When a homeowner downsizes, they sell their current home and move into one that’s smaller. Many people downsize because of retirement, divorce, or empty nests, but homeowners can do so at any life stage as their finances and priorities shift. Some people need to cut costs, while others find themselves drawn to minimalism.

Our guide covers the benefits of downsizing to a smaller home and offers tips for planning the move, decluttering, and maximizing your new space.

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6 Benefits of Downsizing Your Home

More Americans have been downsizing their living spaces in recent years. According to the National Association of Realtors, sellers aged 69 to 77 were the most likely to downsize their homes. Baby boomers and the Silent Generation are typically selling to move closer to friends and family or because their homes are too large.

Because of how “downsizing” often plays out in the business world, many people associate the term with a sense of loss or limitation. Despite these negative connotations, the pros of downsizing can easily outweigh the cons—especially for savvy homeowners. Below are a few benefits you can expect from downsizing your home.

Lower Utility Bills

Less square footage means lower utility bills. Nearly half of a home’s energy usage goes toward heating and cooling. This is particularly true in the less temperate Northeast and Midwest regions, where winter temperatures necessitate more space heating.

Even if you change nothing about your daily habits, downsizing can significantly reduce your energy costs. The smaller your living space, the less energy is required to heat or cool it. You can use the same amount of water and lighting, keep your home at a comfortable temperature, and still save money on your monthly power bill.

Increased Cash Flow

Lower utility bills translate to more cash to spend on other things. You can redirect that money into a rainy day fund, pay down your mortgage, travel the world, or bankroll a new business venture. Downsizing can make it easier to prioritize the things that are most important to you and take concrete steps toward achieving your goals.

Fewer Maintenance Costs

Think of all the time and money you spend each year on home maintenance, from cleaning to repairs. Nearly every line item in this category costs less in a smaller house. If you move into an apartment or condo, some home maintenance costs disappear altogether. Even if you plan to buy a new house, you can still save money. Your property taxes will be lower, and you can pay less for home services such as gutter cleaning and landscaping.

Reduced Clutter

Moving into a smaller home forces you to scale back on clutter, making it easier to stay organized. Use the transition to declutter and explore a minimalist lifestyle, keeping only the things that you truly need and love.

Less Cleaning

Less stuff and a smaller space means less cleaning. Almost every household chore will be easier and less time-consuming in your new home. You will have fewer square feet to vacuum and mop, smaller surfaces to dust, and less to tidy. Downsizing will save you time and effort if you handle your own cleaning, or save money if you hire a cleaning service.

Less Financial Stress

Although you will have less physical space in your new home, downsizing will give you more breathing room financially. The lower physical and financial toll can help reduce your stress levels—which can have several health benefits. You may see positive changes in your mood, weight, sleep, focus, and relationships. You might also experience fewer headaches and stomachaches, less muscle tension, and a stronger immune system.

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How To Plan for a Downsize

Planning for a downsize can take extra time and energy. However, the effort will pay off on moving day and in the following weeks as you settle into your new home. Use these tips to help you plan downsizing to a smaller home.

Prepare Your New Budget

Start with a thorough review of how downsizing will impact your budget. If you do not already have a written budget, take an hour or so to create one that reflects your current reality. Include monthly expenses, such as your utility bills, and annual expenses, such as property taxes and homeowners insurance.

Next, create a second budget to explore what your finances will look like after you move. Some costs, such as your internet or cellphone bills, might stay the same, but many will change. If you are moving into a rental, note your monthly rent payment and renters insurance. If you are buying a home, including your new mortgage payment, homeowners insurance premiums, property taxes, and homeowner association (HOA) fees, if applicable.

Account for All Moving Costs

In addition to creating a monthly or annual budget, you should create a comprehensive moving budget that includes all of your one-time moving costs. The most obvious are packing supplies, equipment rentals, and moving services. To estimate these, you must first decide how you will move. Ask yourself these questions:

• Will you hire a full-service moving company or go the DIY route?
• Will you handle all of the packing and unpacking or pay professional movers to help?
• Will you invest in moving insurance?

Make a To-Do List

Once you have your budget sorted, make your to-do list. Experts recommend compiling a moving binder to keep track of everything related to your move, from quotes and receipts to contracts and booking details. If you aren’t sure where to start, read our foolproof moving guide that walks you through each step of the moving process. Having a list can help you stay organized and on-time during what might otherwise be a chaotic few weeks.

Research Moving Companies

Be thorough in your research. Ask friends and family for recommendations, browse online reviews for local movers and companies that offer long-distance moving services, and request quotes from multiple providers. As you narrow down your options, make sure you have a backup plan. Decide what you will do if your first-choice moving company falls through or your belongings are delayed in transit.

Keep in mind that your list of to-dos won’t end on moving day. It’s best to have a plan for post-move tasks as well, such as unpacking and updating your driver’s license.

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How To Declutter Your Current Home

Toward the top of your to-do list should be decluttering your current home. Depending on the size of your home and how long you’ve lived there, this task can be daunting—but it can also be liberating. Here’s what to do.

Clean One Room at a Time

Decluttering an entire home becomes more manageable when you break it down into smaller steps. Don’t try to clean out the whole house in one day—instead, focus on downsizing one room at a time.

