When you live in a home that is just a few hundred square feet, it’s not just your storage space that is impacted. This choice comes with a lifestyle and, in some cases, some not-so-tiny financial implications.
So it’s not just tiny houses – it’s a movement. A movement towards simpler, smaller homes which gives many a chance to reprioritize their finances and reach for financial freedom..
Exactly How Tiny is Tiny?
Tiny home dwellers tend to take size restrictions very seriously – so the answer can vary depending on who you ask. Some say that a tiny house is less than 400 square feet. Although others will claim that anything up to 1,000 square feet can still be considered “tiny”. For reference, the average single-family home in the U.S. today is more than 2,600 feet (or more than six times the size of your average tiny house).
A Counterculture Movement
Many of us spend roughly 30% or more of our income on housing and a much smaller percentage on savings or retirement. This trend suggests that having a large, or even luxurious, home is a financial priority in the U.S. – and there’s certainly nothing wrong with that! But, the popularity of housing as a financial priority is why the Tiny House Movement, in contrast, can be considered counterculture.
Owning a certain type of housing is simply not a financial priority for everyone. The beauty of the situation is that each of us has the power to choose our own financial priorities and restructure how we live in an effort to satisfy those unique priorities.
A Teeny Tiny Minority
As is often the case with counterculture, these tiny homes are anything but commonplace. Only about 1% of purchased homes in the U.S. are less than 1,000 square feet. This percentage might not be entirely accurate, because many tiny homes are off the grid and difficult to track (due to the fact that they do not require the same building permits as larger homes). Even so, these homes represent a teeny tiny minority of current U.S. housing.
As Gen Y is coming of age and building their own nests, it will be interesting to see if tiny homes become more popular. Owning a home – complete with all the domestic luxuries – was a big piece of the American dream chased by Baby Boomers. But, this doesn’t seem to hold true with Millennials today. 34% of Millennials would either definitely live in, or seriously consider living in, a tiny house. This is in comparison to 23% of all Americans and only 15% of Baby Boomers.
A Chance at Financial Freedom
While not every tiny house dweller is motivated by financial reasons, a lower cost of living is bound to free up some funds which can be put into investing, saving for retirement, travel, or anything else. For someone who wants to reprioritize their finances to meet savings or retirement goals, a tiny house could be advantageous, assuming it makes sense with the rest of that person’s lifestyle.
If we look at the financials of those who live in tiny houses today, the numbers speak for themselves. More than half of tiny house dwellers have more savings than the average American, and more than a third of tiny house dwellers have more than $10k saved for retirement.
Granted, the lifestyle that often comes with a tiny house embraces efficiency and minimalism – which probably helps to amplify these financial achievements.
Living in less than 400 square feet is a pretty dramatic tactic if saving for retirement is your only goal. So keep in mind that there are plenty of other ways to save, and you can always decrease your housing costs in other ways without drastically miniaturizing your life.
More Than a Financial Choice
There is a common misconception that tiny houses are for people who can’t afford houses. But, for most people, it’s a choice rather than a financial necessity. Similarly, a tiny house is bound to impact more than just your finances. There are a variety of reasons – ecological, philosophical, and opportunistic – that might make someone choose a tiny home.
And we can’t forget to mention the allure of adventure and experience! Many tiny homes are mobile, allowing their inhabitants to travel and explore the country with their house in tow.
Have you ever considered joining The Tiny House Movement? Let us know what you think about the implications in the comments below!
Comment on this article
Comments
Patti A. on December 21, 2016 at 2:25am
I've been living with a friend most of this year and I've found that I don't NEED the majority of my things. I want a tiny home really bad so I can then have money to spend on travel and savings. I love this whole idea. The only problem is that it's not so cheap finding a place to park it. Can wait to get one though.
Vicki on December 21, 2016 at 7:16am
We have two tiny houses. A park model with AZ room (750 sq ft). And a class A motor home (350 sq ft). We live half the year in each.
Sarah on December 21, 2016 at 9:40pm
I have more than considered joining the tiny house movement, I am actively planning and designing to build my tiny house. The biggest difficulty is finding people who will loan me the amount needed to build my tiny home with a loan term of longer than 8 years.
