If you are struggling for money, then you may mull through a number of options. Some people may borrow or work harder, reduce their spending or whatever, but there are some that might consider downsizing. This is something which is often suggested as a solution, particularly once families get smaller after children have left home. However, even though it is suggested lightly, it is not as easy as it may seem. It is worth considering what has to be done in order to achieve this.
Move to a smaller home
In order to downsize, you obviously have to move to a smaller home. Although in theory this is simple enough it means that you actually have to find somewhere smaller that you like and go through the hassle of moving. If you own your home, then you will need to sell yours first which could take some time. If you are renting, you may need to get together a deposit for the new rental place. It will take a lot longer to sell a home than move if you are renting, but there will still be the effort of searching for a new place. You will also have to organise all of the removals which some people do not like doing. You will have to decide whether you will pack things up and hire a van or whether you will get a company in to do it for you. Your decision could be influenced by how capable you are of doing the packing yourself or whether your health and strength means that you will need help with it.
Sell items to free up necessary space
If you are downsizing then you will probably need to get rid of some of the things that you own so that you can fit in your smaller property. Selling items will raise money which could help with the costs of moving. You may have to donate some things to charity and possibly even throw some things away. It can be hard to do this and some people really struggle with it. Others cherish the idea of being able to have good clear out and get rid of things that they have been trying to get an excuse to get rid of for years.
Be less able to then entertain guests
Once you have a smaller property it will mean that there will be less room for guests. This could mean that you will be less able to have people stay over with you, but it could also mean that you will not be able to also have visitors over for meals. This may be more of a problem for some people than others, it will depend on how large a family you have and how often you see them. It may be that they will be able to stay in a hotel nearby and you may be able to eat out so that you do not have to have everyone in your home all at once.
Have less money invested in property
If you own your home then you will have money tied up in it. When you downsize you will release that money. Although it could be useful to have the money to help you out if you are in a tricky financial situation, it will mean that you will have less opportunity to have money gaining in value. When money is tied up in property it is usually gaining in value as the property normally gains value. Once the money is taken out then it does not do this. You may need to spend all of the money anyway, but if you do not, then you will be losing out on the increase in value of that money. It is therefore wise to consider whether you want to invest it elsewhere so that it can continue to gain in value. A secondary effect will also be that there will be less to inherit. Your children may be inheriting the home, but once it is smaller it means that they will be inheriting less. You will have to think about whether you need the money more than they will.
The practical side of downsizing, such as finding a new property, reducing the things you own and moving can be tricky but they do not last long. However, the effects of having a smaller home can eb longer lasting. Not being able to entertain so easily could be more of a problem if you like having lots of family and friends to visit. Not having so much to pass on to children could also be a concern to some but it depends on how much help your children need financially or in fact whether you have any children at all to pass things on to.