6 Ways a Tiny House Saves Money

There are countless benefits that come from living in a tiny house. Many people feel a sense of community, develop a connection to the present moment, and report strengthening their relationship with their spouse. While the experience of living in a tiny house is unique to each individual, one benefit everyone experiences is saving money.

1. No Mortgage

The biggest savings most tiny house owners experience result from not having a monthly mortgage payment. Let’s ignore the fact that confusing mortgages and unscrupulous lenders led to the financial downfall of many during the recent housing crisis.

Instead, let’s look at the best case scenario: you pay off your mortgage, per the terms. To keep things easy, we’ll say your home costs $200,000 (as of August, 2014, the average price for a new home was $349,300 (PDF), so we’re being very generous here). We’ll also say that your interest rate on that 30 year mortgage is just 3% (again, we’re being generous here).

Assuming you were able to make a $20,000 down payment (right around the typical amount), you’d owe the bank $967.22 a month. After 30 years, you’d have given your bank $348,199.41! Remember, your loan was only for $200,000! Add the down payment you had to make to that and you ended up paying about 85% above the “sticker price” for your home.

Also, keep in mind that this doesn’t include closing fees, property taxes, homeowners insurance, hiring a realtor, and all kinds of other costs you need to pay just to get your home in the first place.

While you may need to take out a loan to build your tiny house, there’s no way it’s going to be anywhere near as expensive as the above example. Nowadays, you also have the benefit of learning from everyone else who has lived in a tiny home before you, which means finding out lots of ways to save on the build.

2. Less Utilities

The math here is far simpler than the arithmetic we used above. To put it simply, living in a tiny house demands less electricity. Just think of how many fewer lights you’ll have compared to your current home. Most who live in tiny houses also take steps to ensure abundant natural light thanks to well-placed windows.

Some tiny houses take advantage of natural gas or propane, too, for cooking and heating. Still, the final bill is nothing compared to what conventional homeowners go through. Most who live in tiny homes only spend about $10 to $35 a month on all their utilities are concerned. That’s a fraction of what others—even those who live in apartments—usually have to budget.

3. No Need for Land

Though you can buy a plot of land for your tiny house, this often isn’t necessary. Even if you did, the amount of land you’d actually need would be miniscule and you’d have a number of options that would include buying a plot that is already affordably priced.

Of course, many tiny house owners build their home on the property of a friend or family member. Even those who have to pay rent usually only end up being charged about $100. Again, that’s less than what a lot of homeowners pay for their utilities, never mind the mortgage. Many even exchange a service they can provide for the land they need.

Building your home on a trailer is also a very popular method that only necessitates you having a place to park it. Again, this won’t cost much, especially if you know someone with spare space.

One last option for land will actually put money in your pocket. Rent out the home you currently live in and simply park or build your tiny house in the backyard. This not only gives you the land you need, but will probably bring in enough cash to pay for your other expenses and still provide you with a tidy little profit.

Aside from not having to pay for land, not having any of your own means not needing to buy a lawnmower, countless other tools to maintain it, necessary chemicals and treatments, etc.

4. Lack of Overpriced Furniture

Most homeowners have more furniture than they ever use on a regular basis. That, of course, came with a sizable price tag. The furniture they do use also needs to be cleaned and even reupholstered from time to time. You simply don’t have the option for that much furniture in a tiny house. As such, you won’t be buying any unnecessary furniture nor needing to upkeep it.

5. No More Impulse Buying

Taking this to its natural conclusion, impulse buying dies out to a great degree too. You won’t have enough room for consumer electronics, clothes or even books you don’t need, at least not without clearing out some space. Naturally, then, you’ll be keeping more money in the bank.

6. Less Maintenance Is Necessary

There’s little doubt that your tiny house will need some maintenance over time. However, it won’t need nearly as much as a conventional home. If you take part in at least some of the building process, there’s also a very good chance you’ll walk away with a better understanding of how your home functions. This means you’ll be able to save on maintenance even more by handling it on your own. Even the jobs you do end up outsourcing to a professional should cost far less.

If you dream of a simpler life, living in a tiny house may be just the ticket. Since your new life will will be less taxing physically, emotionally, and financially, you will have more time to do what you love.