Tiny homes are the latest craze when it comes to alternative living options. There are even multiple TV shows detailing what it’s like to build and live in one of these small houses. Typically, tiny homes are described as houses with less than 500 square feet of living space.

There are many reasons why people may choose to purchase a tiny home versus a traditional single-family home. For example, a tinier home means a smaller carbon footprint, which positively impacts the environment. Additionally, minimalists are often drawn to the simplistic lifestyle of tiny home living.

However, the most popular reason people buy tiny homes is to save money — and these savings can be massive. For example, some owners of tiny homes claim they cut their living expenses in half by moving into a tiny house. With the median housing prices in the United States now reaching over $350,000, homeowners may realize substantial savings by downsizing.

Here’s the breakdown of cost savings to expect to obtain when living in a tiny home.

Cheaper Build Costs

With an average build cost of under $50,000, tiny homes are substantially cheaper to build than traditional homes. While some homeowners of tiny homes also purchase the land to build their homes on, many others save money by simply building their home on the land of a friend or family member.

Lower Utility Costs

Everything, from water to gas and electricity, costs less in a tiny home because there's less space to heat and cool, and appliances are usually smaller. Many owners of tiny homes also install solar panels to reduce their energy dependency. In fact, in some cases, these owners can sell some of their unused solar energy back to the electric company for even more significant savings.

Fewer Furnishings and Personal Belongings

A smaller home also means fewer furnishings, and anyone who’s gone furniture shopping lately knows this factor can help save a lot of money. People living in tiny homes tend to spend less in general because they have limited space to store things.

Reduced Upkeep and Maintenance

Tiny homes tend to require less maintenance and therefore have fewer upkeep costs. Additionally, repairs costs are often less expensive. For example, replacing a roof on a tiny home is cheaper than on a larger single-family home.

Adding these savings up, it's easy to see how owners of tiny homes can save hundreds, thousands, or even millions of dollars over time. People interested in buying a tiny home may want to rent a small home for a week or weekend to ensure this type of living is right for them.