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An Uncommon But Brilliant Money Move for Young Couples

Friday, April 15th, 2011

When a couple gets married, one of the biggest financial temptations they face is what I call Delusions of DINKhood (Double Income No Kids).  Since they typically both have jobs, it’s easy to get swept up in thinking of all they’ll be able to afford with two incomes. The home!  The cars!  The nights on the town!

It sounds like such freedom.  And it can lead to such a jail.

If you want to have kids, the absolute best money move you can make is to build a lifestyle based primarily on one income.  If and when kids come along, that’ll give you the freedom to choose to have one of you step out of the paid workforce.

Building a lifestyle that requires both incomes limits your choices – a lot.

Even if you don’t plan to have kids, or if you plan to have kids and you both want to continue working, building a lifestyle that requires just one income still makes sense.  That way, if one of you lost your job, you’ll be in a much better position to handle the loss of that income.

Since housing is usually people’s biggest expense, a one-income lifestyle is mostly about choosing a home that can be afforded on one income.

A Personal Example

When Jude and I got married, we rented for the first 10 months.  That gave us the freedom to enjoy our new life as husband and wife without all the responsibilities of home ownership.  When you rent, if something in your apartment breaks, you just call your landlord.

When we bought our first home, we chose a condo and lived there for five years. When you own a condo, if some things break, you call the condo owner’s association.

Now that we own a house, when anything breaks, it’s all on us.

I highly recommend that step-by-step progression into home ownership.

The Freedom of an Uncommitted Second Income

Renting for those first 10 months and then buying a condo we could afford on my salary alone gave us huge financial freedom.  We based our giving on our joint income and then, since neither one of us brought any debt into the marriage, we used Jude’s income to save like crazy.

That enabled us to build up a year and a half’s worth of living expenses, which was hugely helpful in enabling me to eventually quit my corporate job to write and speak full-time.  Before we had our first child, living primarily on one income also gave us the margin to take several nice trips.

If you’re entering marriage with debt, living primarily on one income will give you the means to get out of debt ASAP.

Keys to Making It Work

To be sure, living on one income requires making some uncommon choices. The condo we bought, for example, was in what Realtors optimistically termed “an up and coming neighborhood” in Chicago.  The spray painted symbols that often appeared overnight on the mailbox on the corner, we quickly discovered, was not the handiwork of the neighborhood’s Welcome Wagon.  It was the work of a local street gang staking its territory.

We are also committed to not financing vehicles so we keep our cars for a long time.

Whenever I recommend building a lifestyle primarily on one income during the MoneySmart Marriage workshop, I can see the looks of dejection on the faces of some couples.  But for those who take the advice to heart, I can also envision the happiness to come from the uncommon level of financial freedom they will soon experience.

What are your thoughts about the idea of building your lifestyle primarily on one income?

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Categories: Money & Marriage

15 Responses to “An Uncommon But Brilliant Money Move for Young Couples”

  1. Andrew says:

    “An Uncommon But Brilliant Money Move for Young Couples”…if you may say so yourself! ;-)

    I completely agree. My wife and I followed this track, and it provided financial freedom that we enjoy every day.

  2. Matt Bell says:

    Right, Andrew – if I may say so myself! You gave me a much needed laugh when I read your comment. Ah, the humbling act of writing a blog! :-)

  3. Matt -

    I think if many families could go back and start over when they got married, they would make some radical financial decisions the SECOND time around.

    I recently sat down with a couple making $120,000 but not finding anywhere in their spending plan to cut.

    I asked them how much they made when they first got married. The answer? ….. $30,000.

    Derrik Hubbard, CFP
    yourfinancialpurpose.com/blog

  4. Matt Bell says:

    Derrik – It’s amazing how expenses expand to meet all available income, isn’t it? It’s so much easier to get used to living well beneath your means from the start than to do it the other way around and then try to cut back!

  5. katelyn says:

    I agree with the things you are saying IF you get married and immediatley want to prepare for kids, but it isn’t 1980 anymore. With the trend of DINKs waiting much longer to have kids and more people not having kids at all, a lot of DINKs CAN live it up for a few years first, and live the DINK mentality that is NOT planning for kids but planning on personal growth and experiences, which will make you better prepared for kids later for when you DO make more money!