Rodney C. on December 22, 2016 at 10:44am
Unintentionally these tiny homes also limit family size. But the idea is good especially when the prompts more savings. They can always be sold when deciding on a larger home.
Mary on December 22, 2016 at 11:30am
I've checked into a lot of different tiny homes. They are NOT inexpensive by no means. Haven't found one yet that I could afford.
Terry W. on December 22, 2016 at 12:23pm
I used to rent a 3 BR mobile home for my old chihuahua and myself. I wound up having to move, through no fault of my own and after checking into rent(exorbitant amt), not just for Apts, but also other houses. I decided to look into buying an RV for half the amt I would pay elsewhere, including a storage unit. Granted, I had no truck to move one, but my son did. So I bought a used 2004 5th wheel (32ft). Luckily I had cash for a down pmt. My bank (no credit to buy at dealership) gave me a loan and here I am, loving my tiny house. I first moved to an RV park, then I was laid off and had to downsize again and move to a friend's property. Long story short...I love it. In 4 yrs it will be all mine and I won't have to worry about being evicted again! I can continue to put away the amt of RV pmt in my savings. So yes, I like the idea of a tiny home very much. It's perfect for me!
Mike m. on December 23, 2016 at 9:24am
Love the idea of going tiny for several reasons you mentioned above
Janet on December 23, 2016 at 9:48am
I love how the tiny homes make such great organizational sense!
CHenney on December 23, 2016 at 10:45am
My husband and I live in a 2250 sq ft house. Just the two of us. It's too big!!! It isn't really feasible to downsize right now, so I'm trying to just downsize our stuff. Except for my loom room. My 400 sq ft loom room is sacred, and is the reason that if we did go tiny, it would have to be just under 1000 sq ft, with 400 of that reserved for my looms etc. :)
Mary F. on December 23, 2016 at 7:31pm
I would love to live in a tiny house....its just tiny me...
sailboat l. on December 23, 2016 at 8:41pm
My family lives on a 36 ft sailboat in boston. we have about 300sq ft and it was nice for a couple, we can travel without packing, and the views are great. We now have twins on board so we need a little more space. We have quite a few boat families with kiddos near by.
Jason g. on December 23, 2016 at 11:00pm
Right, buy a $60000 tiny house, a $30000 truck to pull it, and spend $10000 a year on parking and plug in. Smart choice. Or you could buy a trailer on Craigslist for under $10k and do the same thing.
RLB on January 21, 2017 at 10:18am
My first house was only 574 SQ FT it had everything a big house has without all the wasted space. The nice thing, there wasn't a lot of space for storage so i just didn't buy stuff or would get rid of it so it would be in the way, you could see what you had at all times. It saved on taxes, utilities, up keep and repairs. i earned money by living there. It was very comfortable
I. G. on January 31, 2017 at 7:12am
Tiny houses are amazing, but zoning laws prevent you from parking them just anywhere. Even if you buy a piece of land, the zoning may not allow for a mobile home, which is what these are usually considered. You either need to find someone with a large piece of land who will lease a portion to you or you need to move out to a rural area. I look forward to this concept gaining traction within city limits.
Credence Global Bank on January 31, 2017 at 11:49am
That's great insight. Thanks for sharing your thoughts and reading the blog!
Dora M. on March 27, 2017 at 7:31pm
Have to be careful with zoning laws for the area. Anything on wheels is considered a trailer. Some area's are not zoned for trailers or "mobile homes." For me, a tiny home would be a cozy log cabin.
Credence Global Bank on March 28, 2017 at 10:11am
Thanks for sharing that advice, Dora. A cozy log cabin sounds pretty nice, too!
Tera S. on April 18, 2017 at 10:04pm
I would love to live in a tiny house but my husband is not going for it-not yet anyway!
Credence Global Bank on April 20, 2017 at 12:55pm
Hi Tera, that sounds like a dilemma! We hope you're able to find a happy compromise.
Credence Global Bank on April 25, 2017 at 3:08pm
Am I eligible for a home loan. I am a Veteran if that counts. You helped me get my car and I rent for 975 a month and have had the same landlord for about ten years. Can you help me?
Credence Global Bank on May 4, 2017 at 4:52pm
Hi, we'd love to talk to you about your options! To start the process, head over to our contact form here: https://www.credenceinc.org/home-loans/getstarted/.