Double income, no kids? You may’ve heard about the so-called ‘DINK dream’ – that is, when two people in a relationship are both earning well and don’t have any child-related expenses to eat into their hard-won disposable income.
As in –
“Did you see the Majolas’ boujee new ride?”
“Sure, but there are no kids to interfere with their flex; they’re living the DINK dream!”
While DINK status might not be the case for every couple, Client Engagement and Team Lead at Metropolitan GetUp Liezel Gordon admits that there’s a perception that when it comes to money, life is far more comfortable for those in a relationship.
“In reality, it’s a little more complex. Being part of a couple doesn’t necessarily mean that you’ll have more disposable income – or fewer money worries,” she says.
She adds that personal circumstances need to be considered. Do both parties work, earn and contribute to expenses? What standard of living is important to each person? Is one party experiencing financial trouble and how does this impact their partner? “When defining a ‘comfortable life’, it is important to take the full picture into account: both income and expenses, as well as lifestyle and aspirations,” she adds.
Gordon shares how your relationship status affects what you need to consider from a financial standpoint.
SINK or swim
For those who identify as a SINK (single income, no kids/dependants) or SIWK (single income with kids/dependants), the biggest concern is, what if things go wrong? “The risk here is that there’s only one income stream, and no second income to fall back on, explains Gordon.
“It sounds depressing, but it’s prudent to make a list of the possible risks your specific SINK or SIWK status entails. Once you have a clear picture, you can plan your finances accordingly.”
This could list risks such as possible disability – should the sole breadwinner become disabled, are there funds to make modifications to the home or to maintain the living standard of family members?
“Divorce or death of the person who is earning is a key concern, especially if there are dependants to consider, and so it’s extremely important for SINKs and SIWKs to prioritise financial protection, even if finances are tight,” says Gordon.
Financial products such as life and funeral cover, as well as income, critical illness and disability protection, are vital, explains Gordon, and while a will is “important for everyone, it’s especially important for those who are sole breadwinners and have dependants to consider,” she says.
Gordon says that SIWKs are usually excellent at adapting their family’s lifestyle to a single income. “My challenge to single-income households is for the non-earning partner to stay on top of the household finances.
“If something were to happen to the breadwinner, the non-earning individual would have to take over the family’s finances. This is extremely daunting if the non-earning partner was never expected to play any role in the management of the household’s finances previously,” she says.
DINK twice
For DIWKs (double income with kids/dependants), it’s important to account for the home support-related expenses incurred by both partners working. “For example, if both parents work, there’s usually some form of childcare required, which can be costly.
“Someone might have to be paid to collect children from school and take them to extra mural activities, while other expenses could include homework support and housework.”
While two incomes could allow for greater peace of mind, it is still important to prioritise income protection, life and funeral cover and having a sound will in place, she says, as these unplanned occurrences can deal a significant blow.
And don’t think that just because you’re part of a DINK (double income, no kids) unit you’ve got nothing to worry about, says Gordon.
“Yes, expenses can be shared among partners, putting less of a burden on one individual and generally resulting in more disposable income to enjoy. However, if one person in the relationship has higher expenses (due to lifestyle, medical or other reasons) relative to their income, it might not always be that straightforward,” she warns.
Gordon poses a challenge for dual-income households: Why not try to see if you can live off one income, and save the other? “There’re so many benefits to this and it brings you so much flexibility. By allocating a single salary for expenses, you could use the other income to build a nest egg,” she suggests.
The idea is to use that second income to gain financial freedom. “However, it’s important to ensure that both parties’ names are on whatever vehicle is used to save that income, otherwise one person may find themselves with nothing should there be a divorce or break-up,” she cautions.
