Floor plan, please provide your opinion and suggestions for improvement

Smaller does not always mean loss of space. Through clever furnishing, it can also be a gain in space. The gained space in the hallway could, for example, be used for a storage room. You only have a loss of space if you cannot use the space accordingly in a large room.

Your children are still quite small. That makes the storage options for a two-family house seem very tight to me. Do you still have a garage? Where will bicycles, balance bikes, balls, strollers, etc. go?

In the storage room on the ground floor, about 3m2 are also unusable because of the two doors. I would definitely place the door in the middle there, then you can at least use the room along its entire length on one side.

The balcony, at 1.5m wide, is hardly usable, probably not even enough for breakfast. I would consider widening the balcony to about 3 meters and supporting it. It would be a big gain in comfort - but not my decision.

I very reluctantly give up because of the kids and visitors ... Can't quite follow you

Yeah right, if you take every sentence on its own, I can't follow you either ;) Just try reading it in context and then step out of your frame. The draft in grid form looks neat but has too many negative details in the living area. Also, the children's rooms should be located on one side. Here, for example, opposing noise (parents/child) as well as cardinal directions (light) must be considered. I don't understand the bathroom location (west?). A square floor plan creates a large hallway in the center, and you hang the rooms next to each other, resulting in difficulties to get as much living quality as possible from the existing living space. Try dividing zones, work with closet niches/built-in wardrobes, and leave out this T in the bathroom - also upstairs :) Pure waste of space!

Unfortunately, I have to make sure that the house remains affordable for me

Who doesn't feel that way?

and that's why I have to accept many compromises. Cost/benefit

No, your space program can be more efficient = cheaper and with significantly better living quality. On the one hand wasting space and money and on the other hand complaining about compromises does not fit together. WD

@All Thank you for your criticism and I mean that seriously! I will try to implement the suggestions and design a new floor plan.