How to Save Money For a House: 4 Expert Tips for Managing Your Budget Like a Pro
Whether you’re saving for your first home or looking to upgrade to a new one, you’ve probably found yourself crunching numbers and strategizing about how to save money for a house.
Given the current economic climate combined with home prices in Sonoma County and California as a whole, saving for a home is no small undertaking. But it is possible with the right mindset and a strategic approach.
We sat down with Brandon Trammell, Founder of Northern California-based Purpose Financial & Insurance Services, to learn:
- What he sees as the biggest barriers to saving for a house
- Why your mindset is essential to effectively managing your finances
- Four expert tips to help you manage your budget and map out how to save for a house
Here’s what he told us.
SOMO Village: What are the biggest barriers when it comes to figuring out how to save for a house in the current economic climate?
Brandon Trammell: For most prospective homebuyers in Sonoma County, there are two major challenges or inhibitors when it comes to how to save money for a house:
- Saving and budgeting
- Maneuvering property values in Sonoma County and the Bay Area
The first is really about internal motivation and mindset whereas the second is an external challenge based on the cost of living and income in the region.
That said, though, both come into play when thinking about how to save money for a house.
Income vs. Property Values
The reality is that home prices in Sonoma County and the North Bay Area are high right now. It’s a huge barrier to saving money for a home.
But, with the right mindset and motivation, it’s not impossible.
I love Simon Sinek’s work, and he offers some insight through the idea of the golden circle—what’s your why? Why are you buying a home? Is it just because you’re “supposed to” or is there another reason, like building roots where you live?
Once you have that clear “why” you can start to look at the how and what of getting there.
The process of saving money for a house isn’t always an easy one. So, if you’re in the camp of, “I’m buying a home because it’s what I’m supposed to do,” you might get discouraged throughout the process.
But if you have a deeper motivation and reasons for buying a home, you can start to take steps to get there, despite high housing prices in California.
Saving and Budgeting
Many folks are not used to wrapping their heads around segmenting their money in a specific and purposeful way. Honestly, budgeting is a four-letter word for a lot of people.
Some people may already be saving money, but they’re not conditioned to give every penny a purpose in their budget. This is the foundation of trying to save for such a large purchase and it’s the major challenge for prospective homebuyers.
Many people can save for a short time, but longer-term goals like saving for a house, take more discipline and determination. This is why mindset work is the foundation of what I do—people need to have their internalized reasons and purposes for saving for a home, or they just won’t stick to their budget.
So, people need to get into the right frame of mind for how to save for a house. The major mindset shifts needed are:
- Commitment and discipline to both budgeting and saving for a home.
- Adjusting to lifestyle changes and sacrifices to make it happen.
When you’re committed to this process of shifting your mindset, you’re ready to start saving for a home.
You mentioned an important first step when considering how to save money for a house: doing the “internal work.” Can you elaborate on that?
Your mindset is essential to being successful and budgeting because there are barriers and roadblocks to saving for a home. Without the right mindset, the barriers can just feel too big to tackle.
I’ll be completely honest: I’m not your typical financial guide or advisor who’s focused only on action steps. I believe that everything we do in life, as it pertains to change, starts from the inside: how we look at things and come to terms with them, our baggage, our history, and our relationship with money.
That’s why I always encourage my clients to do the internal work first. You need to start by looking inward at your attitudes and ideas with money and be willing to unpack your values and beliefs about that before you do anything else.
After you’ve unpacked all that and addressed your mindset, you’ll be better prepared to handle those tangible action steps of how to save money for a house.
What are your five practical tips for how to save money for a house?
With your mindset as the foundation, you can start taking some practical steps to save for a house in Sonoma County or Northern California:
Here’s what you need to do:
1. Be realistic about whether you’re ready to start saving for a house
First thing’s first—get introspective. Are you truly ready for the undertaking of saving for a home? To make it happen, you need to be disciplined and committed to budgeting and able to stick to savings a routine.
If you’ve never saved for a big purchase before or haven’t managed to save an emergency fund, you may not quite be ready to save for a house. This is especially true if you don’t have an emergency savings fund yet. I’m pretty strict about this—no emergency fund, no house savings yet.
Instead, start with smaller exercises in building the discipline to save and budget over a long period of time, like building up a liquid emergency fund of $1,000 dollars in a savings account and maintaining it for a few months.
Start by getting your personal economy ready for the process of saving for a home first.
2. Examine your expenditures to get a realistic idea of how to save money for a house using the income you’re generating
When the mindset is there, the commitment is there, you can then take an objective look at where your money is going.
Start by breaking down your spending into your “needs” and “wants” to see where it all goes. This shows the exact areas where you can reduce spending and put more into savings.
3. Decide how to save money for a house by reverse-engineering your goals and creating a plan
The next step is to define your target and reverse-engineer from there:
- Determine the target (a home) and how much it costs—consider neighborhood, home type, and your lifestyle needs
- Look at your income and lifestyle preference and determine how much you can start saving for a home each month—it might be $300, $500, or $1,000
- Based on your savings goal, determine a realistic timeline to hit the target
- Consistently put away the same amount of money each month until you hit your target
This should be a detailed process that tells you exactly how to save money for a house; it’s your roadmap to a new home!
One thing I always refer people to is Simon Sinek’s chair illustration which tells us that when you have a clearly defined purpose or destination, you don’t obsess about the route to get there—you’ll just do it. But if it’s an ambiguous destination, you’ll obsess over the route and make slower progress.
The same applies to your finances. Knowing exactly what you’re saving for, how much you’re putting away, and how long it will take will make it easier to wrap your mind around the process and stick with it.
4. Don’t make saving for a home a set-it-and-forget-it endeavor
Once you’ve reverse-engineered your plan and are tracking well with it, it’s essential that you check in on your progress to see how things are going. I’d recommend doing this on a quarterly basis to evaluate how comfortable you are with the savings volume so far and to account for any life changes, like new jobs, promotions, or large purchases.
Saving for a home is not static. The process will change and evolve as your life changes.
For example, a raise at work, some unexpected income, or lifestyle changes may all change your plan. You may be closer to your target or need to adjust the timeline.
- Am I on track?
- How comfortable was that?
- Did that amount change the lifestyle I’m living or want to live?
- Am I putting too much or too little into savings?
- What financial changes impact my plan right now?
You can’t manage what you don’t track. You need to be aware of how you’re following your plan and what factors change it. This is not a “set it and forget it” situation—be aware of your financial situation, how it changes over time, and how it will impact your timeline to hit your target.
What’s a final piece of advice you have for prospective homebuyers in Sonoma County who are saving for a home?
Nothing in life is meant to be done alone, including your finances. Saving for a house is a highly personalized decision and process—the best path for how to save for a house will be different for each person.
I believe that working with someone and learning with someone opens your eyes to blind spots you wouldn’t otherwise see. I learned this firsthand when I was mentored by a Taoist master. Together we read a book and learned together. But if I had read it on my own, I would never have gotten as much out of it.
Conversation and collaboration with others is how we learn and grow. This is true for all areas of your life, including your finances. Reach out to a professional and get some help on this exciting journey of how to save money for a house.
And if you’d like to learn about presale homes in Sonoma County, download our project brief to find out why SOMO Village might be the perfect community for you.
About Brandon Trammell
Brandon is the Founder of Purpose Financial & Insurance Services. With over 15 years of experience as a financial professional, Brandon has developed numerous strategies to help those who want to take charge of their financial future.
Brandon helps clients align their values and financial goals to create a pathway to financial freedom. His main operating principle in life and work is to “Leave it Better.”