Is It Better To Save For a House You May Never Afford or Make the Most of Your Down Payment Savings Now?
Written by
Cindy Lamothe
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Levi Leidy
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There are some financial decisions in life that seem fairly straightforward. Building up an emergency fund, putting money away for retirement, paying off debt — all of these are no-brainers.
Then there are other decisions that keep you up at night, like:Is it better to save for a house you may never be able to afford or make the most of your down payment savings now?
That’s a tough one.
“It’s a dilemma that requires a deep understanding of both personal goals and the financial landscape,” said Justin Godur, finance advisor and founder of Capital Max. Below, experts weigh in on how to make the best decision that works for you and your goals.
What Is the Most Enriching Investment You Can Make?
“Here’s my take: Real estate has traditionally been seen as a solid investment,” said Godur. “However, given the soaring property prices and unpredictable markets, buying a home is becoming increasingly challenging, especially for younger generations. So, if you’re working toward a dream house that seems perpetually out of reach, it might be time to reconsider your approach.
“I’ve seen clients spend years saving for a down payment, sacrificing experiences and missing out on life,” he explained. “Yet, when they finally got the house, the maintenance, taxes and other unforeseen costs took away the initial excitement.
“On the other hand, clients who invested in experiences, like travel or unique hobbies, often found themselves richer in life satisfaction and personal growth. Think about the immediate value of your money.”
He says investing in travel can expand your horizons, offering memories and skills that can’t be taken away.
“It’s about balance. If you feel your dream home might remain just that, consider using your savings to invest in your present — whether it’s travel, education or building a business. Financial planning should be personal, and sometimes, spending on experiences can be the most enriching investment you can make,” he said.
Think Both Short-Term and Long-Term Stability
“I suggest considering the current real estate market, your income stability and what you want to achieve in the next five, 10 or 20 years,” said Michael Benoit, certified finance expert and owner of ContractorBond.
“I would point out that owning a home comes with its own set of expenses beyond just the down payment such as maintenance costs, property taxes and insurance,” he highlighted. “So, it is essential to have a solid financial plan in place before committing to such a large financial responsibility even if you do manage to save enough for a down payment.”
While investing in experiences like travel or other luxury purchases can provide long-lasting memories and potentially even opportunities for personal and professional growth, he says they should not come at the expense of neglecting your financial future.
“My best tip is to find a healthy balance between saving for a house and enjoying your money in the present.”
For instance, he says you should set a specific percentage of your income like 50% for savings and investments, 30% for necessities like housing, food and bills and the remaining 20% for discretionary spending like travel or luxury purchases.
“This way, you are working toward both short-term enjoyment and long-term stability.”
It’s All About Balance
According to Dennis Shirshikov, finance professor and head of growth at Go Summer, this decision depends heavily on individual financial situations and life goals.
“Saving for a house, even one that seems out of reach, can be a form of forced savings that might provide substantial long-term benefits, including building equity and securing a stable living situation,” he said.
If homeownership aligns with your long-term personal and financial goals, he says continuing to save can also lead to a better mortgage rate and lower overall costs when you are ready to buy.
“However, if homeownership in your desired area remains unrealistic due to high market prices relative to your income, it may be prudent to reassess your investment strategy.”
Shirshikov recommends you consider allocating some savings toward other types of investments that can offer returns, such as retirement accounts or the stock market.
“This diversification can provide financial gains that may eventually support buying a home or enhance your financial security, allowing you more flexibility in your lifestyle choices.”
Moreover, he says allocating a portion of your savings to experiences like travel isn’t necessarily imprudent.
“These experiences can offer significant personal value and satisfaction, contributing to a well-rounded life. It’s about finding a balance that allows you to enjoy the present while still planning for the future.”
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