DINK Dilemmas: How Can I Maximize My “Disposable Income?”

Affectionately referred to as DINKs (dual income, no kids) or SINKs (single income, no kids), the number of people who are deciding not to have children has steadily risen over the past decade.

So what’s a DINK to do with the $237,482 they would have spent on raising a child?

In this blog series, we rounded up several frequently asked financial planning questions from DINKs & SINKs and asked independent Avantax Financial Professionals and our Home Office team to weigh in. Visit our main blog page to view the other articles in this series!

Q: I don’t have to budget for childcare, kids’ college education, or other child-related expenses. How can I maximize this “disposable” income? 

• Amanda Young, CFP®, Financial Planning Analyst; Avantax: Create line items on your budget for what you’re passionate about. This doesn’t have to mean charity or giving. For example, I’m a foodie. I will easily spend the same amount of money on dining experiences as another person might on child-related expenses. Additionally, many SINKs/DINKs have pets, and they can spend as much on their fur babies as parents spend on their children. Also consider nieces/nephews. My husband and I are planning to help our siblings’ children with college or other post-high school endeavors, so we keep this in our planning and savings goals.
  
  And remember, spending money as a “flex” is very common in the SINK/DINK community. Don’t spend just to keep up with the Joneses – they aren’t real! 
   
• Caroline Piehl, CFP®, Independent Avantax Financial Advisor; TimeWise Financial: Being successful with your money starts by having a clear vision for your future. What’s important to you? Is it a new home, a second home, retiring in your 50s, or traveling the world?
  
  Think about a car in a snowstorm. With no vision, the car isn’t going to go anywhere.
  
  The same can be said for your money. Without establishing a vision for your money in 1-year,3 -year, 5-year, and 10-year increments, your money doesn’t serve a purpose (other than spending for today). Rather than squandering your disposable income, these clearly defined goals will give your money a purpose – and money loves a clear purpose.
  
  Once you have a clear vision for your future and clearly defined goals, your money will follow your vision.  
   
• Emily Millsap, CFP®, Manager of Financial Planning; Avantax: Having a budget and sticking to it is the most important rule for saving money – whether or not you have children. However, child-free individuals tend set more money aside for early retirement, travel, owning property in multiple states, etc. To make sure you’re saving adequately and appropriately for those specific goals, have regular conversations with your Financial Professional.
   
• Wayne Anderman, CFP®, Independent Avantax Financial Advisor; Anderman Wealth: First, let's reframe the phrase “disposable income.” Disposable, by definition, is income to throw away and there are plenty of people who do just that. However, it’s not the income that is disposable, only the future of whoever wields such a bad habit. 
  
  If you don’t have to budget for childcare, kids’ college education or other child-related expenses, the income that’s left over in a DINK or SINK household is now part of your free cash flow after living expenses are paid. This will help fund future goals and objectives or enhance the goals and objectives already planned to take your quality of life to the next level. 
  
  One exercise I like to recommend to my DINK/SINK clients is to write a check to yourself each month that would be equal to what you would spend on childcare, future educational planning and any other child-related expenses. This will help you see exactly how much money you could invest elsewhere. I then recommend reviewing your retirement plans. If you’re not maxing them out, I highly recommend you do. 
  
  Remember the rule of 72. If a good allocation of securities can earn 7%-8%, each of those "disposable" dollars can double in around 9-10 years. So, over the course of time, every $1 of saved disposable income is potentially $4. 
   
• Pardis Ferdosi, Financial Planning Consultant; Avantax: As a dual income, no kids household, you are sitting on a golden opportunity to turn your disposable income into financial freedom – maybe even early retirement. Hello, beachside mojitos at 50!
  
  Start by building a 3-to-6-month emergency fund, which is something everyone should have. Max out your 401(k) and IRA contributions to take advantage of employer matches (aka “free money”) and tax perks.
  
  If you have any high-interest debt, tackle it with intention. It’s like cleaning out a closet: Once it’s done, you’ll feel lighter and freer to focus on building wealth.
  
  Save for personal goals like your dream home or bucket-list travels, or even a dream business, by contributing regularly to a diversified brokerage portfolio to make those dreams a reality.
  
  Protect your hard-earned money with solid insurance coverage and put some of it toward personal growth (because learning Italian for your Tuscan retirement isn’t cheap).
  
  Consider sprinkling in some charitable giving to causes you love. It’s good for the soul and might lower your tax bill, too. 
  
  Don’t forget to be tax intelligent! Work with a Financial Professional to uncover hidden deductions and credits and have regular financial checkups to stay on track. This will not only help you save for the future but design a life you’ll love.