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Selection previously discussed a group of individuals people with high income but not rich (called HENRYs). In summary, HENRYs earn well above average salaries but often don’t think they will get rich because of factors like high tax ratehigh cost of living and student loan debtor they may be building their wealth but still don’t have enough savings to become considered rich.
If you are a couple with an income of two or more and no children, don’t worry, there is a name for you. You are called DINK – aka the acronym for Dual Income, No Kids.
DINKs often break down family and lifestyle expenditures and work toward financial goals together. It is often easier to achieve goals on two incomes than just one. And when you don’t have kids, you have more flexibility, and potentially higher disposable income, to be more aggressive with certain goals.
But no matter what your total income adds up, what you do with that money is more important. We asked Brian Walsh, a CFP at SoFi, to weigh in with some advice for childless dual-income couples who feel ready to take the next steps financially. Here’s what he shared.
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1. Discuss the goals you want to prioritize as a couple
It’s important to note that just because you’re a dual-income household, it doesn’t mean you’re automatically financially rich. Factors like salary, cost of living, debt, and necessary personal expenses can all play a huge role in a couple’s financial health. So first things first: You need to equip some financial base as a couple. This may include being fully funded emergency savings account for the two of you, make sure each contributes enough to get any match on both of your companies 401(k) accounts (if any) and paying high interest rates.
According to Walsh, once a couple has checked these financial boxes, they should start talking about how to prioritize their other big money goals.
From here, you can focus on what’s most important to you, he says. “For some, this might be early retirementso you’ll want to focus any extra savings on increase your retirement contributions. For others, it might be buying a home, so you’ll want to focus on save on upfront payment. “
It’s hard to know what steps you should take when you don’t even know what goal you’re trying to achieve. You also don’t want to just take pictures in the dark only to realize that by doing things a little differently, you could have bought that house or made significant progress in saving for retirement. . This is why it’s important to discuss what each person wants to be able to afford and if there are any major milestones that make sense for you.
“There’s no one size fits all, but the most important thing to do is make sure you’re on the same page as your partner,” says Walsh.
2. Go beyond your savings together
Accumulate your savings With as much cash as possible (and the sooner the better) can help you feel like you have more options when faced with any major future expenses. And when you have a partner to hit your savings goal together, you can get there faster. So it’s important to do your best to save as much money as possible – especially if you hope to have children in the future.
“Prior to [having] Kids, everyone warned me that things would change when there were kids in the picture,” Walsh explained. As a parent, I appreciate that this applies to finances as well. Children are expensive and only more expensive when inflation rateespecially for things like childcare. Saving for retirement or other goals become much harder when you have additional costs associated with children. “
Walsh also warns that if you don’t Make a habit of saving money Before you have children, it will be even harder to spend money than once you have children. Automate your savings is an easy way to build that muscle to save cash for the future. Typically, you can log into your online bank account and schedule a recurring transfer from your check to your savings for a specific day each week or month.
Where to save on construction
Kudo for you and your partner if you both already have money automatically transferred to your online account High yield savings account. With a high yield savings, you will be able to earn a higher interest rate on your balance than just keeping your money in Traditional savings account.
Have a lot of solid high yield savings account out there, but Select’s top pick for best overall is Marcus by Goldman Sachs High Yield Online Savings, as it offers above-average annual percentage return (APY), doesn’t charge any fees, and provides users with easy mobile access. This is the simplest savings account to use when all you want to do is raise money with no strings attached.
Tools to save you
If you and your partner want to get into the habit of saving for multiple specific goals at once, consider giving it a try Number application. Application to connect with check account and allows you to create different savings “bins” for things like going on vacation, buying a house, or just a really expensive item you’ve got your eye on. The app then automatically saves a small, random amount of money for each of those goals each day, so you’re essentially saving on autopilot.
3. Get into the habit of investing both incomes
Once you and your partner build muscle for savings and feel confident in it, repeat the process with investing. Although it sounds scary at first, investing is the best way to grow your wealth and it can be the backbone of your retirement.
The sooner you start investing and the longer you stay in the market, the more you allow your money to maximize. compounding it can be earned. (Gross pretty much when your returns and returns stack up.) Although keep in mind that putting your money in the market doesn’t mean you’re taking on substantial risk. There are three main components to growing your money through investing: how much you contribute monthly, your rate of return, and how long you have to save.
Investing in both your own and your partner’s income can allow your household to build large fortunes much faster, especially if you start as early as possible and allow your money to grow. up in 30 or 40 years.
“With investing, time can be your best friend or your worst enemy,” says Walsh. “Starting early will give your best friend time to enjoy the benefits of compound growth. Skipping time will cost your worst enemy time as you are forced to save significantly more. to achieve your goals.”
Where to invest?
A good app for couples to invest together is Winding. With Twine, couples can choose a common goal (home, big shopping or vacation) and define a monetary goal. Each partner then links their Twine savings and investment accounts to a checking account and sets up recurring transfers. As their balances grow, couples can see a hybrid account interface that includes each partner’s accounts and shows them their overall progress toward their goals.
Another approach requires using robo advisor as Wealthfront or Improve to help you determine which investments make sense for you based on take risksgoal and time. Robo-advisor also take on the task of automatically rebalancing your portfolio as you near your target date for your goals (be it retirement or buying a home). This way you don’t have to worry about adjusting the allocation yourself.
What if you hope to have children in the future?
For those who currently don’t have children but hope to start a family in the future, Walsh recommends starting to plan ahead for any financial changes you may experience to income and expenses. mine.
“Couples will need to ask themselves, ‘Will we continue to be a dual-income family or will we become a single-income family?'” he explains. “You’ll need to anticipate new additions to the your budget, such as child care. Couples should also consider insurance benefits, parental leave and work-through disability policies and make sure they understand what this means for them. “
If you think it’s more likely that you won’t continue to be a dual-income family and will instead rely on a spouse’s income, consider some of the workplace benefits you may have. can be used to cover some expenses, such as HSA or one FSA . dependent care.
Key point
Individuals in childless dual-income households can be in a place where they not only have a partner to share lifestyle costs with, but can also begin to make powerful financial moves like continuing to live. continue to save, invest and retire funds since they have no expense to feed a family.
It can be easier to make progress towards some financial goals when you can work with someone. But if you’re planning on having children, Walsh recommends being financially prepared for the additional costs and potential loss of income if you transition from a dual-income household to a single-income household. you have children.
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Editing notes: The opinions, analysis, evaluation or recommendations expressed in this article are the sole opinions of Select’s editorial staff and have not been reviewed, approved or endorsed by any third party.
