Money Management

Is Tiny Home Living (Or Investing) The Answer To Your Financial Problems?

By  Karen Banes

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There is no doubt that, for most Americans, housing is one of the biggest monthly expenses, if not the biggest. It’s not just the rent or mortgage, but also the property taxes, insurance, utility bills, repairs, maintenance and other expenses.

While it’s not for everyone, tiny home living has been a way to drastically cut these costs for millions of people across the US, and even more are considering it as a possible future option.

In 2020, a survey showed that 56% of Americans would consider living in a tiny home, and significantly, 72% of respondents indicated they would consider using a tiny home as an investment property, which explains why start-ups have sprung up who will turn your garage or backyard space into tiny home which can easily be rented out.

This is a surprisingly high percentage, but perhaps less so when you consider the fast-growing AirBnB market, and how popular tiny homes are on the platform. There is also the fact that tiny homes are potentially very desirable to young renters who are looking to cut rental costs, and haven’t yet accumulated a lot of furniture or the other material possessions that makes tiny home living impossible.

On that note, the difficulty of getting onto the housing market in many states is also behind the popularity of tiny homes. The above survey showed that 86% of people who are not yet homeowners would consider a tiny home as their first home.

Even during the pandemic, tiny home living continued to be popular, in spite of the potential problems of working from home, in close proximity to other household members, and being confined to home for long periods of time.

While many Americans are trying to cut housing costs by relocating to cheaper parts of the US, or leaving the country altogether, tiny homes tend to be popular in more desirable states where housing costs in sought-after areas are sky-high. According to Business Insider, the top states for tiny home ownership are California, Florida, Colorado and Texas.

Tiny homes are, of course, most practical for small households, such as child-free couples or single people. But that doesn’t mean tiny home living has to be isolating. Tiny home communities are becoming more common across the USA, providing highly affordable, community living that totally suits some sections of the population (while it would, of course, be a nightmare for others).

So Does Tiny Home Living Really Save Money?

There’s no doubt that tiny home living is a complex choice. While saving money is a welcome, and sometimes necessary, side effect, most tiny home dwellers have chosen the lifestyle for reasons linked to sustainability, minimalism and simplicity. There’s usually a good reason that someone chooses tiny home living over other ways to cut bills, such as living with family or finding multiple room-mates.

Having said that, National Debt Relief have confirmed that tiny house living is definitely saving a lot of money for a lot of people. However there are things to take into account. While some tiny homes can be built for less than $10,000, it generally works out that the cost per square foot is more when building a tiny house, often around twice as much as with a traditional home.

The savings don’t end with the construction, or purchase, of a tiny home, though. Property taxes and insurance are generally based on the value of your home, and utility bills tend to depend on its size and how energy efficient is it (tiny homes are often built with energy efficiency, and sometimes off-grid living, in mind).

According to Tiny Living tiny home dwellers are slightly more likely to have savings in the bank than the average person, and are more likely to own their home outright. 89% have less credit card debt than the average person, and 65% of them carry no credit card debt at all.

It is, however, important to be aware that there are other reasons that tiny home dwellers may be financially better off than those in traditional homes. As already mentioned, they are more likely to be child-free (although there are plenty of families living in tiny homes) and some will be retired, possibly with significant retirement savings. Interestingly, Tiny Living also reports that tiny home dwellers are twice as likely as the general population to have a Master’s Degree, and that, on average, they tend to be (slightly) above average earners.

Is a Tiny Home a Good Idea for Me?

This depends on a lot of factors and, to be honest, most of them are not financial. Tiny living is a lifestyle choice that can save you money. But it is very much a lifestyle choice. The most important thing to consider is whether you’ll actually enjoy tiny living, and whether it aligns with your values.

If the answer to that is yes, then it might well be right for you. At least for a while. And during that time, all other things being equal, you will likely save a significant chunk of money over living in a traditional home.

Karen Banes

About the Author

Karen Banes

I’m a freelance writer specializing in online business, personal finance, travel and lifestyle. I also work as a content creator for hire, helping brands and businesses tell their stories, grow their audiences, and reach their ideal customers. I’ve lived, worked and studied in six countries, across three continents. Stop by my blog TheSavvySolopreneur.net to learn how to run your own (very) small business on your own terms. You can also connect with me at my website KarenBanes.com or follow me on Medium.com

Disclaimer: In order to make Wealthtender free for our readers, we earn money from advertisers including financial professionals and firms that pay to be featured on our platform. This creates a natural conflict of interest when we favor promotion of our clients over other professionals and firms not featured on Wealthtender. Learn how we operate with integrity to earn your trust.

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