Start with the rooms you use the least, such as the basement, attic, garage, or guest room. In each one, decide what to take with you and what to get rid of. Then, pack and deep clean as much as you can before moving on to the next room.

If you plan to purchase moving insurance, we recommend creating an inventory as you go. This will make it easier to file a claim if any of your belongings are lost, stolen, or damaged during the move.

Sell or Donate Unwanted Items

You have three main options for disposing of things you no longer want or need. Some items, of course, may simply need to be thrown away. However, gently used items can be sold or donated.

Goodwill and The Salvation Army are two popular options for donating used items. You can also research local organizations that accept donations, such as homeless shelters or family services nonprofits. Some organizations will even pick up donations from your home, saving you the hassle of dropping them off.

Alternatively, you can sell your old stuff to help cover the cost of moving and buying new furniture. You can do this the old-fashioned way by holding a yard sale to downsize, or you can post on an online marketplace or app. Facebook Marketplace, Craigslist, eBay, and Poshmark are a few examples. A local thrift store or pawn shop is another option.

Set Up Decluttering Rules

The urge to hang onto things you don’t really need can be strong—especially in light of all the “what ifs” involved in a move. Help yourself by setting some decluttering ground rules.

The first step is sorting your things into four piles—keep, donate, throw out, and undecided. Come back to the undecided pile once everything else in the room has been sorted. 

Professional organizers have developed several methods for deciding what to do with “maybe” items. One example is the 20/20 rule, which suggests getting rid of anything that would take less than 20 minutes and $20 to replace. Another option is to purge anything you use less than 80% of the time.

Consider Your New Space

As you sort and purge, keep the layout and dimensions of your new home in mind. How big are the closets? How much storage space does the home have? How do the room sizes compare to those in your current home? Measure your current furniture to make sure it will fit. If it’s too big, sell it and use the money to purchase smaller items.

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How To Maximize Your Smaller Space

Use Space-Saving Furniture

As you shop for new furniture, look for space-saving or dual-purpose pieces that are appropriately sized for your space. Oversized or heavy furniture, for instance, will make small rooms feel even smaller. Rugs, drapes, and busy patterns can have the same effect.

Avoid overcrowding rooms. Leave a little bit of space between walls and furniture. Long, clean lines and light colors can help a room feel larger. You can also save space by choosing fold-away furniture or pieces with hidden storage, such as a bed with built-in drawers or an ottoman that doubles as a coffee table.

Consider Renting a Storage Unit

If you have items you do not use year-round but wish to keep, consider renting a storage unit. Many moving companies offer both short- and long-term storage, including climate-controlled units that can safely store keepsakes and seasonal decorations.

The money you save from downsizing can help cover the cost of a storage unit, which you can use as supplemental or temporary storage. It doesn’t have to be a permanent solution. Instead, use the storage unit for “maybe” items and commit to clearing it out by a certain date. For instance, you can give yourself six to 12 months and decide that anything you haven’t used by then can go.

Incorporate a Multipurpose Room

In a large home, each room can have its own purpose—a separate bedroom for each person plus a guest room, dedicated home office, dining room, and playroom. To make a smaller home functional, you might need some rooms to serve multiple purposes. Children might need to share a room, or a child’s bedroom may need to double as their playroom. If you work from home, your desk may need to be in the dining room or your bedroom.

Design Your Space To Look Bigger

Being intentional with your interior design can make your home look and feel bigger. Although furniture choice is important, it’s not the only thing to consider.

• High-contrast colors: For small spaces, focus on high-contrast colors. Bright white can make a small room seem more spacious, while dark or bold colors can provide an illusion of depth—especially in a room with no windows. What you don’t want are the in-between colors. Medium shades will make your space feel smaller.

• Natural lighting: Let in as much natural light as possible with breezy, sheer curtains or blinds. Draw the eye upward with visually interesting light fixtures and emphasize vertical or horizontal lines with shiplap or paneling. In a room with small windows, use a mirror to reflect whatever light does make its way inside. White fixtures can also help reflect light.

• Decor: When choosing decor, remember that less is more. The room will look bigger with a few high-quality pieces than with lots of little items. For instance, you might choose one large painting rather than designing a gallery wall.

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Our Conclusion

Downsizing to a smaller home can be scary for some people, especially those accustomed to living in larger homes. However, it can also be a financially prudent and liberating decision. Many homeowners find that they gain far more than they give up by downsizing.

Moving into a smaller home requires organization and forethought, but it’s worth it to do the work ahead of time. With careful planning and thoughtful design choices, you can declutter and move into a smaller space without sacrificing the things you love most.

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FAQ About Downsizing to a Smaller Home

At what age do most people downsize their home?

The age at which most people downsize their homes is between 69 and 77 years old, according to the National Association of Realtors. Baby boomers and the Silent Generation sell their homes to move close to friends and family or because their homes are too big.

Should I downsize to a smaller house?

Whether you should downsize to a smaller house depends on your personal circumstances. Downsizing often means less upkeep and can help you save on your household bills.

How do you move from a large house to a small house?

When downsizing from a large house to a small house, go room by room to minimize your belongings. Sell or donate unwanted items and keep the layout and dimensions of your new home in mind. Sell anything that you think might be too big and use that money to purchase smaller items that better fit the space.

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