My mother currently lives in a 3 bedroom house, with a yard. She has Dementia and does not do much in recent months accept watch TV and sit on her porch watching the squirrels. She has not prepared for her care and money is very tight for everyone. She cannot afford a 1-bedroom for very long or really at all. Is it reasonable to move her into a 1-bedroom with a bit more space and then downsize afterwards or move her right into a studio and save the money?
What you need to realize is Mom has Dementia. As such, she may not be able to live on her own. In my opinion an Assist Living would be a good choice but its private pay. Medicaid does not usually pay for AL or Memory Care. It pays for NH care which ur Mom may not be ready for.
As said, Dementia people get confused and like familiar surroundings. Its not wise to bounce them around from place to place.
The other thing to consider is if mom is moving to AL with dementia, depending on her progression and needs, she may need to move to memory care before too long and that is another move. If you decide on the 1 bedroom she may need MC before you need to move her for financial reasons and skip the extra upheaval. Are all of these, IL, MC, nursing care available at the same facility, same property?
Is there a possibility of exchanging with a home health aide, or a nursing student (or two) - or some other kind and patient person --
(maybe a senior citizen who is in good shape physically and mentally and pleasant ) who likes being mostly at home... And spends most of their time at home.
Letting them live in the house and watch after her while they are going to school or maybe they work remotely on the computer etc. It would give her care and company.
It would help both of them out, plus keep your mom happy in her own home.
If your mother stays in her home with in-home care you/she will also have hire essential outside help for maintenance.