On this edition of Industry Focus, host Michael Douglass and Fool contributor Matt Frankel discuss personal finance -- in particular, how it relates to homeownership. The average homeowner has a net worth 90 times that of the average renter, and there's also a good case to be made that homeowners are in a better position to build wealth over time. Is taking the plunge into homeownership right for you?

A full transcript follows the video.

This video was recorded on Oct. 30, 2017.

Michael Douglass: Let's turn to home ownership. Now, before we get into this, I just want to highlight, we did this a little bit in order. So, when we're thinking about what you need to do -- generally speaking, of course, we can't speak for everyone, but generally speaking, in personal finance, the very first thing you need to do is establish an emergency savings fund. The next thing is to pare down credit card debt. After that, personally, I think stock investing is important. And after that, thinking about retirement savings. Finally, there's an opportunity to really start thinking about home ownership. Now, I'm a little bit biased, because my wife and I are about to close on our first house. Well, hopefully, knock on wood. [laughs]

Matt Frankel: Congratulations.

Douglass: Thank you -- well, talk to me in two weeks, we'll see if congratulations are still in order then. But, here's hoping. And we've certainly done the other four things first. I tend to think that's the right order to do things. But, of course, it may be different for different people. Everyone follows different paths to get to where they are today. But, keep that in mind. So, with that all said, let's talk about home ownership a little bit.

Frankel: Sure. I've been through the homeownership process three times myself, and I can tell you it's a good idea to get the other four things we talked about in order first before you jump into home ownership. Having said that, it's worth pointing out, the median net worth of a homeowner is 90X higher than the average renter, about $200,000 versus $22,000, roughly. But I'm going to put a big asterisk after that statistic, because this is kind of a bias group. The average homeowner is older than the average renter. The average homeowner is further into their career than the average renter. And when you talk about that net worth, you already mentioned, Americans are pretty bad at saving. And that's true for homeowners just like it is for renters. But the average homeowner, most of that net worth is in home equity, not in liquid assets like stocks and bonds, 401(k)s.

Douglass: It's interesting, because in a lot of ways, this median net worth -- again, 90X that of a renter -- really highlights the difficulty that a lot of Americans have saving money. Home equity, you can think of it as forced savings. Now, that's an oversimplification on so many levels, because home equity is not liquid, you can't get to it easily, also real estate prices change dramatically. All those caveats aside, it's a form of wealth that accrues automatically with every mortgage payment. And that's something that folks are able to do when they really struggle to do a lot of other saving. I think one thing that we can really learn from that, though, is this idea of, what I would consider invisible savings. One of the benefits of the 401(k) is that you don't see the money beforehand. Before your paycheck comes to you, some portion of it gets siphoned off and disappears into this account where you don't see it. And that's really crucial, because it's money that you don't think about having, so it's money you can't spent. I mean, you can, but you have to take a lot of effort to spend it. I've actually tried to do this with a lot of my different savings, automating things, setting aside savings for each paycheck, setting aside and IRA contribution in each paycheck, just to basically put the amount of money that I see and can therefore spend mentally, make that amount smaller and smaller, so that anything we do spend, splurge or go out to eat or whatever, we're not compromising on those retirement savings.

Frankel: Right. Like you said, it's not a perfect example of forced savings. We'll ask anybody who bought a home in the early 2000s how much forced savings it was. But, it is a great wealth builder overtime. At some point, if you're paying down mortgage, you're going to own your house outright, the actual amount of home equity you have will go up and down significantly over time. But, in general, it's a really good way to automate the whole process, just like you said, with the 401(k). I have a certain amount going to my daughter's college account every paycheck. It's something like that, just, automating is kind of the key to personal finance success in general, in my opinion.

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