8 Surprising Ways a Small House Saves You Money

Actually speaking I am not a fan of Antilla or Mannat, not for the reason that I do not have a house like this but due the fact that I like bumping into my kids (sometimes), observe my parents for their greatness and share warmth with my wife. Financially also, if you are shopping for a house, the size of the house makes a key component of your decision. ‘Living life king size’, ‘Living Large’ or ‘Living Bigger’ does not definitely mean living better and ‘going smaller’ does not mean sacrificing.

Surprising Ways a Small Home Saves You Money

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A small house can save your money in many ways. Buying a small house is comparatively much cheaper than buying a large house. Besides this entry point, where we need to pay less price, there are a host of other financial perks available in a small house/flat. Read: Buy or Rent a House?

small vs large house

  1. Easy to make/purchase – the main expenditure in making a house is LAND cost. A small house allows a person to have a small budget as the small land will cost lower than buying a bigger piece. A person can buy a small land near to city amenities and save lot on transportation and safety. If he is buying on loan the outgo will be less in form of interest payments.
  2. Higher transaction time – It’s a global phenomenon that small property is sold in less time than the large one. This is because it is affordable and supply side of buyers is more. So in case of analyzing the relative liquidity, a small house is easy to sell and purchase.
  3. Lower property taxes & property insurance cost – People generally fail to consider property taxes while purchasing large houses. Property tax is based on assessed property value and property value is based on price per square foot/yard. Hence, property tax is comparatively lower for small houses. Hence a person living in a small house can make savings at this front. Similarly the insurance cost for small house is much less than large house. Although insurance depends on lot of other factors but area is also one consideration.
  4. Lower cost of maintenance – Small houses are easier and economical to maintain than large houses. For example, there would be savings in the material used and time in painting/whitewashing the house (due to less space) than large house. Similarly, a small roof will cost less to repair than a large roof. Replacing the floor tiles would definitely cost less in a small house than a large house. Further, there would be savings in purchasing cleansing materials as there is less space to clean. Also, there may not be requirement of domestic help or will require less aid to clear the mess of the house, thus saving on the monthly budget.
  5. Less documentation – To build small houses, some of the building related permits are not required. This depends on state policy on housing. These include setbacks, side walls, parking space, height of building and story levels. But for a small house the documentation and required approvals will be less. Thus a person can save the time and money required for seeking these building permits.
  6. Lower utility bills – There would be a great downsizing in electricity bills, water bills, etc. in case of small houses. Even the installation cost will be less as you will require a kw/h connection. Few rooms would mean less lighting and cooling cost, thus overall making saving in the energy utility bills. This also means less expensive for the house to equip with central heating and cooling system, renewable energy systems like solar water heater etc.
  7. Lower ongoing medical cost– There is various reasons to prove that small homes may be healthier than large homes. Firstly, since small houses are cheaper than large houses, it reduces the financial stress on the house buyer. A person need not take too big loans and the stress to pay them off for buying small house. Secondly, it is easier to clean small houses. A clean house can avoid major diseases which are spread because of unhealthy surroundings like contaminated water, dusty spaces etc.
  8. Save money on frivolous living– A small house has less storage space. Hence a person would purchase only those items that he actually requires. You will not be interested in buying unnecessary plastics and wood. In fact person will be tempted to sell off things that he don’t require to keep the space free. Smaller spaces help in thinking creative ideas to maximize every square inch of the house. It helps in optimum utilization of space.

Besides the above reasons through which a person can make financial savings, there are a host of other benefits which are available in living in a small house.

Small house can actually improve a person’s way of living.

Below are few of many reasons:

  • Family bond– The bonding develops more between family members as they spend more time together.
  • Housekeeping efficiency– Doesn’t need a devoted person to spend the whole day in cleaning the house.
  • Keep wants and need in perspective– Due to less space, would buy only those items which are necessary.
  • Home security– Since there are fewer access points in terms of windows/doors, no intruder can enter the house without being noticed.
  • Easier to live simply– It is much easier to live simply, without fuss and societal peer pressure in a small house.
  • Environmental friendly– Less trees used to build (less furniture), less electricity, gas and water used, less of waste, will have a smaller environmental footprint.

Thus the advantages of a small house over large house are pretty obvious and inspiring to those who believe in economical and simple living without much stress. Warren buffet advocates that “affordability” should not mean “expenditure”. It means that even though you can afford, you should not pay more for what is not required. He has practiced what he said as he is been living in the same house he used to live when he started his career.

