There are many reasons why you can go for downsizing. Maybe you simply don’t need that much space anymore, or maybe you just want to cut your costs down. Many people decide on this step when they get in a situation where they have a sudden drop in income for which they haven’t been prepared. Or, maybe you’re just a college student that’s trying to avoid student loans. Whichever story brought you here, the goal is the same – to cut down living costs. But, does moving to a smaller apartment always help you save? Well, we’re here to find out.
What do professionals say?
As we can often read or hear from the personal finance authors, moving to a different location to save costs is a good idea. However, there’s a little bit more to the story than this. You see, data shows that new single-family homes have been decreasing in size in the last few years. Although this creates lots of opportunities to downsize, it also helps to keep the costs up.
So, moving to a smaller house doesn’t always mean that you’ll pay less. If you’re renting in a big city, moving to a better neighborhood will probably increase your living costs no matter how much smaller the space is. Therefore, before finding affordable yet reliable movers, there are a few things you should consider.
Know all the costs involved
To determine if moving to a smaller apartment always helps you save, you have to know everything about the potential hidden costs. Naturally, smaller homes will initially be cheaper. But, if you’re subject to large gains from selling your bigger home, tax on profits can seriously reduce your savings. That definitely is a thing you should keep in mind before making any moves.
Experts tell us that there are often some curveballs that can seriously reduce your profit and savings. Furnishing and moving to your new home are just two of those. If you have lots of things to relocate, you’re possibly looking at $10,000 just for the move. Depending on the layout and the size of your new home, you may have to buy some new things as well. However, since you’re downsizing you can sell some of your old stuff and get your money back that way.
You also might have to store some of your items before you decide what to do with them. Make sure to pack your belongings properly before storing them so you avoid any damage that can ruin them. Don’t make a mistake that could cut your profits or simply making the things unusable if you decide to bring them with you to a new location.
If you’re moving to a condo, make sure to factor in the cost of the monthly fees. It’s advisable to check the association’s finances to make sure that they won’t have to raise your fees after you decide to move in. Do your homework before you downsize to make sure that you will be saving money.
Trade-offs are real
Like many other things in life, downsizing your home comes with some trade-offs. Although it can and probably will reduce some expenses like mortgage and utility bills, you’ll also reduce your property taxes. In the US there can be an incredibly large difference based on things like access to good the schools or highways.
Another thing where you’ll benefit is cutting down on costs of maintenance. There’s simply less to go wrong and less to clean, so many people find that extremely beneficial. Especially if they lived in a large house all their life so they know how expensive repairs on such homes can get. It’s one of the best ways to reduce financial stress if you ask us.
Plan everything in the proper manner
By now, we almost answered the question of whether moving to a smaller apartment always helps you save. However, there are a few more things we need to touch on. The first among those are life-changing events.
You need to determine how big the new home should be. Do you want to be prepared for some unexpected circumstances like an adult child moving back in, or elderly parents needing assisted living care? Maybe you just need an extra room so your grandchildren can visit you. All of these are serious questions that need answers.
Before you jump to conclusions, there is a common solution to all these problems. The current trend is having one additional multi-purpose room in your smaller home that will have a pull-down bed for visitors.
Think about your objectives for downsizing. Determine what your priorities are. Do you want to be near your family? Perhaps you want to be able to walk to the shops or stay close to the airport so you can travel whenever you want? Do you have the idea of becoming a minimalist so you need a house to suit your new lifestyle? The possibilities are endless, you just need to know what you want.
Find out what your adventure is
So, does moving to a smaller apartment always help you save? Certainly not, but it can if you play your cards right. However, there are many more reasons why you may want to do this. Freeing up your time can provide you with opportunities to do the things you never dreamed about. So, get your goals straight and don’t make assumptions on how much you will save. Instead, do the calculations and find the best way to enjoy the beginning of your new life.