When Krystal Yee finished college and entered the workforce, she set a goal much like many other graduates: find a way to save enough to buy a home.
Yee, who lives in Vancouver, said her career in marketing and as a personal finance blogger were only landing her an average of $44,000 a year.
The benchmark price for a detached property in Vancouver was $901,680 at the time and apartments were going for about $405,200.
Yee didn't let the conditions intimidate her. She crafted a plan and in 2011, at the age of 28, nabbed a one-bedroom townhouse about 25 minutes from Vancouver's downtown core in New Westminster.
The first step Yee took was working out how much she would need to save for a down payment. She used listings and the local real estate board to learn about average home prices and then turned to a series of online calculators to help her calculate how much cash to stash.
The Financial Consumer Agency of Canada says the minimum amount you'll need to save for a down payment if you plan to spend $500,000 or less on a home is five per cent of the purchase price.
If the home you want to buy costs between $500,000 and $1 million, the agency says to save five per cent of the first $500,000 of the purchase price and 10 per cent for the portion above $500,000.
If you intend on shelling out more than $1 million on a home, use 20 per cent as your ballpark savings rate, the agency recommends. It also warns that if you're self-employed or have a poor credit history, you may be required to provide a larger down payment.
Before you even consider buying a home, Yee says it's important to manage your debt. When she was thinking of purchasing a place, she had $20,000 in debt, so she started living even more frugally and taking on gigs whenever she could.
“I did that through working two full-time jobs and a bunch of part-time jobs and really made that my focus,” she said.
Some of the work was unglamorous, she admits, and only paid between $8 and $10 an hour, but it added up and within a year, she was debt free. Looking for freelance work and selling odds and ends online helped her too.
Savers may also be lucky enough to receive help from family members, who sometimes have the means to chip in or lend interest-free money, which can help to save even quicker.
“I personally didn't get any help with my down payment, but if my parents had offered, I probably wouldn't have said no, but I also don't think that it should be expected,” she said.
Yee used a method that she calls “building your budget backwards” to start saving for her down payment.
She worked out that she wanted to buy a home within three to five years and divided up the cost of her ideal home to calculate what she thought she could save every month. Then she subtracted the monthly rate from her budget before calculating how much she'd spend on rent, bills, groceries and other things.
Some people, she said, might do this calculation and realize they don't have enough to live on.
If that happens to you, she said you must decide whether to save at a slower rate, look at more affordable homes or in areas like suburbs where prices can be lower, or find ways to increase your earnings.
“Some months I made that goal and some months I didn't,” she admitted.
Yee recommends anyone looking at saving for their first down payment take advantage of the home buyer's plan, which allows you to withdraw up to $35,000 from your registered retirement savings plan to buy or build a home and gives you 15 years to repay the amount you took out.
She used the plan in connection with her tax returns to build up a stash of cash - and it's a method she suggests others mimic.
“All the money I was saving for my down payment, I would put into my RRSPs, and then with the tax return, I would reinvest in my RRSPs,” she said.