    Katelyn – Check out: http://www.dinklife.com/topic/money

  6. Matt Bell says:

    Katelyn – I don’t think we’re saying opposite things. As I mentioned, we used my wife’s income to take some nice trips before having kids. I’m just arguing — whether it’s 1980 or 2011 — that it’s a mistake to build a lifestyle that requires two incomes. When you lock yourself in to a house payment that requires both incomes, there’s nothing freeing about that.

  7. Patrick says:

    Hi Matt,

    This is a great post. It definitely made me think.

    A lot of my friends who are young couples without kids (myself included) were forced into this situation by changes in the economy, but have found that learning to live off of one salary, ‘paying yourself first,’ and being flexible in how and where you work has been good for them (all things considered).

    Thanks for expressing this better than I could!

  8. It’s great advice to not get trapped into a two-income lifestyle, especially if a couple wants to have kids. I know some moms who would like to stay home, but they can’t maintain their current lifestyle on one income.

    On the other hand, I know a lot of DINKS couples who are very happy with their decision to not have kids and live on two professional incomes.

    I chose to raise a family of four on my single income and I wouldn’t change a thing. In the end, it’s purely a personal decision.

  9. To be brutally honest, while I am totally agree with life on one income – is it not possible for every one.

    You want to send two kids to university, private school – what would you do?

    If she is a housewife, sitting at home with the kids. Than they are going to public school – yes, it is feasible. A step out – I am not so sure about it.

    How do you make provisions and planning for that?

  10. A.J. says:

    Great blog!

    I’m getting married in less than two weeks and my fiancee and I have been talking a lot about budgeting and how to set ourselves up properly for our future. This is some great advice that I hadn’t considered yet.

    Thanks!

  11. Brent says:

    This is great advice! Question for you. In our first year of marriage/DINK hood we’re trying to live off one salary and save the other. We can do it, but we don’t hit future savings goals off the single salary…we’re just past living paycheck to paycheck.
    We could cut back if need be but we aren’t frivolous anyways.
    So, how should savings targets (house down payment, retirement etc) play into the plan? Obviously we can stock up on cash with the second salary now, but how should savings targets play into the one income plan?

  12. Matt Bell says:

    Brent – I’d have to know more details about your situation to give you the best possible answer, but… Ideally, you’d be (and it sounds like you probably are) using the second income to really crank on your down payment savings goal and retirement savings. Also ideally, you’ll buy a house where the mortgage/taxes/insurance cost no more than 25% of one monthly income.

    So, hopefully the head start you’re getting on retirement savings while you have two incomes and the affordable-on-one-income mortgage you get will enable you to save an adequate amount for retirement on one income when you go down to one income.

    I’m happy to keep doing some back and forth on this with you if you want to share more details, but I hope this helps for now.

  13. Christa says:

    This is great advice. My husband and I had little choice but to live by these rules as we married right out of high school. We rented for the first five years then purchased a condo and once we graduated from college we built a home. But 15 years later we’re still purchasing only what we can afford with cash, including cars, and living on one income. It’s allowed for me to stay home with our boys, purchase rental properties, travel as a family and help others in need. Today we’re debt free–Praise God!–except for the mortgages on our properties. It feels fantastic. Many of our friends are strapped with debt and it makes for a very stressful situation for the entire family. Newlyweds, your marriage and personal happiness are way more valuable than the short-term enjoyment of driving a new car. Although I will say when we were first married we needed a reliable car since we used it to get to our three jobs and college. We took out an $8000 loan and paid $175/month for 6 years b/c we couldn’t afford the huge repairs our clunker constantly required. That car got us through undergrad and graduate school so I really can’t say I regret it! But having no car payments is even better. :-)

  14. I think it is worthwhile to also point out that the lesser paid spouse might not be making anything after paying taxes at the higher rate, paying child care expenses, paying transportation expenses, paying for additional work clothing and meals, paying for more take-out and meals out because both spouses are too tired to cook, and missing out on the ability to shop more frugally due to lack of time and on the ability to make a small income from home. Sure, two lawyers might do better if both are working but a CEO and a teacher? Probably not.

    • Matt Bell says:

      That’s a really good and often overlooked point. There’s a strong pull in the culture to be a two-income household, but the cost of that second income sometimes outweighs the benefits.

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