The benefits of downsizing

Having a clear-out of old, unused items can be as beneficial for personal finance as it is for the mind. While we all accrue a lifetime of memories, many of us needlessly retain boxes of supposedly "much-loved", but in reality long-forgotten, trinkets.

Generally in later life, homes, previously the centre of family life, quieten down. The need for space diminishes and, increasingly, homeowners choose to declutter and downsize for a number of both practical and financial reasons.

In celebrity circles, especially for those with a reputation for what could be regarded as excessive consumption, this has become something of a trend. Sir Elton John regularly declutters, and has raised over a million pounds in the process. In 2002, at a sale in the UK, the singer raised £400,000, following this up in 2005 with a similar event in New York raising £700,000. Both sales were in aid of the Elton John AIDS Foundation.1

Similarly in 2013, hoping to raise £40,0002, former footballer David Beckham and his designer wife Victoria gifted 20 containers of clothes, shoes and accessories to the British Red Cross. The items were sold in the charity’s Chelsea shop to help raise money for those in the Philippines affected by the devastating Typhoon Haiyan.

In the UK, the Association of Professional Declutterers and Organisers (APDO) is a not-for-profit organisation helping those less prone to excess, but equally keen to declutter, to get rid of unwanted possessions.

“The benefits of decluttering are incredible,” says Sharon Bryant, an APDO member and co-owner of decluttering business, The Spacemakers. “We have clients who baked a cake in their kitchen for the first time in years after we’d reorganised it. They felt back in control of this area of their home and able to bake again which was something they enjoyed but felt was unachievable because of all the clutter. We have a system called the THREE Cs; Chuck, Cherish, Charity. This means that only items that are broken or unsuitable are ‘chucked’ responsibly. Items that may no longer serve a practical purpose but have sentimental value are saved and stored properly (for example, a lock of baby's hair or a christening robe). Other items that no longer fulfil a useful purpose are recycled in a responsible manner i.e. to charity shops.”

Decluttering, however, is often only part of the process. Those with especially large or even just very old houses will be all too familiar with the financial drain that bricks and mortar can become - that’s when downsizing might be a prudent approach. Even the Royal Family have had to come to terms with the concept: HRH Prince and Princess Michael of Kent were forced to downsize, selling their 300-year-old Gloucestershire manor house in 2006.

Downsizing should not be regarded as a negative move, as was the case of Princess Michael of Kent, who described it as the worst word she’d heard in ages3. Lloyds Banking Group research in 2013 suggests that downsizing could potentially generate average savings in the region of £100,0004: money that can be put to a variety of alternative good uses.

“Downsizers have a key role to play in the housing market,” explains Lloyds Bank Mortgages Director Marc Page, “especially in a climate where it’s not just those looking to retire who want to free up equity from their home by moving somewhere smaller. Many families view downsizing as a sensible way to lower their bills, help out their children or free up funds for retirement.”5

SOURCES

  1. Elton John sells contents of his wardrobe for charity, Daily Telegraph, 12/12/09
  2. Typhoon Haiyan: Beckhams clothes sale prompts queues, BBC News, 22/11/13
  3. My horror at having to downsize, Louise Eccles, Daily Mail, 13/10/13
  4. Downsizing your home raises £97,722 on average in the UK and 43% do so to reduce bills, Mindful Money, 17/11/13
  5. Downsizing is the main reasons for selling a home, The Independent, 19/11/13

This article has been provided to Bank of Scotland Private Banking by external/third party contributors and contains their views as at September 2015 and should not be relied upon as fact and could be proved wrong. The information and opinions may not be accurate after this date. The views expressed may not reflect the views of Bank of Scotland plc.

Bank of Scotland Private Banking assumes no responsibility for the content or any reliance upon the content of the third party websites detailed in this article.
Bank of Scotland plc. Registered office: The Mound, Edinburgh, EH1 1YZ. Registered in Scotland, no. SC327000. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 169628.

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