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 downsize your home, the home you love and cherish.
Downsizing as a term has long been associated with trading in a larger home for a smaller one that is less expensive and requires less maintenance.
And of course, downsizing your home can definitely come with financial benefits.
But there are lots of other areas that you can use this concept in your life to save money.
Take a look at the ways downsizing can help you spend less, save more and simplify your life.
Downsizing Your Home
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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 home.
Life transitions like kids leaving home and getting older often top the list.
But perhaps you simply wish to save money on the costs of upkeep, property taxes and are no longer interested in all the maintenance tasks that come with owning a large home.
These can definitely be advantages to downsizing.
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.
Which then meant it was doable to pay if off 10 years early, even though we didn’t earn much.
You can read about what we did to become mortgage free in this post:
Should you downsize your home?
Downsizing your home to save money can be a good call to not only free up money every month but also, as we did, to cut your mortgage down.
Be careful to consider things like property taxes, capital gains tax, moving costs and the price of furnishing or decorating a new home.
If your moving costs amount to $15,000 then you need to be saving significantly more than that on both reducing your mortgage and your monthly costs.
When we downsized we didn’t just halve 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 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 post: How To Pay Off Your Mortgage Early (So You Can Be Free)
Even if you don’t downsize your current home you definitely want to be downsizing your home insurance.
It pays to shop around when it comes to home insurance but no need to make multiple calls or plug your details into a dozen websites. Gabi is an online advisor who compares all your insurance options to find you the right policy, in under two minutes.
They compare multiple quotes from 20+ top insurance companies, saving you $720 on average.
Downsize Your Vehicle
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 sinking fund 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.
A quick way to save on your car insurance is to use Gabi.
Gabi is a free online insurance comparison site where it takes only a couple of minutes to find the best rates and policy for you.
Create your free Gabi account today and see how much you can save on your next insurance policy.
Downsize Your Entertainment
Take a look at your budget for entertainment.
There may be a number of ways you can reduce costs 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 keep 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 rate for the services you use by negotiating with your various providers.
As the saying goes, there is always a deal to be done.
Even better, get Billshark to ask for you.
Billshark negotiates lower prices on your monthly bills such as internet, wireless and TV providers to save you time, money and hassle.
You could save hundreds each month with the help of professional bill negotiators at BillShark, starting today!
Downsize your expectations
Saving money is not about doing without.
But if you want to learn how to downsize your life and save money 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 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 and save money and stress.
Simplify your Life and save money
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 pay for convenience like eating out, having someone do your cleaning, your gardening, washing your car.
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 save money 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 downsize your house to save money. Because you save the money you need this way instead.
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 money.
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.
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.
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Last Updated on 22nd May 2021 by Emma