Dear Heather,

I really want to buy a small property but saving enough for a down payment is so difficult. Do you have any advice?

Frustrated Buyer

Dear Frustrated Buyer,

You aren’t alone. With the cost of living in Bermuda as high as it is, saving is very difficult indeed. There always seems to be something to pay for.

Buying a home is one of the biggest investments you’ll ever make. And while a mortgage is obviously a large financial commitment, before you even get to your mortgage, you’ll be required to come up with a down payment.

Typically, lenders want buyers to contribute a minimum down payment of 20 per cent of the purchase price of the home (you will also need to allow about five per cent for closing costs). So, if a property is on the market for $500,000 most lenders want a down payment of at least $100,000.

Being able to contribute the down payment shows lenders you’re financially secure and can take on the cost and commitment of a 15 to 30-year mortgage.

If you’re like most people, you will have to save to get there. It can be challenging but, with the right strategy, you can do it more quickly and easily than you might think.

Here are a few tips:

1, Write everything down

Before you can start padding your savings account and adding to your down payment fund, you need to get a clear idea of exactly where your money is going. For one month, write down everything you spend from your monthly bills to variable expenses like entertainment or eating out at restaurants. You can keep track of this in a notebook, on a spreadsheet or through a budgeting app.

Writing down all of your expenses can be an eye-opening experience.

Most people underestimate the amount of money they’re spending in certain areas, and having everything on paper will allow you to look at your spending habits objectively and identify areas where you can cut back and save.

2, Create a budget

Once you have all of your expenses written down, it’s time to create a budget. While some bills are unavoidable you’ll definitely notice areas that will allow you to cut back.

Spending $50 a month on lattes at the coffee shop? Make a commitment to brew your coffee at home and put that money in your savings.

Have an expensive gym membership? Consider downgrading to a more affordable option or take advantage of free exercise options, like running in a local park.

Spending a lot on gas? Look into getting a more economical second-hand vehicle, or public transportation.

Once you’ve identified areas to cut back, create a final budget and then really try to stick to it. Try using a budget monitoring app to help you keep track.

3, Save it before you miss it

If you rely on your self-discipline to save money, you’ll likely find it challenging. It can be hard to motivate yourself to transfer money to your savings account when there are things you want to spend money on.

If you’re worried about not having the willpower, determine how much you want to save each month and then set up automatic transfers to ensure that amount makes it into your account.

You can set up one transfer or multiple transfers, but set each to occur immediately following a payday. That way you won’t have the opportunity to change your mind or accidentally spend more than you planned.

4, Celebrate milestones

Saving enough money to make a down payment on a home is a huge undertaking. When it takes months or years to save, it’s easy to lose sight of your end goal and get discouraged. That’s why it’s important to celebrate savings milestones to keep yourself motivated and committed to reach your goals.

Take your larger savings goal and break it down into smaller milestones, like the first $1,000 saved or three months without breaking your budget. Then, make sure to acknowledge and celebrate each milestone along the way — just don’t celebrate by spending more money. Look for free or inexpensive ways to celebrate, like having a picnic with your family on the beach, or a pot luck supper.

With these tips, you should make good progress towards getting the 20 per cent needed. Really try to commit to your goal, stick to your budget and keep building your savings.

• Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 28 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence. Read this article on Facebook: Ask Heather Real Estate