house can be more energy efficient and give you a big reduction in the monthly payments you make for bills.

Downsizing your life in general is all about doing less, for less, so this will also save you more money.

Woman with many hands doing different jobs screaming to signify how to downsize your life

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How do you downsize your life?

A larger family home demands more time cleaning, maintaining and for general upkeep. A smaller home means you get back some of that time.

Downsizing your life is all about doing less and paying out for less. Not less as in being bored because you have nothing to do. But less as in making choices about what you really want to be doing.

The added bonus of doing less is that you may find you have more family time. Time to relax and just enjoy being, rather than always doing.

How do I start downsizing my life?

People downsize their lives, their homes, even their friends in their quest to build a better, simpler future. The easiest way to get started is to think about how much money it is that you want to cut from your expenses.

Getting rid of your mortgage can make a huge difference to you and your family. So much less stress! So much more freedom!

detached house exterior

Downsizing Your Home to save money

Because it’s the one that comes to mind, let’s start with some tips for downsizing your home.

There are lots of reasons you may wish to opt for a smaller space.

Life transitions like kids leaving home and getting older often top the list. You might also be craving less stress, a new lifestyle or have financial goals you want to achieve such as making sure your retirement account is topped up.

Or perhaps you simply wish to reduce how much you are spending on the upkeep and property taxes of your current home. Maybe you are no longer interested in all the maintenance tasks that come with owning a large home like lawn care and keeping your yard clear.

And of course let’s not forget the cost of the mortgage you pay. There are many financial benefits to selling an expensive home and opting for a new home that is cheaper to buy and cheaper to run.

We downsized our home when we were in our mid-thirties because our mortgage felt like a heavy weight on our shoulders every single day.

By downsizing we were able to cut more than half off our mortgage monthly payment.

Which then meant we could use the extra money to pay it off 10 years early, even though we didn’t earn much.

You can read about what we did to become mortgage free in these posts:

15 Things We Gladly Gave Up To Become Mortgage Free

Mortgage Free Living: How To Achieve It

Should you downsize your house?

Is house downsizing worth it? Downsizing your house can be the right move to not only free up money every month but also, as we did, to cut your mortgage debt down.

Perhaps you’ve got debt you want to pay off? Or your retirement account needs a top up? Selling your home and buying a smaller one could reduce your mortgage and free up money for debt repayment and your retirement fund in one fell swoop.

Be careful to consider things like property taxes, capital gains tax, moving costs and the price of furnishing each room or decorating a new home when you start your new home buying journey.

If your home sale expenses amount to $15,000 then you need to be saving significantly more than that on both reducing your home loan and your monthly costs to realize the benefits of your move.

Related Reading: An Essential Guide To Determining Whether Equity Release Is Right For You

What should I save when downsizing?

You can save on every aspect of home owning when you move to a smaller house. Your mortgage, all the bills associated with the property but also things like the services you have to use when things go wrong.

For instance, if you employ a window cleaner, they are going to charge more for a bigger house with more windows than a smaller one. Same goes for a cleaner. Even things like buying paint for your new home will be less. Because you will have less walls to paint!

Less square footage, less property taxes

When you move into a new space, you can ensure you have only the rooms you now need, whether that is just one room or just a bit less space than you have right now.

The bigger the house, the more mortgage and property tax you pay. How much money you might save by reducing your house footprint will of course depend on things like the area you live in, how many spare rooms you might have and how much space you give up.

Exterior of old fashioned English home

How do you drastically downsize your home?

Selling your home and moving into a smaller space can seem difficult if you have a lot of stuff, clutter and sentimental items. Taking the time now to declutter, to end up with less stuff is time well spent. It will give you an idea of how much room you really do or don’t need.

It can help if you get family members involved in the declutter, after all they might want a few items for themselves.

Tiny houses

Moving to a tiny home is my kind of drastic action to get rid of your mortgage very quickly. A tiny house will have extremely low bills and a tiny mortgage of any at all. The question is, could you be happy in something that is not much bigger than a room in your current house?

Does Downsizing mean you’ll be saving Money?

Does downsizing save money? You bet it can do! When we downsized, our savings weren’t limited to just halving the size of our mortgage. All our associated monthly bills were reduced too.

Bills like energy, water, council tax (property taxes) and house insurance.

My advice on downsizing your home to save money is to firstly work out how much you want to cut from your mortgage AND your monthly bills.

Then do the sums to see how it works out. With some research and planning, you can downsize your home in a way that saves you big money.

Related Reading: How To Pay Off Your Mortgage Early (So You Can Be Free)

Even if you don’t sell your current home you definitely want to be downsizing your home insurance.

couple on a pale blue motor scooter with shopping bags to signify how to downsize your life and save money

Downsizing Your Vehicle to save money

A car payment, fuel and insurance can take a big chunk out of your take-home pay, especially the car finance payment.

