More and more Millenials and Gen Xers are waiting to have kids, or opting not to have kids at all. This choice is partly financial since it requires some financial resources to raise a child.
According to the most recent data from the U.S. The Department of Agriculture, a middle-income couple (before-tax income between $59,200 and $107,400), can expect to spend about $233,610 to raise a kid from birth to age 17.
Often known as DINKS, couples who choose not to have children may enjoy some significant financial advantages.
What Does DINK mean?
DINK is short for “dual income, no kids” or “double income no kids.” It refers to households where there are two incomes and no children. The two incomes can either come from both partners or one partner having two incomes.
Some couples opt to wait longer before having kids, so they fall into the DINKY, or “dual income, no kids yet” category.
The Significance of Dual Income, No Kids
Without the added expense of children, DINK couples might have more disposable income available for spending and investing. Marketing campaigns for luxury vacations, homes, and other high-end items often target DINK couples.
However, just because a household has two incomes doesn’t automatically mean they have more money.
There are some reasons why they may still struggle financially, including:
• Their two incomes are not very high
• They live in an expensive area
• They have spending habits that eat up a large portion of their income
Why are More Couples Choosing the DINK Life?
One of the main reasons couples choose to wait or forgo having children is the cost. When the Great Recession hit in 2008, many Millennials were just graduating from college or starting their careers.
The recession made it challenging to get jobs and begin investing for the future. Gen Xers lost 45% of their wealth during this time. On top of recovering from the recession, nearly half of Millenials and a third of Gen Xers have a significant amount of student loan debt.
These factors have made it difficult for young people to achieve financial milestones and start families. Some couples choose to wait a few years before having kids after they get married for non-financial reasons. They prefer to use their time as a young couple to travel, make life plans, and enjoy an untethered lifestyle.
Structuring a DINK Household
There are many costs associated with having children, including clothing, food, healthcare, and education. Partners who don’t have children might instead choose to splurge or save up for early retirement.
DINK couples with disposable income have many options for how to spend or invest their money. Some couples may choose to buy nice cars, while others may enjoy going out to eat.
They also potentially have more free time to travel and spend money. In general, clothing, food, or travel that may have been too expensive for couples with children can be accessible for DINK couples.
A couple with no children doesn’t need as many bedrooms or as much space in terms of housing. They can either choose to save money by renting or buying a smaller place to live. They can also choose to use the extra space for other purposes, such as a home gym, art studio, or rent out a room for extra income.
Kids also take up a lot of time and have fairly rigid schedules. Some DINK couples may choose to take more time off for travel and leisure, while others might choose to work longer hours or find ways to earn supplemental income.
In addition to purchasing and leisure options, dual income couples have the opportunity to invest their extra money. They might purchase stocks, bonds, real estate, or explore other opportunities.
Money Management Tips for Couples
Learning about each other’s financial habits and goals is important so that couples can get on the same page, whether they’re planning to have children or not. It also helps to have productive conversations about finances.
Establishing open and honest communications before having kids may make things easier in the long run. There are some crucial areas for couples to work on if they want to live a successful DINK lifestyle or get their finances set up before having children:
Paying Off Debts
Before setting off on a lavish vacation, it’s wise for DINK couples to have a plan to pay off high-interest debts such as credit cards and student loans.
Without kids, home loans, and other monthly bills, couples may have more available funds to tackle their debt and. Once they’ve paid down the debt, they can use the extra money they’ve saved from monthly interest payments to invest or spend elsewhere.
Creating Sustainable Spending Habits
Whether a DINK couple is waiting to have kids or doesn’t ever plan on having them, practicing sustainable spending habits is crucial for financial success. If a couple is always in debt, having kids probably won’t change that.
Similarly, not having kids could make it tempting to go out to eat or travel a lot. Having conversations about the type of lifestyle each person wants both now and over the long-term helps make day-to-day spending choices easier.
Travel is a huge draw for many DINK couples, but it can quickly get expensive. If couples want to travel a lot, they might consider staying in less expensive places and skipping the luxury trips.
If luxury is important to a couple, they might think about only going on one big trip per year and taking advantage of points, credit cards, and other offers to maximize their ability to see the world.
Planning Ahead and Investing Early
The more couples can figure out what they want in life and get their finances organized, the easier it is to plan their finances. If they plan to have kids in the future, they might consider saving now for college and other child-related expenses that may come later.
Factoring in future raises, inheritances, and other additional income or expenses is also helpful. Even if couples don’t start with high incomes, the earlier they can start saving, the more their portfolio has time to grow.
Just as couples without kids may not need to live in a large home, they may not need as many things. DINK couples might choose only to have one car or bicycle. There might be other items that each person has been buying for themselves that could be shared.
Acquiring New Skills
Couples without kids may choose to invest some of their time and money into additional training and education. If they plan to have kids in the future, this might help them move up the career ladder or earn a larger salary when the kids do come.
Getting Wise About Taxes
DINK couples can make smart financial choices to minimize their taxes. Contributing to an HSA or putting pre-tax income into a 401K can help reduce the tax burden. Owning a home may also provide tax breaks to some homeowners.
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The Pros and Cons of a DINK Lifestyle
There is nothing dinky about the DINK lifestyle. Not having kids or waiting to have kids presents a huge financial opportunity for couples. However, if they aren’t smart about their savings and spending, couples may risk running into financial trouble.
Pros of Becoming a DINK Couple
• More free time and money to travel for work or pleasure.
• Ease of mobility—moving or traveling to a new house, city, or country is more manageable without kids.
• Disposable income to spend on cars, clothing, food, or other items.
• Ability to save money by living in a smaller house and not paying for children.
• Opportunity to save and invest extra income.
Cons to Remaining a DINK Couple
• Potential for overspending and splurging on travel and luxuries rather than saving and investing.
• DINK couples may be in a higher income bracket and have to pay more taxes.
• There may be less family support for caregiving as they age.
Planning for a Life Without Children
Life without kids might be an excellent decision for many couples. The extra free time and money can be used in many meaningful ways.
However, couples need to be on the same page about whether they want kids, and there are some things to keep in mind about a childless future.
Couples will need to figure out:
• How they’ll spend their retirement years,
• Who will visit or take care of them when they’re older,
• And who they will leave their money and assets to after they die.
Saving up extra money for caregivers, retirement, and unforeseen circumstances can be an intelligent strategy for DINK couples. DINK couples must also make sure that they create an estate plan, so that their assets get distributed according to their wishes after they pass away.
Key Financial Baselines to Keep in Mind
When doing financial planning for the future, a few things are certain. Couples will have to pay taxes, and they’ll need food, shelter, and basic necessities. Beyond that, there are some baselines couples can look to as they plan for retirement, investing, home buying, and any kids they might plan to have.
• Using the 4% rule, most couples will need at least $1 million in savings at retirement according to AARP.
• $435,400: The average price for a new home in the United States
Although these numbers may sound like a lot of money, couples with two incomes and no children can start early saving some of their extra cash and take advantage of compound interest over time.
If they start early and are savvy about their savings and spending, couples can potentially retire early and enjoy more free time for travel and personal pursuits.
Planning for the Ultimate DINK Lifestyle
Going kid-free has many upsides, but it’s important to be money smart, plan, and work together to create a prosperous and secure future. Investors who are planning to never have children or to wait to have them, often have more disposable income to put toward their financial goals.
If your financial goals include building a portfolio, a great way to start is by opening a SoFi Invest® brokerage account. The SoFi app lets you keep track of your budget, investment accounts, favorite market assets, and goals all in one place. SoFi also has a team of professional financial advisors available to help you get started and reach your goals.
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