Buying our own home is a key aim of most Australians. We have a focus on it. It’s the Australian dream. Owning our home provides security, we can’t be kicked out. We can also modify and personalise the home to suit our preferences.

The home also helps build our wealth through capital growth over the long term. If we borrow most of the purchase price and slowly pay the loan down as the home value rises, we build our equity in it.

People in many other countries have less focus on owning their homes. For example in England and Europe many people rent their homes all their lives. Are they financially worse off? In Australia we fear that paying rent is wasting money, that rent money is dead money.

That is not true. If I buy a home and rent it to a tenant, I receive the rent, say $500 per week. After paying the costs – rates, insurance, maintenance etc – I might have a net 3 or 4 per cent income on my purchase price.

If instead I choose to live in the home myself, I don’t receive any rent but still pay the costs. So it costs me the potential rent from my home to live in it. In effect we all pay rent to have a roof over our heads.

So if we are unable to buy own our home and pay rent instead, that is OK. However we miss out on the capital growth. We need to earn that some other way. We could buy an investment property that will provide rental income and capital growth.

We could start an investment gearing plan to buy managed funds and shares. For example we could start with a $100,000 loan, then increase it when it suits us. It must be a long-term plan. Instalment gearing is also attractive, allowing us to start small, contribute regularly and borrow extra each time.

There is interest to pay but the strategy of regular contributions and borrowing can build a large equity base just as we build equity in our own home. As our investments grow, we may be able to buy a home later.

Most landlords are very appreciative of tenants who pay on time and maintain their property well. They won’t usually push them out unexpectedly.

Renters can’t modify their home but have one big advantage over homeowners. They can move to a new home easily, with minimal cost. If they find a better job in a different location, they can easily move.

If a homeowner wants to move to a home more suited to their growing family, they face major costs – agents fees, stamp duty, legals, or the cost of an extension. A renter doesn’t.

People unable to buy a home early aren’t miles behind, so long as they save and invest regularly. With discipline they can get close to the same financial outcome long term.