The key to healthy finances in 2020

You may be in a very different financial position at the end of this year than you were last year. Thanks to the pandemic, more people are struggling to make ends meet.

There is one factor to consider, however, and this factor can save you thousands of dollars. It's downsizing.

Downsizing is when you move from a larger housing situation to a smaller one. Smaller accommodations come with smaller mortgages (or rents), smaller heating and cooling costs, and fewer opportunities to splurge on decor and furniture...because where would you put it?

Why are people upsizing?

Funnily enough, more people have been upsizing since the pandemic started. Remote work and school closures have made people rethink the size of their homes and the functionality of what they need to do within those walls.

The desire to increase square footage, have a yard, and gain a home office with an actual door may be quite strong and quite reasonable. However, the volatile economic situation combined with the ever-looming health crisis makes those desires clear "wants" not "needs."

Why you should downsize

Out of all your monthly costs, mortgages and rents are usually the most impactful. Changing this variable can change the entire state of your finances, and it is one of the only variables you can really control. After all, you can't control whether you are let go from your job or the state of the stock market.

Even if your finances are stable at the moment, downsizing can offer a financial cushion for whatever may come in 2021.

Right now, interest rates are at an all-time low, so downsizing can come with the added benefit of paying less in interest.

How to make it work

If you've been living in a larger space, it may seem impossible to get by with less square footage. However, this is a mindset, and it can be adapted.

Consider how you can be smarter with your space. Loft beds maximize vertical space, so you can have a sleeping area with a work station underneath. Kids can share bedrooms. Corner desks can turn unused space into an office.

This home office is by Summerwood.

Or, you could consider adding a small cabin to your backyard. This could serve as a home office or a guest room.

There are ways to make a smaller home just as functional as a larger one. But smaller homes come with the benefit of padding your wallet.