DINK Dilemmas: Should I Spend or Should I Save?

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 requested independent Avantax Financial Professionals and Home Office team members to weigh in. Visit our main blog page to view the other articles in this series!

Q: I feel like I should be able to spend more on restaurants, vacations, etc., since I don’t have the expenses that come along with having kids. Is that mindset detrimental to my budget/savings? 

• Wayne Anderman, CFP®, Independent Avantax Financial Advisor; Anderman Wealth: Not if done thoughtfully and with intentionality. First, let's reframe this mindset. With proper and responsible planning, you can increase your quality of life and still save more for your future. The idea here is to be very careful of "lifestyle creep,” which is when you make more money and have more money to spend, and subsequently begin to acquire and spend in a way that pushes your expenses up. 
  
  There is a significant opportunity cost to this. Remember the rule of 72 from the disposable income blog? It applies here as well. If you save half of your disposable income, the other half can be split between increasing your lifestyle, home environment, etc. – in other words, things you can enjoy in the present. Then, the other 25% of your money goes to your discretionary spending.
   
• Caroline Piehl, CFP®, Independent Avantax Financial Advisor; TimeWise Financial: It really depends. Financial plans are one of one, meaning each person’s plan is completely tailored to their specific needs, wants and situation. The reality is, your money only goes four places: it’s saved/invested, spent, paid to the IRS, or donated. The key is to ensure your spending doesn’t come at the expense of your goals. 
  
  If your goal is to retire at 55 and spend $200k per year in retirement and you are well on track to achieve that goal by consistently saving and investing, then you can feel confident about spending extra cash on eating out more, travelling more, etc.  
  
  Alternatively, if you have nothing saved at age 50 and continue to spend all of your money, then you likely aren’t going to achieve your goal. In this scenario, that spending mindset is detrimental to your financial plan.
  
  Without a financial plan, you don’t know how much you should be saving and if you are on track or not – which is the most common issue I see that leads to overspending. Once you build a baseline plan with your trusted Financial Professional, you have guardrails that tell you what a good range for saving and spending is. At the end of the day, it’s all about balance – it shouldn’t be “all or nothing!”
   
• Emily Millsap, CFP®, Manager of Financial Planning; Avantax: A “spending” or “saving” mindset is usually determined well before you decide to have or not have children. I’ve created financial plans for younger SINKs who’ve saved 50% of every dollar they earned allowing them the flexibility to retire when they want – but I’ve also crafted financial plans for SINKs in their 60s who didn’t focus on saving money and will need to continue working in some capacity to have the income they need to survive. Whether you consider yourself a spender or saver, are childfree or have several children, one truth remains: Planning early and regularly revisiting your financial plan is key to helping produce the best possible outcome.   
   
• Amanda Young, CFP®, Financial Planning Analyst; Avantax: It’s so easy to get into an overspending habit and validating it by saying, “Well, we don’t have children as an expense so we can do whatever we want!” Make no mistake – this mindset is detrimental to your savings. Regardless of your income level, you should always have budget line items and make sure to save first into all the different tax buckets (pre-tax, ROTH, taxable) and pay your overhead bills. Line these out distinctly, then add different line items or big purchase savings goals into your budget. 
  
  The goal is the same every month: have every dollar planned for – yes, even your Starbucks coffee runs. Have an allowance every week for your spending money (i.e., anything not household related) and keep that amount the same regardless of how much money you make. 
   
• Pardis Ferdosi, Financial Planning Consultant; Avantax: Not at all! One of the joys of being child-free is having the flexibility to enjoy life’s luxuries. The key is finding balance. Start with budgeting for essentials first: fund your retirement, build an emergency cushion, contribute to your brokerage accounts and save money for long-term goals. Then, give yourself permission for guilt-free splurging. Think of it as “living your best life responsibly.” You’re enjoying today without sabotaging tomorrow. So, yes: Book that trip and order the filet mignon. Just make sure your financial goals are still the VIP of your budget! Your tax-intelligent Financial Professional can help you to find the balance by using the planning resources available to them.