Making the Most of Dual Income, No Kids

As acronyms go, DINKS—dual income, no kids—may sound a little belittling. But there is nothing dinky about the savings potential for couples who don’t have to plan for the costs of raising a family.
 
The fact is, whether you’re a couple planning to have kids in the near future or lovebirds determined to remain a duo, DINK status provides a huge opportunity to build savings. Socking away half of a couple’s total income is the DINK holy grail.
        
This is easier said than done and mapping your financial future is always a challenge. It requires communicating with your partner, sharing your visions and agreeing on goals. Turning those goals—whether buying a starter house, taking extravagant vacations or paying off your student loans—into reality means planning, budgeting, saving, investing and being realistic.
 
Discretionary Income Is Savable Income
Here’s the deal: Every household in the United States faces two unavoidable expenses: taxes, which the government needs to survive, and necessities, which you need to survive. Food, clothing, healthcare and shelter have to be included in any budget. The money that remains after couples have paid for taxes and necessities is discretionary income. It can be spent on vacations, fast cars, shoes—anything.
 
For couples who want to accrue wealth and fund long-term goals, discretionary income should be viewed and deployed as savable, investible income.
 
The Big Questions
One savings strategy involves projecting and planning for desired outcomes. What are you investing for? What do you want it to earn? And when will you need to access your money? The answers to these questions are vital to determining your investment strategies.
 
Benchmarks and Baselines
Couples gazing into their financial future may want to bear these figures in mind:

• $379,600: The average sale price of a new home in the United States in February 2019, according to the U.S. Census.
• $1.5 million: The average amount needed to retire at age 70, according to AARP.
  $233,600: The average cost of raising a child from birth to 18 for a middle-income family, according to the U.S. Department of Agriculture report issued in 2017.
• $26,458: The average yearly costs of sending kids to college in 2018, reports Sallie Mae.
   

A Sample Five-Year Plan
For two recent college graduates who each earn $50,000—the average starting salary, according to the National Association of Colleges and Employers—these are daunting numbers. But there’s no need to panic. DINKS have an advantage. They have time to build savings.
 
Let's imagine the two graduates save 20% of their income—$20,000—annually.
 
These DINKS are risk-averse; they know stocks and investment funds offer the highest theoretical returns and also the highest theoretical losses. So they focus on accounts that offer guaranteed fixed-rate returns.
 
To build an emergency fund for unforeseen expenses—major car fixes, a sudden airplane ticket to see a sick relative, or, most ominous of all, unemployment—the couple decides they want about $10,000 on hand, and they want it to be liquid.
 
So they put $2,000 in a high yield money market account that earns 2.25% annual percentage yield (APY) and put $200 into the account every month. Three years later, they have $9,577. And if they keep that contribution steady, in 20 years, that untouched account would have $63,798.
 
A down payment on a home will require research into the local market. But our DINKs want to have at least $25,000 saved in the next five years to put down on a starter home. They put $5,000 in a high yield savings account that earns 2.25%, and contribute an additional $300 each month. Five years later, they’ve beaten their goal with $31,000 in savings.
 
For retirement, they put $300 in each of their 401(k) accounts at work every month. As their salaries increase, they plan to increase contributions. But if they don’t, and their funds average a 6% return—a conservative estimate based on past performance—over 45 years, each account will be worth more than $800,000, or, taken together, well over the $1.5 million benchmark.
 
As for family planning, these DINKs want to have $15,000 set aside for childcare when they first hear the pitter-patter of little feet. But that seems years away. They decide to wait. One year later, thanks to salary increases, a tax refund and a bonus, they wind up with $10,000 in their checking account, which they invest in a four-year Certificate of Deposit (CD). It earns 3.00% APY, growing to $11,250. The next year, they take the same surplus and put it in a three-year CD with a 2.9% APY. It earns $10,900, pushing them well past their five-year goal. 
 
Perma-DINK-Think
For the most part, these sample projections don’t factor in annual raises, equity on property value, yearly bonuses, inheritances and other possible assets that will be added to discretionary income. But that’s the point. Saving early and saving smart allows couples to achieve financial stability, and even independence, based on their base salaries and earnings. Anything above and beyond that would be a bonus. And, of course, the example is a best-case scenario, and you should also prepare for any unexpected expenses.
 
And couples with no plans to have children should be able to save even more.
 
With or without kids, successful DINKs may find themselves creating investments for nieces and nephews or making donations to their college funds. Others may become more philanthropic and create endowments for organizations or favorite charities.
 
And that’s the bottom line for DINKs. The more aggressively couples save and invest, the more they will have to spend—both on themselves and on others, if they choose.
 
Seth Kaufman is a journalist and ghostwriter based in Brooklyn. His work has appeared in The New York Times, The New Yorker online and many other publications.

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