First, you set the goal for how much you want to have saved. Then you divide how much you want to save by the amount of time (months) that you have.

So if you want to buy a $250,000 house and you want to put 20% down (which you should), you’d need to save $50,000. That part is easy.

If you’re planning to buy your home in three years, you have 36 months to save. So you divide your $50,000 goal by 36 and you come up with $1,389 a month. That’s how much you have to save every month to meet your goal. Impossible, you think. There’s no frackin’ way you can sock away $1,389 a month. Well, you have three choices:

1. You can extend the amount of time you’re planning to save. Saving for five years instead of two means you only have to sock away about $800 a month. (I know I’m not including anything for return on your savings here, but it makes this example a lot easier.)

2. You can reduce the amount you have to save. Buy a cheaper home and you’ll need a smaller downpayment.

3. You can cut expenses and find more money – or get another job – so that you have the money to sock away.

Once you’ve decided how much you’re going to save, set up a high-interest savings account. Don’t settle for a piddley-assed account that pays next to nothing. Have the money automatically deducted from your primary account and moved to this savings account so you aren’t tempted to spend the money. That’s the pay-yourself-first way.