When you think of downsizing, your home probably comes to mind. The term has long been associated with trading in a larger home for a smaller one that is less expensive and requires less maintenance.
Downsizing your home can definitely come with financial benefits. There are lots of other areas you can use this concept in your life to save some money. Take a look at these ways downsizing can help you spend less and save more.
Downsize Your Home
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 and are no longer interested in all the maintenance tasks that come with owning a large home. These can definitely be advantages to downsizing.
Just be careful to consider things like capital gains tax, moving costs, and the price of furnishing a new home. With some research and planning, you can downsize your home in a way that saves you big money.
Downsize Your Vehicle
A car payment, fuel, and insurance can take a bit out of your take-home pay. In fact, estimates say it can be about 22% of your total income. That’s quite a lot. 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. Is biking or walking an option for you? Perhaps public transportation or ride-sharing services would be more economical if you don’t need to ride far or frequently.
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 earn you a discount on your insurance. Paying off your car payment or trading down to a less expensive vehicle are also options that might provide significant savings.
Finally, look for ways to save on your insurance like reducing coverage on a used car or choosing a higher deductible.
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. 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. 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. Keep these suggestions in mind when moving forward.
Downsizing is not a one-size-fits-all solution, but it can be a powerful way to free up some extra cash in your budget. When done thoughtfully and with careful planning, downsizing can help you save money in many areas of your life. Keep these ideas in mind the next time you’re looking for ways to reduce your spending and increase your savings.
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