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!