More and more Millennials and Gen Xers are deciding to wait to have kids, or not have kids at all. This choice is partly financial. Having children can increase a couple’s expenses by 10% to 20%.
In the United States, a middle to high-income couple can expect to spend anywhere from $284,570 to $454,770 on a kid from birth to age 17, according to the most recent study completed by the United States Department of Agriculture in 2015.
There are a few reasons this trend is growing in popularity, and a number of upsides for couples who choose to live the kid-free lifestyle.
Related: Effective investing as a couple
SPONSORED: Find a Qualified Financial Advisor
1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.
2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.
What does DINK mean?
DINK is a slang term short for “dual 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 are opting 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 potentially have more disposable income available for spending and investing. Marketing campaigns for luxury vacations, homes and other high-end items are often targeted towards DINK couples.
However, just because a household has two incomes, it doesn’t automatically mean they have more money or more disposable income.
If their two incomes are not very high, they live in an expensive area, or they have spending habits that eat up a large portion of their income, their spending ability can be affected.
Why are more couples choosing the DINK life?
One of the main reasons couples are choosing to wait or forego having children is financial. When the Great Recession hit in 2009, a lot of 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 Millennials 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. They can use this time to travel, make financial and life plans and enjoy married life as a couple.
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 on themselves 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 travels that may have been too expensive for couples with children can be accessible for DINK couples.
In terms of housing, a couple with no children doesn’t need as many bedrooms or as much space. They can either choose to save money by renting or buying a smaller place to live, or they can choose to use the extra space for other purposes, such as a home gym, art studio, or office.
Kids also take up a lot of time and have fairly rigid schedules with school and extracurricular activities. DINK couples may choose to take more time off for travel and leisure, or others might choose to work longer hours.
In addition to purchasing and leisure options, dual-income couples have the opportunity to invest their extra money. They might purchase stocks, bonds, or real estate, or explore other opportunities.
Money management tips for couples
Learning about each other’s financial habits and goals so that couples can be on the same page and have productive conversations about finances is a common suggestion.
Establishing open and honest communication before kids are in the picture 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 might be smart for DINK couples 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 then 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 broke and in debt, having kids probably isn’t going to 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, as well as long-term and retirement goals, typically 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 a year. Taking advantage of points credit cards and other offers might 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 their financial planning has the possibility to be. 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 useful.
Even if couples don’t start out 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 much other stuff as well.
DINK couples might choose to only have one car or bicycle, and 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 and possibly be able to afford more for their families.
Getting wise about taxes
DINK couples can make smart financial choices in order to minimize their taxes. Contributing to an HSA, putting pre-tax income into a 401K, or putting money into a commuter plan can all help reduce the tax burden. Owning a home may also provide tax breaks to some homeowners.
The pros and cons of a DINK lifestyle
There is nothing dinky about the DINK lifestyle, and not having kids or waiting to have kids presents a huge opportunity for couples. However, if they aren’t smart about their savings and spending, couples may risk running into financial trouble.
DINK couples might find some pros to remaining childless:
• 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 easier without kids.
• Disposable income to spend on cars, clothing, food, or other items.
• Save money by living in a smaller house and not paying for children.
• Opportunity to save and invest extra income.
There could also be cons to remaining in DINK status:
• 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 a great decision for many couples. The extra free time and money can be used in many meaningful ways.
However, it’s important for couples 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 come 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 a smart strategy for DINK couples.
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.
Although these numbers may sound like a lot of money, couples with two incomes and no children have the opportunity to start saving some of their extra cash and take advantage of compound interest over time.
If they start early and are smart about their savings and spending, couples can potentially retire early and enjoy more free time for travel and personal pursuits.
Smart planning for the ultimate DINK lifestyle
Going kid-free has many upsides, but it’s important to be money smart, plan ahead and work together to create a successful and secure future.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA/SIPC. The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP, CERTIFIED FINANCIAL PLANNER, CFP(with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Featured Image Credit: YakobchukOlena / iStock.