In fact, estimates say it can be about 22% of your total income. The AA have a detailed article on the running costs for a car.

That’s a lot of money on a piece of metal that takes you from home, to work, to the shops and back again.

I’m not one for saying you should do without a car, far from it (we still have 2 vehicles). What your finances could do without is that monthly car finance payment.

Looking ahead, the ideal scenario is to create a sinking fund for a new car and save into it each month.

When it comes time to trade in your current car, use the money in that savings account to purchase a new (to you) car.

Free and clear of any finance.

Money saving transport options

Meanwhile there may be other options that can save you a lot of money.

  • Perhaps you can carpool with someone else in your household or a co-worker?
  • Can you work from home more?
  • Perhaps public transport or ride-sharing services would be more economical if you don’t need to go far or that frequently?
  • Is biking or walking an option for you?

You may also want to consider a combination of those options.

Driving your car less frequently could save wear and tear, as well as potentially earning you a discount on your insurance.

Long term, paying off your car payment or trading down to a less expensive vehicle are options that will provide you with significant savings.

Look for ways to save on your insurance like reducing coverage on a used car or choosing a higher deductible.

And of course, never auto renew your car insurance, always look around to get the best priced cover you can.

Group of older family members eating together outside

how to Downsize Your Entertainment

Take a look at your budget for entertainment. There may be a number of ways you can reduce expenses in this category.

Home entertainment such as cable TV and streaming services fall under this umbrella, as do eating out, seeing a movie or concert, traveling and other such expenditures.

You could take your cable package down a notch if you’re getting premium channels and more. Getting rid of cable altogether in favor of streaming sites like Netflix and Hulu can save you a big chunk of cash.

We chose to pay for cable but don’t have Netflix, BritBox, Hulu or Amazon Prime Video.

Setting limits on your outside entertainment activities is also wise. Perhaps make a choice to go out only one night a week, while staying in the others?

You can also make sure you are getting the best deal for the services you use by negotiating with your various providers.

As the saying goes, there is always a deal to be done.

Downsize your expectations

Wanting to spend less money is not about doing without.

But if you want to learn about the downsizing process and any hidden costs then don’t expect to do everything and have everything.

You can have anything you want, but you can’t have everything you want.

Simplifying your life enables you to slow down, to appreciate what you do have so much more.

Downsize your future expectations of what you should have or want and you are going to save money.

Learn to love what you already have and not constantly want the latest must have gadget, movie or clothing accessory.

Focus on what is important to you, what you value most. Ignore what everyone else is doing, saying and buying. They’re likely in debt and you don’t want that.

Do these things and you will simplify your life, have more money and less stress.

Related Reading: How To Love Living Within Your Means Every Day

How To Stop Living Beyond Your Means In 10 Easy Steps

Woman in sunshine head thrown back and arms behind her enjoying the sunshine

how to downsize and simplify your life

The busier you are, the more likely you are to spend. Because activities cost money.

Time becomes more precious when you have a packed schedule.

And a packed schedule means you end up paying for convenience like eating out, having someone do your cleaning, your gardening, washing your car.

The good news is there is nothing wrong with not having activities back to back every night.

There is nothing wrong with having date nights at home with a good book, on your own or with your spouse.

If you want to increase your savings and reduce spending then downsizing your schedule and your stuff is a great way to do so.

Depending on just how busy you are, downsizing your schedule could amount to hundreds saved every month.

Which could mean you do not need to move to a new space to be saving money. Because you save the money you need this way instead.

2 piles of coins and a roll of dollars

Should i downsize to save money?

If you are overspending and building up debt then absolutely you need to be downsizing something.

Downsizing your home is hard so don’t think that’s your only option to save the money you need.

In fact I would suggest that downsizing your house to save money should be the last option you take rather than your first.

There are lots of ways you can downsize your life to save a great deal of money.

Saving money is really about getting the right mindset to create healthy financial habits that help you both in achieving you short term, and long term goals.

Looking at your circumstances honestly and getting creative can help you find what works best for your situation. You can:

Cut your monthly costs in other ways.

Stop overspending, cut back on some of the luxuries you allow yourself each month.

Consider cutting your transport costs.

Reduce your lifestyle and entertainment costs.

All of these could add up to a significant sum each month. More than you would gain from moving to a cheaper house.

For more help with money saving grab your copy of the Money Saving Mini Bundle

Come and follow me on Pinterest for more money saving hints and frugal tips!

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Last Updated on 7th August 2023 by Emma

About Emma

I'm here to help you become confident in making the best money decisions for you and your family. Frugal living has changed my life, let me help you change yours.

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