Smart Moves by Ellen James Martin

Struggling to Save for a House? Here Are Some Pointers

After the COVID crisis hit last spring, Bernadette Joy and her husband began plotting their move to the popular mountain retreat of Asheville, North Carolina, from their cramped city place two hours away, in Charlotte. By September, they’d topped off a 20% down payment and bought a spacious condo in their dream location.

Joy, an influential blogger who heads her own financial education firm, says many in her millennial age group could also achieve homeownership if they approached their debt reduction and savings goals more systematically.

“There’s so much guilt and shame about money and budgeting for our generation. This causes people to avoid facing financial issues squarely,” says Joy, who provides personal finance pointers through virtual courses and her website:

Obviously, not all would-be homeowners are now in a position to consider a purchase, let alone contemplate a large down payment, says George Ratiu, a senior economist for, the real estate listing service.

“There are still over 20 million Americans receiving unemployment benefits across all programs. And, worryingly, about 12 million of them are scheduled to run out of benefits in December, unless Congress takes action,” Ratiu says.

Even those currently able to contemplate a home purchase are facing headwinds, with property prices continuing to ascend in the majority of metro areas. Year-over-year price gains are now exceeding 6%.

On the other hand, the pandemic has helped keep mortgage rates temptingly low. This has worked to the advantage of wannabe buyers who’ve retained their jobs and can telework, thereby helping them build down payment funds.

“With COVID, people are saving a lot by reducing commuting costs, travel and restaurant meals,” Joy says. “There are fewer opportunities to spend and more chances to cut back debt and save.”

Joy has long been a saver. For instance, she managed to pay off more than $70,000 in student debt for her MBA program in just two years. Together with her husband, the couple also zeroed out their credit card balances. In addition, they accelerated their down payment program by scaling back from two cars to one, thereby scoring significant savings on lease payments, car insurance, gas and repairs.

“Having just one car felt awkward at first. But we soon became comfortable with the change, which is far easier now that we’re both working from home,” she says.

As Joy points out, not all millennials are motivated to save for a property purchase. But many who are find it less demanding than they imagine. Here are a few pointers for buyers:

-- Adjust your attitudes about spending.

Shawn Koch, a planner affiliated with the National Association of Personal Financial Advisors (, says many homebuying aspirants “come to financial planners hoping for a miracle. But we’re not miracle workers.”

Though many young buyers face financial constraints -- including student debt and salary limitations -- many also confront bad money habits, such as impulse spending on designer clothing or other luxuries.

One approach to helping overcome emotional barriers to saving is by reading up on the topic. “Money Harmony” and other books on financial psychology co-authored by therapists Olivia Mellan and Sherry Christie are good places to start.

“The reality is that most people have to get into ‘hunker down’ mode before they can become serious savers and that means an adjustment in attitudes,” Koch says.

-- Start with an inventory of your current spending.

A major impediment to saving is uncontrolled everyday spending. But before you can decide how to reallocate your funds, Koch says you need to review where all your money has gone for at least one to three months. This can be done either with pen and paper or with such online personal finance tools as Mint or Quicken.

Doing an inventory of spending is laborious because you must sift through both credit card and checking account statements. And for cash expenditures, you’ll probably need to make estimates, an arduous exercise. Though the entire process can take the better part of a weekend, Koch says it’s an essential element in your search for potential areas of savings.

-- Consider cutting your core expenses, including phone costs.

Koch says phone charges “are among the fastest growing items in the budgets of many young people. Many think they need the newest phone upgrade as soon as it comes out.”

Creating a working budget that saves on such routine expenses isn’t an intellectually demanding exercise. But for those who could use guidance, Koch recommends the latest edition of “The Budget Kit: The Common Cents Money Management Workbook” by Judy Lawrence.

-- Make sure to enroll in an automatic savings plan.

Are you one of the millions of Americans who live paycheck to paycheck? If so, you might think it impossible to get by if a chunk of money is taken out every time you get paid.

But financial planners say automatic withdrawals are the answer for many who aren’t methodical savers. And surprisingly, they say those who have direct debits taken from their pay rarely miss the money. Meanwhile, their savings accounts grow quickly.

“The idea of an automatic savings plan is that the money rolls in without any proactive steps on your part. That’s a huge advantage for anyone trying to save for a house,” Koch says.

(To contact Ellen James Martin, email her at