Read: Why it is important that affordability should be measured? 

What is your analysis or observation on this? Share your views in the comment section please.

Surprising Ways a Small Home Saves You Money


  1. Surely surprising, for the reason that your views reflect my current living conditions…i’ve patted my shoulders :)…could you please reflect your thoughts on advantages / challenges in living in large living spaces. I’ve seen my friends/colleagues living in 3 bedroom aparts having a family size of (we 2, ours 2), with practically the 3rd room not put to use or used for dumping. They tell me its for the guests(arriving once in a blue moon nowadays ? 🙂 )

  2. Dear Hemant,

    I am a big fan of your writing. Recently, i purchased a very small flat (300 sq,ft. carpet) in KoperKhairne, Navi Mumbai. I got it for a small price compared to bigger flats. I chose it for 2 reasons, 1 was budget (based on your thumbrule of 35% of income) and second is the space potential. I am architect by profession and i could convert this 1 room kitchen in 1 bhk somehow. I enjoyed the process and feeling proud of the minimalastic endproduct. Your this article made me felt great about our decision….thank you for guiding us throughout….

  3. I fully agree with your views.Particularly as senior citijen I feel a one bedroom apartment is more than enough for two main reasons . Security and minimum maintnance cost. People arond will not think you a rich person and troble you unnecessarily.To show off by a having a large house is foolish.

  4. Dear sir,
    Financially it’s always very advantageous to have small house. Your literature on this will definitely change the mindset of those who always think of buying a big house. Along with the financial benefit, it will help all the family members to stay close to each other rather than everyone sitting in their own room, thereby increasing the bonding between family members.

  5. Hi sir, excellent writing again. It is very important to know the difference between the needs and the wants if one desires to achieve success in life.

  6. Dear Hemant,
    Your article is well researched and brings out valid issues in favour of a small home.
    However, I have noticed that smaller plots and homes tend to be available in LIG localities. Such localities have corresponding neighbourhood which may not be to ones liking.
    Story is similar for flats. Some years back, i was looking for a 1BHK flat for my son in Pune as he was studying there. I found that though 1BHK flats are affordable but were in seedy neighbourhoods which become dangerous after dark, sometimes before it too.
    If one is ready to live with that, one is welcome to opt for a small home.

    • This is actually quite true in India. In such a scenario, I would recommend studio apartments, or looking for 1 BHK in a good society which houses other bigger projects as well.

  7. i really appreciate and that everybody must follow this principle. in case the extra money available to buy big houses can invest safely which will earn income for our spendings.there is proverb in tamil siruka katti peruga vazha,build small house and live happily.

  8. Hemantbhai,,
    I fully agree with your
    views and I really appreciate and that
    everybody must follow this

  9. Sir,
    Your article about small house/flat is really good. I have small house and i am enjoying the all the benefits that u have mentioned. Its really a helpful to those who are going to purchase a new house/flat. I fully agree with you.
    Thanks for realizing me.

  10. Sir,
    It was an inspiring write up. I was planning to buy a house and was a little confused to go about. I have a big jont family (me, my parents, my wife, my daughter & two of my brothers of which one is handicapped) and we all want to stay together. Can you enlighten me about this aspect where one has a large or joint family and needs a bigger house.

    • Somir,

      In today’s scenario, for a sole earning member, it is difficult to shoulder responsibilities which involved big financial outgo. Real estate in itself is a very tough decision cause the prices are high and it impact your finances for a very long time. Difficult to give you a concrete answer with this information but you will need financial support of other members, to decide for buying a house, especially in joint living.

  11. Very nicely put.

    One word of advice would be just because its small and affordable people should not be careless in terms of formalities and documentation.
    Out side a bunch of agents are ready with litigation properties with the mask of affordability where there will be lot of hidden issues with the property.

    Good luck to all.

  12. Small house also means guests do not overstay their welcome, reducing costs.

    Extended family meets on festivals and other family occasions whenever invited, instead of independent visits to each persons house saving lots of time and money in socializing.

  13. You have displayed courage in saying a fact,which is usually accepted as a proof of low net worth.It encourages people like me, who held similar views but were ridiculed at large.
    You have stimulated us to do things we feel right,not what others think right.

  14. Dear Sir,
    It’s always nice to read your posts because these are always an eye opener.
    All you are stated in your writing are very helpful in making and preparing mind. awesome,awesome writing.

  15. Hi Hemant,

    Very good and useful article and must read for all .

    I am always to eager to read each and every article on this website.
    Please keep posting such good articles.


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