Dual Income, No Kids, Still Broke
Dual Income, No Kids? Take advantage.
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A few years ago, while working in IT, my co-workers which were mostly men always talked about this concept of DINKs. As a 22 year old, I had no idea what that meant. I had never heard of the term before and was pretty surprised that a term like this existed. For those that are not familiar, DINK stands for Dual Income, No Kids. It describes a childless couple where both partners work. For a period of time, many couples will fall into the DINK category as they settle into married life and there's an opportunity here.
My husband and I are in this category today. We've been married for 5 years now. We are planning on having children in the next year or so. I wanted to bring this concept up because there's an opportunity here if we stop to take a full look at it. Mainly, it's the opportunity to really coral all of your finances and set yourself up for Financial Independence before kids are in the picture. What can this look like?
Learn Money Management With Your Partner
I think the biggest thing to also do during this time is to learn each other's financial habits. Learn to be open and communicative about wants, needs, financial dreams, etc. The sooner you and your partner understand how each deals with money, the better off you will be. Without children yet, hopefully you will have a clearer picture of what you both need to do to get what you want out of life. I think this is key. Know what you want so that you have something to works towards.
For my husband and myself, we came from two different worlds. Our culture, our past experiences shaped our money mindset and there was a point where we had to unravel some of our old beliefs so that we would be on the same page regarding money. It's not always rainbows and unicorns when we talk about money, but we are open about it. I believe the more transparent we are with each other, the better we off we will be. There are so many tools out there to help you too. We use Personal Capital (full review here) to track our budgets, investments, etc. Now that we are a family, we have a shared goal and a shared commitment to ensure financial security for our family, but also to fulfill our personal goals and dreams.
Pay Off Debts
A great strategy during this time period is to make sure you pay all debts. At this point in time, this may be student loans or consumer debts. This is a great opportunity to tackle what can be high interest rate debts. Now is the time. It will be early enough in the debt timeline that interest hasn't accumulated that much yet. It will also be a time when you are not competing with other bills. Paying off debt will free up some of your resources in terms of money and mental energy. With this extra savings, you can use time and the power of compound interest to help grow your money faster. With debt paid off, you'll be reclaiming mental energy so that you can focus more towards income growth strategies.
Practice A Sustainable Lifestyle
Before you have to worry about feeding and taking care of other humans, figure out a lifestyle that is sustainable. What I mean by that is that if you are broke today, having kids tomorrow will not change that. In fact, it may lead to more debt. I'm not trying to be harsh here, but I am trying to put some perspective. Lifestyle Inflation is very real and it can compound quickly when kids come into the picture. Have a sit-down with your partner and discuss what kind of life you both want to live. Remember that at some point, one of you may need to stop working to raise children or one of you needs to earn more in order to pay for childcare costs. Of course, it's possible to make more money to meet the demands of your growing family. Understand though that sometimes making more money means sacrificing more time. Is this the kind of life you want to live?
Learn New Skills
The time period before kids is probably one of the perfect times to learn a new skill. This can be as simple as learning to cook, learning to code, learning to sew or as extensive as finding a good hobby that you can have a side hustle in. If you are thinking big picture, learn a new skill that will allow you to be more self-sufficient. Doing so can save you a lot of money and time in the future. When the kids are in the picture, time becomes scarce and we end up trading in money for time or money to get expertise. If you can learn a skill or two today given that you have more time and more money to spend on, the pay off can be huge. It will also give you a different outlet of expression which could provide stress relief or the opportunity to start something that has a flexible schedule. Check out Skillshare, CreativeLive and even YouTube for tutorials on the things that you want to learn about. We have to start thinking and planning if we want a different life.
Take Advantage of Economies of Scale
Another advantage of combining household is economies of scale. Take advantage of the fact that you may not need two of everything. What can be shared that will allow you to save money? Within comfortable limits of course. Perhaps, one shared car is more than enough for the both of you. If you are like me, I was single and independent for many years so I felt comfortable having "my own" thing, having things that I paid myself and was a bit stubborn about letting some of these things go. I completely understand, but re-assess a little bit about what you can give up so that you can experience Financial Independence earlier in life. You've married someone that you trusted so why not work together to achieve those goals.
Invest, Invest, Invest
With dual income and no kids to worry about, now is also the time to invest. Investing early will do wonders as compounding and market growth will work to your advantage. Hopefully, you'll also have more time to do research and find the investments that work for you. When kids are in the picture, most people will tend to become risk-averse in order to protect the family. Even if you are still in the early stages of a relationship, it's also never too early to invest for future children. If both you and your partner really want kids and are on board with that decision, using some extra money to start saving for children now can be a wise step. Note that your partner may want children later in life and unfortunately for women time is not on their hands when it comes to child bearing capabilities. Start thinking ahead if a large family is in the picture because it will cost money to have children.
One of the things that I've loved during this time period with my husband is that we have been able to travel the world. It seemed easier for us to pick up and go. The trick of course is not to go poor traveling the world. We knew eventually we would want a family and while I don't think having kids would stop us from wanting to explore the world, we wanted to be smart about travel expenses. To do this, we took advantage of credit card offers to maximize travel points (travel hacking). It's also "tax-free" money that we were able to take advantage of. It takes a bit of diligence, but I think it's worth it.
One of the downsides to being a DINK sometimes means being in a higher income bracket and getting taxed fairly high. I know, it's not fair, but understand that this is possible and figure out ways to minimize your taxable income. Contribute pre-tax to your 401K, contribute to an HSA, contribute to a commuter plan pre-tax. Get wise about this so that at the end of the year, your dual income is saved for the things that you want.
And What If You Don't Want Kids
All power to you. Having kids is a tough decision and it is OK if you decide not to have kids, but make sure that you and your partner are on the the same boat when it comes to this decision. It may need to be a discussion that happens early on. My advice then is to continue to build your wealth. Figure how to use your wealth for good. Because there will be no children and grandchildren in the future, think about how you will leave your legacy, think about how you will spend your retirement and think about who will be there to support you later in life.
So regardless if you have decided to have children or not, take advantage of this time period where both you and your partner are earning dual income. Enjoy life, but start thinking big picture and start seeding the idea early on that if we work smarter, we may not have to wait until 65 to retire and we can spend more time with family now instead of later. Regardless if you are single AF right now, statistically you will end up getting coupled off sooner rather than later. Prepare for the life that you want and make sure your significant other is on the same page.