What would you do with the extra cash every month? What would you do with an extra income?
We’re not talking about a side job working part-time, or even a second full-time job, although you can accomplish any of these! I just came across an article on DINKs living off one partner’s income while saving each earns, or using the second income to pay for other expenses. It made me think about how and why a family with no children might be able to do that.
Yes, parents are able to do this, too. A lot of families with children are dependent on the income of one spouse. This is often done so that the other parent is the primary caregiver at home. This is often prompted by expenses for childcare. However, living on a single income for a family of children could be difficult, because it is the Brookings Institution estimates the expense of raising children until age 17 is about $300,000. for a middle-income family who have two kids.
It’s not that a middle-class family with a DINK will save$600,000 simply by not having children. (Of Of course, DINKs come in all age groups and are able to span the entire socioeconomic spectrum.) What is the likelihood that they might be able to? Today, I’ll focus on the reasons why a family without children may want to survive with just one income — and what they could decide to dowith the income from other sources.
DINK-ING UP
If you are living with a particular person or group of people who you share love or friendship, or even living area (or any of the three!) It’s evident that living with someone else could help you cut expenses. Rent can be split or divide the cost of food, and also split bills for utilities, and even household chores. Apart from the last non-paid work All of these can be used to cut costs, as opposed to each person in an entire household handling these by themselves.
There’s a chance you’ve heard of the expression “What was good for two is great for one.” I’ve been told it to talk about retirement plans for the spouse who survives in the event that their spouse dies. If the couple planned their retirement well, this is often the case for survivors who are worried about whether they’ll be able to survive after losing a loved one.
If you were playing DINKs, what would happen if you changed the script? In terms of income, can what’s good for one person be a good idea for two? That is, can two working individuals live on only one’s income?
I’m not saying that it’s impossible, but you’ll need to be part of an financially responsible partnership to be able to accomplish this. Even if it’s not the best option for you, just let me be funny for a second. What would you do if could survive on one paycheck? If you decide to spend it or save it for the other the “extra” income sounds pretty amazing to me!
… however, what is the best way to go through making this … then what do it be to it?
LIVING OFF OF ONE INCOME
The first step in committing to another person’s financial future doesn’t involve the idea of living off a single income. If you’re thinking of the idea of combining your finances with your partner you should read some of the other blog posts I’ve written about the subject below.
Combining Cash Flows: To Plan Solo or With Your Partner?
Getting Married — and Marrying Your Finances
If you’re ready to make the leap towards single-salary life Here are some ideas to think about.
How do you budget? How you’ll budgetOpen dialogue with your spouse is essential when you choose to live on one income. Who’s income will pay for what? You’ll probably need to talk about the major purchases you’ll need to discuss with one another prior to making them and this could apply to smaller purchases as well. Making a family budget and understanding your earnings and spending plans for each other is a good place to start.
How much you’ll saveThe solution to the question could take many formats. It could be as simple as direct depositing the entire amount you’re saving to one specific account. It could be that it’s a matter of each of you putting aside the equivalent of half or more of your individual income. Whatever way you decide to break the deal, make sure that you’re both on the same page.
What will your taxes look like?This one is easier if you’re married and filing taxes jointly. If not, and a significant part of your savings are going into one of your partners’ 401(k) such as you’ll receive tax advantages. What do you think about this? Do you have any ways to make up for the difference in the event that it is meaningful to you? Make sure you sit down with your tax preparer or financial planner regarding this.
What are your legal rights areIf your relationship isn’t married having your lawyers involved to discuss the rights of financial responsibility as a cohabiting couple can be beneficial. This is also true for married couples with an agreement to prenup. Naturally, the possible ending of a relationship is not something that most couples would like to contemplate. However, with the proper legally binding documents in place, in the event that your partnership or marriage was to end and you both left it in good standing, legally and financially at a minimum. As you work out the legal aspects, whether no matter if you’re married or not. You may also want to focus on drafting or revising an estate planning plan.
The place where your funds are going where they are goingFrom different accounts, to one joint one, savings to brokerage, and further, there are options to consider. Plan out where your the funds you’ve saved will go, when they’re appropriate to spend the money, what you’ll use the money on, and what will take place if you fail to meet your savings goals. Staying on top of these things early can assist you in making adjustments to your plan in the event that what appears appealing on paper doesn’t occur. It also provides accountability to help you stick with or refocus.
How will you invest How you’ll invest What will you invest in —Planning to invest your extra income? Beyond budgeting, make sure to develop a strategy for how you will put money to be used for your benefit as couples. If you have different levels of risk tolerance A professional can assist you in finding an investment mix that are suitable for your needs.
Once you have the fundamentals down, I wouldn’t suggest to do this only to get it done. What’s the purpose? Your objectives. That’s what!
WHAT TO DO WITH AN EXTRA INCOME
For a couple that has two partners working together switching to a lifestyle that is based on one salary is an enormous decision. If you’re capable of it, here’s a list of what you could accomplish using it.
You can save for a specific goal, like a major vacation, or a the down payment on a home.
As expenses are reduced, think about planning to retire earlier or cut the time between today and financial independence.
Put away your retirement savings for future use, and benefit from tax savings while you’re doing it. (Compound interest, anyone?)
Are your savings already in order? Enjoy lavish living by using the extra money to fully take in the world.
And whatever else you can fit into your budget. This is your money at the end of the day!
Do you and your spouse working for one salary? Do share your story! I’d like to know what you’re doing with the additional income, regardless of how standard or unusual you think it might be. Contact me to let me know about your experience and provide your advice and tips to help make this work for both you and your spouse.
