Financial planning tips for double income, no kids couples

'Dink' is an acronym for 'Dual or double Income and No Kids' couples. Investopedia explains ''Dink'' as typically a couple that has high education and a high income, with no children. The term 'Dink', has become a familiar term in India that can be categorised as those couples who are either newly married with high income or don't have kids as yet.

Why is Financial Planning very important for a 'Dink' couple?

Since 'Dink' couples have two incomes, most of their expenses, EMIs and bills get split between them and, at times, they also enjoy various tax breaks due to their joint holdings, like in the case of properties and the benefits on home loans. This typically leaves them with  more income at their disposal.

Since they do not have to worry about responsibilities like diaper changes or babysitting yet, it leaves them with more time to fulfil and live their dreams. However, this is exactly what could possibly create financial problems. More free time and money means it's easy to get used to a lavish lifestyle and to be vulnerable towards opting for loans beyond their means or overspending.

These are some of the steps you could take to avoid this trap and do your financial planning based on a systematic approach and by starting as early as possible. 

⇒ Analyse: First of all, you will need to sit with your spouse and calculate your income and monthly expenditures. You need to analyse your expenses, savings, and how much money is required to plan and invest to achieve future financial goals. This is important and critical, keeping in mind your future and of the next generation. 

⇒ Budget: Making a budget is important to avoid any kind of confusion or excess spending in a month. You can even use special apps dedicated to make a budget to make the process much faster manually.

⇒ Life insurance: It is a common notion with most 'Dink' couples that since both of them are financially independent, they don't need life insurance. But this is the wrong approach. In fact, because of double income, you may end up buying bigger and better homes by taking loans or make other similar investment or expenses.

In this scenario, not buying sufficient life insurance cover could expose you to a bigger and serious risk. If anything were to happen to either spouse, the income would reduce substantially, handicapping the other spouse with huge bills and outstanding EMIs. So, its advisable to buy a good term life insurance policy based on the overall insurance analysis and requirement.

⇒ Medical Insurance: The way you have seen the importance of having a good life insurance cover, having a sufficient health i.e. medical insurance is also very important. A good medical insurance cover would cover for a partner if he/she is unable to work or work with a reduced income because of a serious injury or disease. 

⇒ Manage debt: If you are already under the burden of a huge debt because of excess spending or investments, then you and your spouse need to take a serious look at your expenses so that some cuts can be effected. If loans or bills cannot be avoided at this stage then you need to find an extra source of income to pay them as soon as possible so that your main income isn't sacrificed on a regular basis. If you carry these debt/ bills later, you have to deal with several cuts in several spheres of life, even compromising on the upbringing of the children if you plan to have in the future. 

⇒ Retirement plan: Being a 'Dink' couple with higher disposable income could also limit your worries about saving up for the golden years. If you choose not to have kids, you may have less people around you to take care of when you grow old. So it's important to seriously think about your golden years and retirement planning.

⇒ Wealth creation: Since 'Dink' couple have more income as discussed, it also gives them a great opportunity to create great amount of wealth with timely investments into the right mix of asset class. In fact since their risk appetite is more, they can invest in higher generating returns products, this apart from the fact that you should analyze your risk profile and create a right portfolio.

⇒ Emergency fund: You should also create an emergency fund to meet any sudden or immediate financial requirements. Have atleast three to four months' worth of monthly income set aside as emergency fund.