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There Are Other Ways to Build Wealth if You Can’t Afford to Buy a Home

Building a secure financial life is still possible for those priced out of the housing market by high property prices and soaring mortgage rates.

(Bloomberg) -- Homeownership has long been touted as one of the best ways to build wealth. But for many Americans, that path to financial security is moving further out of reach.

Mortgage rates just posted their largest weekly increase since 1987 and home prices remain elevated. Add to that the highest inflation in 40 years, growing student debt levels and wages that aren’t keeping pace with price increases, and it’s no surprise many feel priced out of the housing market.

Read more: Millennials’ Home Dream Fizzles Again With U.S. Prices Surging

This is hitting younger Americans particularly hard, leaving them with fewer options to secure their financial future. So what do you do if you simply can’t afford to buy a home? Here’s what experts recommend:

Maximize Your Savings

The key to financial success starts with developing healthy financial habits early, said T.J. Williams, regional vice president for Wealth Enhancement Group.

“The habits that you create in times when things are lean are a far better indicator of your financial success than anything that you purchase or invest in,” he said. 

This includes creating a budget that maximizes the amount of cash you save and limits discretionary expenses.

That might be hard for those living in expensive cities like New York and San Francisco. With the rise of remote work, some financial planners say it’s worth considering a move to the suburbs or a more affordable city to cut living costs. If that’s not an option, Williams recommends limiting housing costs to just 28% of your total pre-tax income, and to live with roommates if necessary. 

For Gen Z and millennials who have a lot of student debt, paying down high-interest loans as soon as possible is critical, according to Sara Kalsman, a financial planner at roboadviser Betterment. It’s not a “sexy financial goal,” but it boosts the excess cash flow that you can put toward retirement or investments, she said.

Use Retirement Accounts 

Another path to building wealth is contributing as much as possible to retirement savings accounts like traditional 401(k)s and IRAs — in which you can invest pre-tax dollars and then are taxed when withdrawing the cash in retirement — to capitalize on tax-deferred growth. 

For those lucky enough to have employers that match, Williams recommends maxing out your own contribution if possible since “that's free money.”

Once your bills are paid and you have an emergency fund in place, it’s also a good idea to consider opening a Roth account, which enables tax-free withdrawals when you retire, Williams said.

“Contributing to different retirement accounts are a really important thing for both someone building wealth early and also accumulating wealth,” he said.

Invest in a Diversified Portfolio 

Historically, investing in the stock market has been a great way to build wealth, and exchange-traded funds offer investors low-cost diversification opportunities that weren’t available to older generations, said Amir Noor, director of financial planning for United Financial Planning Group.

While today’s market volatility might be bad news for those close to retirement, young investors who have decades to build wealth should take advantage of the lower stock prices, according to Andrew Crowell, vice chairman of wealth management at D.A. Davidson & Co.

Crowell said the rise in interest rates means it’s also a good time for people to invest in a low-risk bond and Treasuries portfolio.

The benchmark 10-year Treasury yield is currently trading around 3.3%, a huge jump from 1.6% at the beginning of the year, meaning investors earn more interest for holding the government bonds. 

Boost Your Earnings 

Financial planners advise negotiating for a higher salary whenever possible. This could be particularly fruitful right now, with inflation surging and the labor market the tightest it’s been in decades.

Sometimes getting more education or additional training can help increase your pay. It’s also important to assess whether there’s potential for growth in your current role — if not, you could make a career change that might pay off in the long run. 

If you’re young and early in your career, experts recommend picking up a side hustle or extra job, with rideshare and food delivery companies making that easier than ever.


For those who have their hearts set on owning a home, experts say it’s within reach if you start investing and saving for a down payment now.

With the housing market showing signs of cooling down and recession fears growing, Crowell advises potential buyers to wait for home values to drop in the next year or two. 

Those banking on investments in the stock market for a down payment may have a harder time as global markets plunge. Saving up cash might be a better option than being forced to sell when stocks are down. 

Just remember that homes often come with additional expenses — including property taxes, insurance and maintenance — that can cost thousands a month. 

However, Williams emphasized that owning a home is not a prerequisite for financial security. Think about what financial success means for you personally. 

“A primary residence is not an investment until you sell it. It’s actually just a place to live,” Williams said. “Homeownership is a symptom of financial security — not a cause.”  

To contact the authors of this story:
Paulina Cachero in New York at [email protected]
Claire Ballentine in New York at [email protected]

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